Yale University is joining other elite colleges across the country in increasing student financial aid after complaints from federal lawmakers about years of rising tuition rates.

Yale officials announced Monday that the Ivy League school in New Haven will be spending more money from its $22.5 billion endowment in the 2008-2009 academic year on financial aid and scientific research. The university intends to increase the annual endowment payout for such programs by 37 percent to $1.15 billion, Yale President Richard Levin said.

Yale is also considering using endowment money to build two new residential colleges and increase its undergraduate student enrollment from 5,300 to about 6,000.

Exactly how much Yale will increase student aid will be announced later this month, but Levin said it will be "substantial" and in line with the $20 million increase announced by Harvard last month.

Yale currently spends $60 million a year on financial aid for students, with the average annual grant totaling $28,000. Tuition, room and board for one year at Yale costs $45,000, and about 43 percent of undergraduates get financial aid, Conroy said. Parents earning a total of $45,000 or less a year do not have to pay anything for their child's education.

"Exceptionally strong investment returns in recent years have led to a lower than anticipated payout rate from the endowment under our current policy," Levin said in a statement.

"The prudent policy revision we are making will increase spending from the endowment to benefit students and researchers today while continuing to ensure that the endowment's capacity to support future generations of students is undiminished," he said.

Levin said that while Yale officials have been concerned for several years about the low percentage of the endowment spent on university programs, the changes announced Monday were partly in response to criticism from federal lawmakers, including Iowa Sen. Charles Grassley.

"I think it's important that our schools be left to make those decisions for themselves," Levin said about endowment spending. "But I think Senator Grassley's done a public service by raising the issue."

Grassley, the ranking Republican on the Senate Finance Committee, has been urging colleges with large endowments to offer more financial aid.

"This is a great day for parents and students," Grassley said about Yale's announcement. "The Yale bulldog might take a bite out of tuition costs for middle and low-income families.

"For the first time in years, we're hearing good news about tuition and affordability," he said. "It's a big deal that the two wealthiest colleges are making tuition more affordable. They set an example for all other well-funded schools to do the same."

Grassley said U.S. universities have some $340 billion in endowments, and those funds and the donations to them are tax-exempt. He said American taxpayers deserve a benefit because they are subsidizing those tax exemptions.

Yale is changing its policy on the targeted payout rate from its endowment, which increased to the current rate of 5.25 percent of the endowment from 5 percent in 2004. The university's new formula calls for a floor of 4.5 percent and a ceiling of 6 percent on the targeted payout rate.

Yale's endowment is topped only by Harvard's, which stands at about $34.9 billion. Harvard announced last month that it will be providing $20 million more in aid to students whose families' income extend beyond the 90th percentile nationally. Harvard's tuition, room and board are $45,600 a year.

Yale will also use more endowment funds to give the public greater access to its undergraduate course content and other Yale information on the Internet for free.

The school also has plans for a major expansion to its biomedical sciences programs and the creation of more research institutes, made possible by Yale's purchase of the 136-acre Bayer campus in West Haven last year.

Yale's endowment is the largest single source of revenue for the college's budget, currently funding 37 percent of expenses. That rate is expected to climb to 45 percent of the budget in 2008-2009.