...this morning, "How Some Would Level the Playing Field: Free Harvard Degrees," reminded me of some random thoughts I've been having lately on higher education.
The first is in the title of that article I just mentioned: Should an institution with a 30-plus billion dollar endowment charge tuition? Kinda nervy, isn't it? After all, universities are supposed to be non-profits. From the piece (all emphasis mine):
The idea of free tuition paid for by endowment income has also gained traction in Congress. College endowments held $516 billion in 2014, with 74 percent of the money held by 11 percent of institutions, according to a Congressional Research Service report in December. The average return in 2014 was 15.5 percent, the report said, but the colleges spent only 4.4 percent. By law, those are tax-exempt earnings.
Wow. Let's unpack all that one at a time.
74 percent of the $516 billion in endowments is held by 11 percent of institutions. A little over ten percent of American universities have endowments totaling $380 billion. Again, wow.
The average return in 2014 was 15.5 percent. Double-wow (or is it triple-wow by now). I guess Harvard doesn't exactly invest that money in T-bills, huh? Reminds me of that old quote from Annie Lowry, "Harvard is a real-estate and hedge-fund concern that happens to have a college attached."
But not only is Harvard a really well-managed hedge fund, it's also tax-exempt.
Good God, Harvard, get ahead of the curve on this one, will ya? Stop charging tuition to debt-burdened young people! You were founded to educate ministers, remember?
Speaking of rich universities, you may have noticed that the Pritzker family -- one of the wealthiest in Illinois -- recently donated $100 million to Northwestern University's law school. From the Chicago Tribune:
According to the school, the donation is the largest single donation to a law school in the country. It will be used, in part, to pay for scholarships and grants. The money also will support the college's social justice, entrepreneurship, and civil and human rights initiatives.
That's admirable. Oh, and I almost forgot:
As a result of the donation to the Evanston university, the 156-year-old law school will be renamed Northwestern Pritzker School of Law.
Now I have a degree from Northwestern, but I'm not all rah-rah Northwestern. As far as I'm concerned, I just went to school there. (Someone once asked me if I had a purple sport coat. Full disclosure: I don't.) So forgive me if I'm not entirely thrilled with the whole thing. In fact, it makes me wonder, if people have $100 million to throw around like that, are taxes on the rich too low? Think about it: Is that the best possible use to society of that money? Someone tweeted to me this week that "the private sector is much more efficient at spending money." And I'll admit, when I was an Ayn Rand-sympathizing libertarian, I used to think that way too. But, nowadays, especially when I read about examples like the Pritzkers and Northwestern, I'm not so sure anymore. I repeat: Is that really the best use of $100 million? Or might it be better spent on -- oh, I don't know -- shoring up the safety net?
Finally, imagine this: what if you bought a car and, say, six months or a year later the dealer called you up to ask if you'd like to give him more money. "Huh?" you might respond. "Didn't I already pay you?"
But isn't that kind of what universities do? You pay your tuition, complete all the requirements for a degree, they hand over the diploma and then you leave. A simple transaction, right? But then they come back to you later and ask for more money. Why? Aren't we done here? In that same article, it says:
The Pritzkers' donation comes in a year when Northwestern has received three other hefty donations of $100 million, distinguishing the school as a major fundraiser.
So why the heck are they asking me for money? Even if I gave them $10,000 -- a pretty hefty sum -- that would only amount to .0001 of one of those $100 million gifts. Not even a rounding error. In fact, would Northwestern even notice if I gave that kind of donation? (A check like that could get lost behind the cushions of some couch.)
Call me nuts, but I'd rather give a charitable donation to a deserving charity.