U. reports spending to Congress

Correction appended

In response to a request by the U.S. Senate Finance Committee, on Friday the University submitted a report detailing its financial aid expenditures and its handling of endowment funds. The 22-page letter was made available to the public yesterday.

The Senate committee had written to Princeton and 135 other colleges and universities on Jan. 25 asking for information related to college costs, financial aid and the size and utilization of their endowments. The request for information comes at a time of increased congressional attention to higher education endowment spending. On Feb. 7, the Higher Education Act was presented to Congress, and witnesses testifying before the Finance Commitee presented a proposal to require colleges and universities to spend a minimum percentage of their endowments to reduce education costs for their students.

This series of actions followed a committee hearing that last September at which several individuals had made “misleading statements” regarding universities’ financial policies, University Vice President and Secretary Bob Durkee ’69 said.

President Tilghman noted in her introduction to the letter that the University spent $81 million on financial aid this year, more than the $75 million received from tuition payments. More than 85 percent of this aid, she added, is paid from endowment funds. The average grant for the 52 percent of undergraduates on financial aid now covers 96 percent of tuition, leaving $1,458 to be covered by a student’s personal funds.

The letter also addressed the prospect of a free Princeton education for all students, including those from families for whom high tuition isn’t a significant issue.

“We believe that these families should contribute toward the cost of educating their children recognizing that even families paying full price pay less than half of what their children’s educations actually cost,” Tilghman said. She added that asking students to contribute to their own education costs through jobs undertaken during the academic year and summer is “appropriate.”

The report also spelled out several issues not directly addressed by the congressional inquiry. Tilghman noted, for example, that graduate programs and research take up a significant portion of University funds.

“The endowment makes very substantial contributions to the operating and capital costs of the cutting-edge research that fuels America’s competitiveness, at a time when federal and other sources of support are failing to keep pace with rising costs,” she wrote, citing nanotechnology, environmental studies, genomics and neuroscience as fields that have benefited from Princeton’s stewardship.

The University must also consider future expenditures when deciding how much of its financial resources to devote to current programs. “You have to think about [universities] not only supporting the fields that exist,” Durkee said. As knowledge expands, he noted, new fields of research are created, often requiring funding unanticipated by federal research grants.

Tilghman also called attention to the differences between universities and private corporations, whose endowments are held to a “specified minimum payout.” Colleges, she explained, are forced to make “long-term commitments” to maintain world-class faculty, academic programs and technologically advanced facilities. Grant-making foundations, however, can simply reduce spending in years of financial strain.

The decision to make Princeton’s response public, Durkee said, was the result of a desire to inform the increasingly interested public prior to further congressional action on the issue.

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“We assume that at some point the Senate Finance Committee will make the responses public, or at least portions of the responses public,” he explained. By providing this data now, the University hopes that discussions among students, parents and alumni will be better informed and more constructive, Durkee said.

Requesting additional information from colleges was a “responsible response” to concerns raised by Princeton and other institutions after the September hearing, Durkee added.

“If there are people who are thinking about these issues and thinking about whether any kind of legislation is appropriate or whether any further hearings are necessary,” Durkee said, “we’d rather have them asking the questions and getting the answers than proceeding without having the answers.”

Correction:

The original version of this article stated that the Higher Education Act contains a provision to require a minimum percentage of endowment spending by colleges and universities. This provision is not contained in the Act but rather was proposed to the Senate Finance Committee by witnesses in a hearing. The Daily Princetonian regrets the error.