HIGHER EDUCATION BUBBLE UPDATE: College endowments under scrutiny.

The tax-exempt endowments of colleges and universities are coming under scrutiny in a presidential election year where the cost of higher education has become a top issue.

Leading Republican tax-writers in Congress have sent questions to 56 private institutions with endowments of over $1 billion, giving them until April 1 to respond. The answers they receive could lead to legislation.

The letters — which were sent in February and signed by Senate Finance Committee Chairman Orrin Hatch (R-Utah), House Ways and Means Committee Chairman Kevin Brady (R-Texas) and Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) — stated that many colleges are raising tuition at rates above inflation despite having large and growing endowments.

The five private colleges with the largest endowments in fiscal year 2015 were Harvard University ($36.4 billion), Yale University ($25.6 billion), Princeton University ($22.7 billion), Stanford University ($22.2 billion) and the Massachusetts Institute of Technology ($13.5 billion), according to the National Association of College and University Business Officers (NACUBO) and the Commonfund Institute.

Private colleges are generally established as nonprofits, which means their endowments are tax-exempt. Unlike private foundations, there is no requirement that the colleges spend a minimum percentage of their endowments each year.

Critics have denounced the schools as hoarding cash, and lawmakers are taking note of that argument.

Populism is blooming, and established institutions won’t like it.