Syracuse University spent nearly 7 percent of its now-$1.1 billion endowment in the 2006 and 2007 fiscal years, according to its letter last week in response to the U.S. Senate Finance Committee's recent inquiries into the spending practices of the 136 schools with endowments larger than $500 million.
The Senate committee's request came after several of the country's top universities increased the amount of their endowments spent each year in order to provide "free tuition for low-income families and greatly reduced tuition for middle-income families," the Senate's Jan. 25 request said.
The College Opportunity and Affordability Act would have required all universities to spend 5 percent of their endowments to make college more affordable, but the House of Representatives removed that portion of the bill before passing it Feb. 7.
The committee's chair, Sen. Max Baucus (D-Mont.) and ranking member, Sen. Charles Grassley (R-Iowa), wrote in a committee news release that "federal law requires most private foundations to pay out 5 percent of their assets each year toward a charitable purpose."
SU responded to the committee Wednesday and posted the letter on its Web site Monday.
Lou Marcoccia, executive vice president and chief financial officer at SU, said while there may be times when the university can't pay out 5 percent, it doesn't mean the school decreases its financial aid to students. The money comes from other sources.
Syracuse spent $135.1 million in student aid in 2007, but only $9.74 million came from its endowment, the letter said.
"We're just about at the maximum of what we can pay out (of the endowment fund for financial aid)," Marcoccia said. "That number is our peak right now. I don't see us going much higher than that."
In addition, if the university required all students to pay tuition in full, it would have received $510 million for the 2006-07 school year, Marcoccia said. SU only received $330 million because of discounts given to students from the university and from other sources.
That percentage ($330 of $510 million), which is now approximately 65, has decreased in the last six years, the letter said. That means students are paying less and less of the "sticker price" of tuition.
The letter said when that decrease in percentage is considered, the increase in the cost of tuition is more in line with inflation.
Looking at it in another way, while the cost of tuition has skyrocketed this decade, so has financial aid.
From 1998-99 to 2007-08, Syracuse's tuition increased 79.4 percent Ñ from $18,875 in 1998-99 to $31,286 in 2007-08. During the same period, SU's financial aid increased 101.4 percent Ñ from $66.6 million to $135 million.
But there are those who still question whether schools are spending enough of their endowments.
"That public benefit is not being seen if universities are not spending it but hoarding their endowment," said Lynne Munson, an adjunct fellow at the Center for College Affordability and Productivity who testified before the Senate Finance Committee.
Syracuse said in the letter regardless of whether its financial aid came from the endowment or not, it spent what is equal to 12 percent of its endowment on financial aid ($135.1 million of $1.1 billion).
"Five percent (of a school's endowment) should go to student aid and the university's public purpose," said Jill Gerber, a spokesperson for Grassley. "So student aid is their interest."
In comparison to the top universities in the nation, SU has spent much less money on financial aid.
Harvard University, which has more than $34.6 billion in endowment, spent $98 million in aid last year. Duke University, which has $5.6 billion in endowment, spent $73 million.
Both institutions have made free tuition for low-income students and capped middle-income student's family contributions.
Don Saleh, vice president of enrollment management at SU, said the university is more concerned about the weakening economy and students' ability to return each year, rather than adopting programs similar to those at Harvard and Duke.
"We're more concerned about our students' ability to return year after year," he said.
SU committed $200 million of its current $1 billion dollar fundraising campaign, which started in 2005 and is expected to continue through 2012, to financial aid. Also, the letter said SU has increased aid to low and middle-income students by approximately 40 percent in the last three years.
Said the letter: "It is particularly significant given that SU, a world-class university that has been increasing its quality for decades, does not nearly have the size of endowment to match the best endowed private institutions. Nevertheless, we consider ourselves a leader among private institutions in meeting the financial needs of low and middle-income students."
dmtaube@syr.edu
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