Today, the UBC Board of Governors announced an increase in the endowment’s target spend-rate from 3.5% to 4%. The AMS is very pleased to hear that UBC’s endowment will be able to generate additional resources to support students, faculty, and staff.
As the recently approved motion currently reads, this increase in spend rate has the potential to affect the interest rate that applies to the loans for building of student housing in the future. As such, the AMS has concerns about the possibility that rent may be increased for students living in future housing projects.
We would like to see a commitment from the University that student housing costs will not increase in parallel with this spend rate increase. While this is exciting progress on the stability and growth of the University’s finances, the AMS looks forward to working with the Board to clarify the intention of the changes.
What is the endowment? The endowment is one of UBC’s major financial assets that exists in perpetuity, generating investment income. A portion of the income generated by the endowment is placed in UBC’s operating budget each year.
What is the spend-rate? The spend-rate is the percent amount that UBC withdraws annually from the endowment. This was previously 3.5% and is now 4%.
How is this connected to student rents in residence? The terms of reference that apply to loans used to build student housing directly tie the interest rate on those loans to the spend rate from the endowment. If this motion is applied to all endowments, a higher spend rate would mean higher interest rates on loans for student housing.
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This statement was updated on December 7th, 2016.