Proposed Bill Would Force Colleges to Use Endowments on Tuition

• Republican Sen. Rick Scott of Florida last month introduced the Changing Our Learning, Loans, Endowments, and Graduation Expectations (COLLEGE) Act.
• The bill purports to "hold university administrators accountable for [the] unacceptable skyrocketing price of education."
• The proposal forces the wealthiest schools in the country to put some of their endowment funds toward covering tuition costs for students.

The latest effort to rein in the cost of college would force universities to use their billion-dollar endowments to help cover tuition for students.

Republican U.S. Sen. Rick Scott of Florida last month introduced the Changing Our Learning, Loans, Endowments, and Graduation Expectations (COLLEGE) Act to "hold university administrators accountable for [the] unacceptable skyrocketing price of education."

In addition to forcing cash-rich schools to cover some tuition, the bill would also implement new reporting requirements and put institutions on the hook for defaulted debt.

President Joe Biden's federal student debt cancellation plan only treats the symptom of a larger "disease" in higher education, Scott said.

Instead, politicians should do more to control college costs and hold schools accountable when they provide education that does not lead to better student outcomes, he said in a statement.

"For far too long, state and federal leaders have taken a misguided and failed approach to managing public institutions of higher education," Scott said in a statement announcing the bill's introduction. "The result of their decades of failed policy and mismanagement is millions of Americans with mountains of student debt racked up earning degrees that haven't prepared them for [a] good, high-paying job in the real world."

Endowments Turned Tuition

The COLLEGE Act would force the wealthiest schools in the U.S. to put some of their endowment funds toward covering students' cost of attendance.

According to the bill's text, the breakdown is as follows:

• Endowment funds between $1 billion and $5 billion must cover 25% of tuition.
• Endowment funds between $5 billion and $10 billion must cover 50% of tuition.
• Endowment funds $10 billion and above must cover 75% of tuition.

Institutions that qualify would only need to cover tuition costs for full-time students, according to the bill.

According to the 2022 NACUBO-TIAA Study of Endowments, 142 U.S. and Canadian institutions participating in the study had endowment funds over $1 billion for fiscal year 2021. Twenty-seven institutions had endowments above $5 billion, and 17 had endowment funds greater than $10 billion.

Some public university systems had endowments greater than $10 billion, according to the study. That includes the University of Texas system.

Harvard University topped the list with an endowment fund of $51.9 billion in 2021.

Pitching in on Defaulted Loans

The COLLEGE Act also aims to place colleges and universities on the hook for student loans that go into default.

An institution would be responsible for 1% of a loan balance for loans taken out to attend that school, beginning in the first year of enactment. That increases to 2% in the second year, and incrementally after that until it is responsible for 10% after 10 years.

This applies to loans that default within three years of the loan entering repayment, according to the bill.

"Forcing universities to have accountability for student debt provides a powerful incentive to actually prepare students for careers — instead of encouraging mountains of debt and degrees that don't lead to jobs after graduation," Scott's office said in a statement.

Increase Transparency

Lastly, the COLLEGE Act includes new reporting requirements for all colleges and universities participating in Title IV federal programs.

For one, it would require institutions to report the size of their endowments to the federal government. That would allow the Department of Education to enforce the tuition price-matching portion of the bill.

The proposal would also force institutions to make the following information publicly available:

• Four-year graduation rates for each available program
• Percentage of graduates employed full time one, three, and five years after graduation
• Median full-time wages for graduates one, three, and five years after graduation
• Tuition and fees to graduate with a degree in each program
• Total cost to graduate, including books, room and board, etc.
• Average monthly loan payments for graduates
• Average total student loan debt for each program
• Average three-year loan default rate for graduates of each program

These borrow from items the College Transparency Act also seeks to make publicly available. The College Transparency Act, however, has failed to be enacted into law multiple times, most recently failing as an amendment to the America COMPETES Act over the summer.