U.S. Rep. Tom Reed (R-NY) wants to rein in rapidly escalating higher education costs through congressional tax reform and has called on colleges and universities to fund more tuition assistance and end extravagant endowment spending.
“Some universities have lost sight of helping kids from working and middle-class backgrounds. We want to fix this and we ask that universities work with us to get college costs under control,” Reed said on Tuesday.
Reed said that many institutions of higher education (IHEs) have huge, ever-growing endowment funds.
“These are tax free investments and contributions that schools are getting, so where that money goes is a legitimate question that needs to be asked,” said Reed, a member of the House Ways and Means Committee.
The lawmaker said that IHEs are using their endowment funds to retain hedge fund managers or pay their presidents salaries that top $1 million. Some IHEs are funding lavish campus amenities like lazy rivers, as well as high-end televisions in dorm rooms or in each football player’s locker, he added.
“Universities are going to have to start making hard decisions of reducing executive salaries, reducing expenditures on some of these extravagant, resort type of investments and focus on what they should be focusing on: providing a good quality education with an affordable price tag,” Reed said.
Meanwhile, the average U.S. student graduates being more than $30,000 in debt. Nationally, student loan debt has hit $1.4 trillion, according to Reed’s office.
“As we bring more light to this issue, I am optimistic we can work with colleges to get the money to where I believe it needs to go — tuition reduction for working class students,” said Reed.
The current tax reform bill includes a 1.4 percent excise tax on endowments for IHEs having funds totaling more than $250,000 per student and more than 500 students.