Fri 1 Feb 2008
A sign of the top in university endowments?
The Senate Finance Committee has begun questioning colleges and universities with large endowments about the rising costs of higher education. After ten, Kathleen Dunn and her guests examine how Universities set tuition rates, give out financial aid, and manage their endowments.
Guests:
- Lynne Munson, Adjunct Research Fellow, Center for College Affordability and Productivity.
- Wick Sloane, columnist for InsideHigherEd.
- Robert Shireman, Executive Director, Project on Student Debt.
Listen here (might only work for NPR members).
This whole debate seems silly to me. First, the richest schools are already free to anyone from a family below the 50th percentile. Is it really critical that Congress forces Williams to charge less to families making hundreds of thousands of dollars? Second, although elite endowments have had a nice run over the last 2o years, that won’t go on forever. If Williams kept making 15% while global GDP growth averaged 4%, then the College would eventually own the world. Desirable but unlikely! Third, only stupid people think it would be possible to have one law which applied to elite endowments and another that applied to everyone else. Money buys excellent legal advice and smart lawyers would find a way around any regulation.
Reading assignment for students in MATH 373: this and that.
February 1st, 2008 at 8:49 am
That’s a blatant false dichotomy. Median household income in the US is $48k. There’s a lot of improvement that can be done in the $48k-$100k range (which contains 80% of the rest of the population) without giving handouts to “families making hundreds of thousands of dollars”.
I agree that this sort of legislation is a bad idea for the other reasons you mention, but implying that Congress’s efforts are directed towards families with six-figure incomes is disingenuous and makes you look silly.
February 1st, 2008 at 8:59 am
They’re just doing it all wrong, especially language-wise. The Democrats should pitch it as a progressive tax that the super-rich are paying to help fund the poor. Only it’s for post-secondary educational institutions, not people. Given the percentage of academia that is for increased progressive taxation, through various methods, opposition would seem like the most rank hypocrisy — “progressive taxation for thee but not for me”.
February 1st, 2008 at 9:31 am
What a bunch of tomfoolery! Each institution is perfectly capable of deciding the extent of this type of “progressive taxation”, which it desires to apply to its own assets, all without the “help” of Congress.
February 1st, 2008 at 4:06 pm
‘10
So, your claim is that, even though elite schools are free to 1/2 the families in America and even though you agree that it is stupid of Congress to force colleges to give more discounts to families making more than $200,000, there is some huge market failure in terms of endowment spending rates which requires Congressional action so that families with incomes between $50k and $200k are saved from spending too much on college?
Why?
As always, few have done more than I to illustrate how important competition between schools is for decreasing prices. But if that process only gets prices for you and your family down to X (and you think X is too high), I would object to Congress forcing Williams and other schools to spend more money just because you think that this might decrease X.
First, it might not. The main policies under consideration are about spending, not tuition. Williams could just double the salaries of its professors while charging you the same as before.
More importantly, how much do you think Williams ought to cost to families making $100,000? Of all the injustices in the world, high tuition for such families does not seem to be the worst.
You claim that “implying that Congress’s efforts are directed towards families with six-figure incomes is disingenuous and makes you look silly.” Actually, I think it makes me look informed. Imagine that Congress forced Williams to spend more money and that, as a result, Williams cut tuition. Who benefits? Rich people! Below $100k income families contribute a trivial portion of Williams tuition payments. Any major cuts will save rich people much more than it saves non-rich people.
February 1st, 2008 at 5:00 pm
I’ve rarely, if ever, seen a post so thoroughly misrepresented, David. ‘10 made the point that you were (yet again) sloppy with your wording. ‘10 spoke specifically about people making between $48-$100,000 and you talk of people making up to $200,000. That’s a HUGE difference in terms of framing the discussion, one with absolutely no rational reason for change — it just allows you to make pithy remarks about people making hundreds of thousands.
christ…a hike in the mandated spending minimum is likely stupid (I haven’t thought about it enough), but it shouldn’t take making a false dichotomy and then misrepresenting ‘10 when s/he calls you on that false dichotomy. and no, it doesn’t make you look informed. it makes you look like a political hack trying to spin something because you have an axe to grind instead of an honest commentator seriously contemplating an issue and coming to sound conclusions.
February 1st, 2008 at 5:52 pm
Rory,
I was not trying to misrepresent ’10’s post. Really! ‘10 wrote:
When he quotes me about families making “hundreds of thousands” does that include families making $101,000 or not? It depends on his intentions. What’s your guess?
So, I had a choice between focusing my response on either the $48k — $100k group or a group that went up to $200k (which is surely as high as I need to go to be consistent with his phrasing.
So, being polite, I went with the larger comparison because it put ’10’s argument in the best possible light! If we focus on the 48-100 group, then his argument is worse not better because the College already gets a trivial amount of total dollars from these people. (Note that all plans require money in the student’s name and 529-like funds to go for college spending.)
In other words, of the $60 million (I think that this is the figure, corrections welcome) that Williams gets from all families, only a trivial portion is contributed from family income (not college savings) from families making 48-100. (I don’t have time to guesstimate about the amount, but it is small.) So, if you cut Williams tuition prices in half, most of the benefit would go to rich families. Restricting the range below 100k rather than below 200k just makes my point more true.
I understand that ‘10 (and you?) think that Williams should be free to families making $100k. That’s a reasonable opinion. In fact, I mostly agree! But that is not what we (NPR, Wick Sloane) are discussing!
We are discussing passing a law forcing colleges to spend 8% (or whatever) of their endowments with the hope/expectation/fantasy that this would lead to lower tuition. That is the topic under discussion.
My point is that any such plan would overwhelmingly favor rich families, families making more than $100,000 per year.
February 1st, 2008 at 7:10 pm
A lot of gas addressing a tiny point! You guys ought to run for public office.
February 1st, 2008 at 11:40 pm
Your argument seems to assume a blanket reduction in tuition. My point was that if Williams were to spend more of its endowment, for whatever reason, it could apply that towards better financial aid for middle-class families in the $48k-$100k region, some of whom currently pay full price.
I never claimed any sort of market failure. I have no idea if it’s in Williams’ interest to improve financial aid (although possibly so now that Harvard has stepped up the aid competition drastically), and as I said I think it’s probably a bad idea for Congress to get involved. But I think there are plenty of good arguments against Congressional involvement without resorting to arguing that financial aid is already so good that any further improvements would only be helping rich people, because that’s not true.