Fat Cat Universities Don鈥檛 Need Any More Money
College affordability is a problem, with tuition, room & board averaging above $31,000 a year. Reason to boost government aid, as the incoming Speaker says she will? Nope: That 鈥渟olution鈥?will only make things worse. Here鈥檚 why:
Colleges charge outrageous prices knowing that Washington always deflects cost. Consider that qualified students are eligible to receive $4,050 in Pell Grants per year and up to $23,000 per undergrad degree in Stafford Loans (the two main sources of federal student aid). That means there is at least $16,200 in Pell Grants and $23,000 in federal loans currently set aside to offset costs. That鈥檚 a whole lot of green college administrators can play with鈥?39,200 to be exact鈥攚hen calculating the sticker price. What incentives do schools have to be price-friendly and economically resourceful when the opposite behavior will multiply its piggybank? The government鈥檚 鈥渉elping hand鈥?gives colleges a perverse market incentive to inflate costs.
Think that鈥檚 far-fetched? Consider that congressional spending for higher education jumped 686 percent between 1973 and 2005, the Office of Postsecondary Education tells us. Taxpayers shelled out $72.4 billion in 2005 compared to just $9.2 billion (in 2005 dollars) in 1973. Outlays rose 95 percent from 1995 to 2005 alone. Yet this soaring spending has not brought prices down鈥攊nstead, it鈥檚 goosed them up. Tuition鈥檚 grown more than twice as fast as inflation over the last 30 years, indeed, faster than the costs of food, clothing, and shelter.
Here鈥檚 the ironic part. Whenever tuition prices climb, we don鈥檛 get angry at the ones actually jacking them up. Politicians don鈥檛 probe college presidents over college affordability. Instead, they just whip out Uncle Sam鈥檚 (our) checkbook. What assurances have we been given by the new Congress that increasing aid this time around will do what鈥檚 been long promised and lower cost? You鈥檇 think from the Left鈥檚 rhetoric that there鈥檚 a direct relationship between more aid and lower prices. Not so. Every time aid increases, tuition increases. The College Board鈥攚hich tracks all these figures鈥?reports that since Congress ratified the Higher Education Act in 1965, tuition has escalated 44 percent.
It鈥檚 not like colleges and universities are short on cash, either. The endowments of the nation鈥檚 top 50 schools all tower above one billion dollars and sport return on investments (ROI) that would make Morgan Stanley jealous. The big players, reports The Chronicle of Higher Education, contain gigantic investment accounts. Harvard鈥檚 endowment is more than $25 billion with a 19.2 percent ROI. Yale鈥檚 $15 billion endowment raises the bar with its 22.3 percent ROI, and Princeton scrapes by with an $11 billion endowment backed by a 17 percent ROI. Harvard鈥檚 endowment, in fact, is bigger than the gross domestic product of some Latin American countries.
The nation鈥檚 top 50 colleges and universities are not the only ones sitting on huge investment portfolios. Two hundred and twenty-seven colleges and universities have endowments ranging from $100 million to $900 million. And an additional 141 have endowments that surpass $50 million.
Why is it that when ExxonMobil posts record billion-dollar profits amidst soaring oil prices, liberals demand price controls and government investigations? But when colleges post record endowments despite soaring tuition prices, liberals demand more federal funding? It鈥檚 just as outlandish for the government to subsidize ExxonMobil as it is for the government to subsidize academic establishments with abnormally deep pockets. Don鈥檛 look for Pelosi to probe any college presidents over 鈥渨indfall鈥?endowments or swelling tuition prices or demand that they pay their 鈥渇air share.鈥?br>
At least the extra aid goes toward instruction, right? Wrong! Ohio University Professor Richard Vedder saliently noted that from 1977 to 2000 only twenty-one cents out of each increased dollar spent per student actually covered teaching. So where鈥檚 the money being squandered? Administrative salaries and fringe benefits, for starters. Those two categories jumped 26- and 31 percent respectively over the past 5 years, even though the consumer price index only increased by 14 percent. Another reason: bloated staffs and needless vice presidents, deans, provosts, and campus life directors鈥攎any of whom are pocketing salaries that average $195,000 a year and controlling six- and seven-figure budgets, reports the Chronicle.
Boston University鈥檚 administration, for example, includes one president, two provosts, and 11 vice presidents. There鈥檚 a vice president for government and community affairs, a vice president for operations, a vice president for auxiliary services, a vice president for information services, and a vice president for enrollment and student affairs, to name a few. Many colleges and universities are administered the same way, clogging staff with too many deans and chief diversity officers who carry out politically correct agendas. We often complain about government bureaucracy growing out of control. The same has been occurring in higher education.
As taxpayers, we should demand that Congress review the real reasons behind skyrocketing tuition: federal funding and explosive bureaucratic growth. Pelosi and her liberal allies in Congress do not plan on addressing these concerns. Instead, their sights are set on dumping even more of our money into higher education鈥攁 move that will only expand the problem of affordability while allowing schools to amass even larger fortunes on the backs of beleaguered American taxpayers. Seriously, universities have plenty of money between state grants, donations, tuition and alumni. Virginia in-state tuition, books,classes food and an apartment...$1600/month. if uncle sam wants to get the "f" out of the middle east and kick in some snaps on my son's monthly bill, bring it on. Of coarse they don't,Just like the rest of the schools.They are used as a reason to raise taxes, but never get any better.Private schools are much more effective. |
