Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald


Spending can bridge college gap

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

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 ([email protected])
is a freshman majoring in business.

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