Opinion
Spending can bridge college gap
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As the wealth of our nation’s richest 136 schools continues to grow, the rift between the quality of education at these schools and those without outrageous endowment funds widens.
Schools like Harvard and Yale have endowments upward of $20 billion, while a study done by The New York Times reveals fewer than 400 of the approximately 4,500 colleges and universities in the United States have even $100 million. On average, the top 10 private institutions have more than 10 times the endowment funds of the top 10 public institutions. As a result, these less wealthy institutions are having difficulty trying to compete for the same quality of education one would receive at an Ivy League school. Even state universities are playing catch-up through fundraising and increasing endowments.
But as they are catching up, are they spending enough of the money they make?
Originally, state support was good enough to fund the costs of public universities, but that time has come to an end. With private universities using financial experts to put their portfolios into hedge funds and equities, endowments are escalating each year. According to the National Association of College and University Business Officers (NACUBO), Harvard’s endowment increased from $25.4 billion in 2005 to $28.9 billion in 2006, while the University of Wisconsin Foundation only produced a $300-million increase in endowment funds, moving from $1.1 billion to $1.4 billion. While UW was the nation’s 40th richest school in 2006, its endowment funds must be spread over 40,000 students, compared to Harvard’s 19,000. The saddest part is that the $3 billion increase in Harvard’s funds is worth more than all but 14 other schools’ endowment funds.
Aside from scooping up the world’s top professors and resources, Ivy League institutions can offer more financial aid to students from a broader range of income brackets. Harvard can offer financial aid to families that make up to $180,000 per year, whereas some schools struggle to meet the needs of families that make $90,000 per year. These less fortunate schools must scramble to explain why their tuition costs rival Harvard’s and also why they can’t do anything to help fix the broken wallets of those families that are sending their children to these institutions.
While some may sit around and complain about what these exceedingly wealthy schools are doing to the rest of the nation’s schools, I say we look to the ideas of the leader of one our nation’s greatest institutions, Chancellor Robert J. Birgeneau of the University of California. Mr. Birgeneau’s idea is simple — create larger endowment funds for the nation’s public universities. His model would have half of the endowment funds come from donors and the other half subsidized by the state. This seems like an ideal plan; however, one of the pitfalls of this is that some institutions will just sit on their money. Most colleges spend just 5 percent of their endowment funds per year.
While some may say that it’s financial prudence not to spend this money, it seems to me that this is a load of crap. If investment returns are ever-increasing at our nation’s wealthiest universities, then why not increase spending to 10 or even 20 percent of these endowment funds? If a donor does not have to pay taxes, then they will give more, and this source of funds should be steady enough to keep spending at this rate. Critics of this idea might say spending this much might hurt an institution in the long run, say if a recession occurs and funds for that institution decrease, but thinking like that will never make the great public and private institutions affordable for the average family ever again, and the quality of education at these schools will surely dip.
So I say, “Spend, spend, spend!”
Andrew Traverse (atraverse@wisc.edu) is a freshman majoring in business.
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It sure is easy to spend other people’s money.
Me thinks that this entire opinion article was wholesale stolen from the ny times article. You read the article. Took all the facts and opinions that were represented on the reason to spend the money side and then mangled them into this idiotic piece.
Would not be the first time a BH writer stole from a better article.