The Trump administration has a new proposal for how wealthy universities and colleges spend their endowment. The allowance may greatly help middle-class kids with higher education expenses.
Bloomberg reported that Tom Reed, a Republican U.S. House member and vice chair of president-elect Donald Trump's transition team, proposed that wealthy colleges should spend more of their endowment gains on helping middle-class families.
If they refuse, they may lose their tax-exempt status. Aside from the new endowment spending rules, Reed also proposed that all universities receiving federal aid would provide more disclosure about administrative salaries and perks.
Additionally, colleges would also need to file "cost-containment plans" in order to keep tuition increases below the inflation rate. Federal government would have the authority to take money away from institutions who fail to decrease their costs and give it to those who are able to comply.
"It's time to disrupt this area and really put the attention necessary to it to get the costs going in the right direction, and that is down," Reed said. "We truly are entering the crisis phase."
During a rally in Pennsylvania last September, Trump revealed that he wants to work with Congress on reforms that will make sure that universities put great effort in reducing the cost of college and student debt. In exchange, they get to keep privileges such as special federal tax breaks and tax dollars.
"We care about ensuring that all students have the opportunity to reach their fullest potential," Reed wrote in his proposal, "Our Vision for Students." "It is only right that students have access to affordable education; it is simply not fair that our sons and daughters are forced to mortgage their futures in order to attend college."
Reed plans to introduce the measures in January. There is a possibility that it would be part of a Republican tax overhaul.
The rules would apply to about 100 schools with endowments of $1 billion or more. It would include Harvard University, with $35.7 billion, to the University of Georgia, with about $1 billion.
