Everybody is always trying to spend someone else's money. This kind of thing would really make me sick, except it is a little funny to see the kind of class warfare and redistributionist economics preached by elite universities come back to bite them:
Dr. Gravelle points out that endowment wealth is concentrated in the
upper ranks, much of it at 62 institutions with endowments larger than
$1 billion. But just three years ago only 39 schools had billion-plus
endowments. That's a 38% increase in just a few years. In 2006, 125
schools had endowments over $500 million"”a third more than in 2002. The
number of schools that can count themselves as endowment-rich or
super-rich is growing rapidly....
What the data shows is that endowment wealth is everywhere"”except in
the hands of the students who need it today. Last year endowments
increased 17.7% on average"”those larger than a billion increased 18.4%.
Yet, despite double-digit increases stretching back a decade or more
"”endowment spending is at a nearly all-time low of 4.2%--down from 5.1%
in 1994, 6.5% in 1982, and 5.2% in 1975....
Tuition has been going up so rapidly for so long it has reached nearly
ungraspable levels. So let me put today's tuition cost in concrete
terms. Senators, what would your constituents say if gasoline cost
$9.15 a gallon? Or if the price of milk was over $15? That is how much
those items would cost if their price had gone up at the same rate that
tuition has since 1980.
I believe that skyrocketing tuition is
undoubtedly the biggest "access" problem in higher education. What can
possibly be more discouraging to a capable student whose parents are
not wealthy than a school with a $45,000 price tag on the door?...
Congress should not hesitate to consider a minimum payout
requirement"”and 5% should be considered a starting point. The 5% number
is a dated one"”even for private foundations. Many schools have been
rolling over so much money for so long that they should easily be able
to accommodate a higher rate of payout. Possibly the most significant
challenge for policymakers will be to make sure that any newly directed
monies actually go toward aid or tuition reduction and don't become
part of a shell game.
Seriously, is there no pocket of private money that socialists won't stick their hand into? In effect, at the same time Americans get lambasted for saving too little, this guy is going after private universities for saving too much? And note the implicit assumption about government intervention he holds and expects all of Congress to hold in the third paragraph above: It is just assumed that if prices go up enough to upset the constituents, then it is Congress's job to act.
Far be it for facts to get in the way of good populism, but I do know what Princeton does with its 2nd or 3rd largest endowment:
- Every student who gets admitted gets a financial aid package from the University that will allow them to attend, no matter what their finances are. Yes, the student may have to work his butt off, but if he really wants to go to Princeton he will be able to go. Princeton's wealth also allows it to be much more friendly in these financial assessments. For example, many assets like the parent's house are taken off the table when assessing ability to pay
- If a student graduates normally, then all of her debts are paid off at graduation. Every student graduates debt-free, giving them far more flexibility in what jobs they choose our of college. No longer must they eschew non-profit or low-paying jobs due to the burden of debt.
- Princeton has accepted that applying more money to increasing the educational intensity of its existing 4000 students by an additional 0.1% is not the best use of its investment. It has committed (in too small of a way for my preferences, but that is another matter) to using its fortunes to increase its size and bring Ivy League education to more people. This year, it increased its entry class size by 250, which may seem small to those of you from large universities but is about a 20% increase for Princeton.
Since all Princeton students get whatever aid they need and graduate debt-free. So the tuition number is irrelevent. And statements like "I believe that skyrocketing tuition is
undoubtedly the biggest "access" problem in higher education" are virtually meaningless.