(Bloomberg) -- With many of the largest U.S. college endowments at record values,two congressional committees that determine tax policy jointlyopened an inquiry about how the wealthiest schools manage and spendthose funds.

The Republican leadership of the Senate Finance Committee andthe House Ways and Means Committee sent letters late Monday byemail to 56 private schools with assets of more than $1 billion,citing their “numerous tax preferences,” and adding weight to thefederal scrutiny of college endowments.

Congress is evaluating the value of federal policies that permittax-free investment earnings for schools and tax deductions fordonors.

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One proposal recommends that schools spend more on tuitionrelief as the cost of college skyrockets. Some private collegeshave sticker prices of more than $65,000 annually.

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“Despite these large and growing endowments, many colleges anduniversities have raised tuition far in excess of inflation,”according to the letter, signed by Orrin Hatch, chairman of theSenate Finance Committee, Kevin Brady, chairman of the House Waysand Means Committee, and Peter Roskam, chairman of the House Waysand Means Oversight subcommittee.

Schools that received the letter ranged from Amherst College inMassachusetts to Yeshiva University in New York, and included theeight members of the Ivy League.

“We look forward to providing Congress with data and informationthey can use to become more familiar with the essential role thatcollege and university endowments play in helping support highereducation and in creating opportunities and access for so manystudents who otherwise might not be able to attend,” said BillBurger, a spokesman for Middlebury College, which has a $1.1billion endowment.

George Washington University is reviewing the letter and willcomply with the request, said Candace Smith, a spokeswoman for theschool, which has a $1.6 billion fund.

Harvard University, which has the largest U.S. school endowmentat $37.6 billion, said it would provide the committees “clarity onthe strong financial management practices governing the endowmentand the positive impact it has for students, faculty, researchersand society,” said David Cameron, a spokesman for the Cambridge,Massachusetts-based school.

‘Careful stewards’

Swarthmore College, with a fund of $1.9 billion, said that whileit’s been “careful stewards of the resources that were entrusted tous by generous donors over many years, we are certainly willing todemonstrate that commitment in our response to the request,” saidGreg Brown, vice president for finance and administration.

Several other schools, including Duke University, CornellUniversity and Lehigh University, declined to comment on theletter.

The query comes a month after Tom Reed, a Republican congressmanfrom New York, proposed a draft bill that would mandate endowmentsof more than $1 billion devote 25 percent of their annualinvestment income to reduce college costs for low- andmiddle-income students or lose their tax-exempt status.

Schools supply limited information about their endowments onInternal Revenue Service forms, including the balance, earnings anda breakdown of investment categories. Some colleges voluntarilysupply additional details on their websites or in annualreports.

The letter asks 13 sets of questions about the costs to managethe funds, including fee arrangements, and how investment incomewas spent for the past three years and, if available, for thecurrent year.

The questions--with answers due on April 1--also seek data abouthow much of the investment return is spent on financial aid andasks about categories of assets.

Record gifts

Congress needs to have a better understanding of how endowmentfunds and “the exorbitant cost” of higher education interact,Roskam, of Illinois, said in an interview.

“The status quo, in terms of the cost of higher education, isn’tworking,” Roskam said. “If the tax code is having an impact one wayor another, we need to understand it.”

The letters address donations, including naming rights, at atime when some of the wealthiest schools have received recordgifts, which also bolster endowment values in addition toinvestment income. Schools in the year ended June 2015 raised arecord $40.3 billion, according to the Council for Aid toEducation.

Schools counter their endowments come from thousands of giftsand they can’t break agreements with donors who specify how moneyshould be spent.

“I’m hopeful this process will allow us to learn more about howuniversity endowments use their tax preferences to fulfill theircharitable purposes,” Hatch, of Utah, said in a statement.

Investment returns on average for endowments in the year endedJune 30 were the worst in three years, with a gain of 2.4 percent,following a 15.5 percent rise in the previous year. The largestendowments, $1 billion and more, had the strongest returns in themost recent year, at 4.3 percent, according to the NationalAssociation of College and University Business Officers andinvestment manager Commonfund.

Generous aid

Several of the richest schools -- which offer the most generousfinancial aid -- had outsized returns. Those include BowdoinCollege’s $1.4 billion fund, with a 14.4 percent gain;Massachusetts Institute of Technology’s $13.5 billion endowment,with 13.2 percent return; and Princeton University’s $22.7 billionfund, up 12.7 percent.

The letter is similar to one sent in 2008 by the Senate FinanceCommittee, which prompted some of the wealthiest colleges to shifttheir financial aid policies to grants, that aren’t required to berepaid, from loans. The committee had asked 136 colleges withendowments of $500 million or more a series of questions about thefunds’ payouts and student aid.

Taxes, endowment spending and the rising cost of highereducation came before the House subcommittee in an October hearingcalled by Roskam.

He said holding hearings, asking questions and sending theletters are efforts to learn more about the role of endowments.

“The cost of higher education is just staggering for manyAmerican families,” Roskam said. ‘Is there a relationship betweenthe tax code and that cost? That’s one of the questions we want toexplore.”

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