Facing pressure from Congress and some donors to use more of its multibillion-dollar investment gains, Yale University announced Monday that it would increase the amount of money it spent from its endowment next year by nearly 40 percent.
The additional money will be used for financial aid and new scientific and medical research.
Yale’s announcement was the latest sign that the nation’s wealthiest universities are trying to fend off action by members of Congress who question why universities raise tuition faster than the rate of inflation while the value of their endowments soar.
Some lawmakers have been threatening to require universities to spend a minimum of 5 percent of their endowments each year, the same as most private foundations. Senator Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, which has jurisdiction over tax policy, has suggested that colleges and universities, which are tax exempt, should spend more of their endowments.
Yale’s announcement came a month after Harvard University said it would increase its financial aid to students. At nearly $35 billion, Harvard’s endowment is by far the largest among American universities, with Yale next at $22.5 billion. Both have seen robust returns.
Harvard officials said they would spend an additional $22 million annually, beginning next year, to expand financial aid to low- and middle-income students, as well as to students from families earning as much as $180,000 a year.
Yale will spend an additional $307 million next year in income from its endowment, which represents a 12 percent increase on the university’s current $2.5 billion budget. Besides increasing financial aid, the money is likely to finance a proposed expansion in the size of Yale’s undergraduate student body.
“This is a very big boost to our spending,” Richard C. Levin, the university’s president, said in an interview. Dr. Levin added, “We want to do things that are significant with it.”
Mr. Grassley called Yale’s announcement “a great day for parents and students.” In a statement, he said he thought it significant that the nation’s two wealthiest universities were making the cost of college more affordable for students.
“They set an example for all well-funded schools to do the same,” Mr. Grassley said.
Still, Mr. Grassley said he hoped Congress would continue to consider imposing mandatory requirements on how much universities must spend from endowments.
“This isn’t just an issue of college access,” he said. “It’s also an issue of tax fairness. Universities hold at least $340 billion in endowments. The donations to those endowments and the endowments themselves are all tax-exempt. American taxpayers are subsidizing that tax-exemption, and they deserve public benefit in return.”
Senator Max Baucus, a Montana Democrat who is chairman of the Finance Committee, did not reply to telephone messages seeking comment.
Dr. Levin said universities should be allowed to determine how much of their long-term assets it would be prudent to spend. “You wouldn’t want to mandate a spending rate,” he said.
Yale will spend every year at least 4.5 percent of its endowment and at most 6 percent, Dr. Levin said. That would put it in the range of the 5 percent that foundations are required to spend.
Yale is spending about 3.8 percent of the endowment this year, a relatively low proportion among elite universities. Harvard is spending about 4.3 percent of its endowment this year and plans to spend 5 percent next year, university officials said.
Dr. Levin acknowledged that the Congressional pressure, along with concerns by some Yale donors about the university’s relatively low level of spending, had figured in the decision. He said another factor was the rapid growth in the value of Yale’s endowment, which increased by 28 percent last year.
“The folks in Washington are saying you’re hoarding money,” Dr. Levin said. “And we felt uneasy about it ourselves.”
Dr. Levin declined to spell out details of Yale’s plans on financial aid, saying they would be made public later this month. But he indicated that the aid would be comparable to Harvard’s effort to channel money well into the ranks of the upper middle class and that it would be not be limited to undergraduates.
“When all is said and done,” Dr. Levin said, “people are not going to be choosing between Yale and Harvard based on cost.”
Yale charges $45,000 for tuition, room and board, though many students get financial aid.
Yale will use the additional money for biomedical and scientific research, and will also make more courses available online without charge.
Yale is also considering whether to expand undergraduate enrollment to about 6,000 students from the current 5,300. The proposal will go to the university’s governing body in February.