Student activities fee reform

This week the Georgetown University Student Association passed the Bill on Student Endowment Interest, which seeks to retain interest accrued on the student activity fee shares of the university endowment. Director of Student Programs Erika Cohen-Derr said she expects the university will implement the Senate’s suggestions.

In 2001, more than 2,000 students approved a referendum to create a student activity fee of $50 per semester, according to bill sponsor Colton Malkerson (COL ‘13). Half the money from the fees goes to the annual budget to be allocated by the Funding Board, and half the money goes into Georgetown endowment. Currently the student activity fee portion of the endowment is 6,067.83 shares, or $1,840,129.09 market value. Once the activity fee portion of the endowment reaches $10 million, the interest earned on the account should be high enough that future generations of students will no longer have to pay the student activities fee.

However, the interest accrued on the student activity fee portion of the endowment is kept separate from the student activity fee account, so the fund is not benefiting from the higher long-term growth enabled by compound interest. The Bill on Student Endowment Interest stipulates that the student activity fee portion of the endowment should retain all of the interest it generates from now on.

“We’re trying to get to this $10 million mark where students don’t have to pay the fee, and if we’re not keeping the interest, it’s going to take us longer to get to the $10 million mark,” Malkerson said.

Additionally, the bill allows GUSA to investigate how much money from interest has already been lost and to see if there is a way to recoup the losses. Malkerson said it is difficult to put a number on the interest lost since the endowment and the interest rate both fluctuate, but the GUSA Finances and Appropriations committee estimates thousands of dollars of student money have not been retained in the student account fund.

Finance and Appropriations committee chair Nick Troiano (COL ’11) said Cohen-Derr had suggested GUSA develop a formal policy to advise the university as a first step. However, Cohen-Derr said she would not comment publicly about the next step.

“My understanding of this bill is that they are asking to do something with that interest, move it back into the endowment,” Cohen-Derr said. “I don’t expect that it will be a problem, but I think it’s a set of financial transactions that need to take place.”

Senate speaker Adam Talbot (COL ‘12) said Cohen-Derr indicated to him in a meeting on Tuesday that the university would “act comprehensively” to implement GUSA’s directives, and he believes this “represents a victory.”

Troiano said the bill was a part of the Finance and Appropriations committee’s underlying goal to manage student money more responsibly.

“It’s very much in the students’ interest… that they retain the interest earned on the endowment because… it’s real money,” Malkerson said. “It’s a lot of money, and it’s theirs.”