Yale U. Plans Big Increase in Annual Endowment Payouts

Yale University has announced it will spend significantly more of its endowment each year, a decision prompted by “exceptionally strong investment returns.” The change comes amid questions from Congress about the large size and relatively small payouts of university endowments.

In the current fiscal year, the university plans to spend $843-million of its endowment, which had a market value of $22.5-billion on June 30. The following year, Yale will spend 37 percent more than that, approximately $1.15-billion.

The university also announced that from now on it will spend at least 4.5 percent of its endowment annually, with a cap on spending of 6 percent.

The increased payments will support financial aid for low- and middle-income students and scientific research, especially biomedical research. The university is also considering expanding its undergraduate body from 5,300 students to 6,000.

Sen. Charles E. Grassley, a Republican from Iowa, praised Yale’s decision, adding that he was eager to see more details. Mr. Grassley, the senior Republican on the Senate committee that oversees tax-exempt groups, has held Congressional hearings in the past year exploring whether universities are holding on to too much of their endowment money at a time when tuition costs continue to rise.

Mr. Grassley has noted that private foundations must spend 5 percent of their assets each year, and he wants a similar standard enacted for all university endowments, which he says are collectively worth more than $340-billion nationwide. Several major higher-education associations, however, have opposed the idea.