Show And Tell For Rich Universities

Now that the Senate finance committee has requested – the New York Times said “demanded” – that the nation’s wealthiest colleges and universities supply detailed information about their endowments and financial practices, it seems clear that college cost is emerging as a long-running, popular and bipartisan issue. The request/demand came in a stern but polite letter from committee chairman Max Baucus and ranking Republican Chuck Grassley. It asked 136 colleges and universities to supply answers in 30 days to a long laundry list of questions about tuition rises, spending and the handling of endowments.

The euphoria over Harvard’s plan to grant financial relief to students from families earning up to $180,000 a year, since followed by similar announcements from Yale and Dartmouth, is long gone. Criticism of the three rich Ivies is increasingly caustic. Lynne Munson of the Center for College Affordability and Productivity, calls Harvard’s reform plan “miserly,” and Richard Vedder, head of the Center, wrote a Washington Post op-ed headlined, “It’s a Start, Yale. Now do Something Serious.” Several critics have labeled the announced reform plans “chump change” and denounced the wealthiest schools for decades of hoarding of endowment monies.

Munson points out that the new financial relief offered by Harvard amounts to a mere day and a half of earnings on the university’s $34.9 billion endowment. Even so, other universities are even more addicted to penny-pinching. The University of Michigan, one of two richest public schools (along with the University of Texas) gives its 40,000 undergraduates only $61 million in aid, half of what Harvard spends on its 6,600 undergraduates.

Many critics argue that aid for students is small in relation to spending on compensation for university presidents, new stadiums, and dubious expansions of administrative officers, including the new and mostly pointless “diversity deans.” Luxury housing on campuses is becoming an issue as well. Vedder calls attention to Princeton’s new Whitman College (named for a donor, eBay executive Meg Whitman) that cost $388,571 per room. Vedder wrote for the Washington Post: “Taxpayers may ask why should Whitman get a multimillion dollar tax break building a luxury hotel for children of mostly wealthy Americans?”

The Senate finance committee letter launches the project of generating reliable information on the historically shrouded financial practices of colleges and universities. Grassley said that answers “will help Congress make informed decisions about a potential pay-out requirement.” In other words, cooperate or else.

John Leo

John Leo is the editor of Minding the Campus, dedicated to chronicling imbalances within higher education and restoring intellectual pluralism to our American universities. His popular column, "On Society," ran in U.S.News & World Report for 17 years.

4 thoughts on “Show And Tell For Rich Universities

  1. Whatever the political implications of this “inquiry” into private institutions’ finances, it is ethically wrong. What right do Washington bureaucrats have nosing into the business of private educational institutions? That at least one of the elected officials leading the charge on this is a Republican is really beyond the pale.
    This is illustrative of the slow slide toward socialism in which both major political parties are now engaged. Constitutionally, it is absolutely not permissable for the federal government to be undertaking such fishing expeditions. One can make a reasonable argument for oversight of PUBLIC universities, but not private institutions, which are governed, rightly, by their own boards. The free market has always and will continue to weed out those institutions which make bad business decisions or provide poor services. For Washington, or any government entity for that matter – to attempt to regulate or control a private business is obscene and should not be permitted. Where is the outrage?

  2. I’m sure the schools accept federal gov’t funded loans and grants for students. That kind of makes it their business but then again what business did congress have investigating MLB and steriod use.

  3. I fail to see why these universities should be tax exempt in the first place. They don’t pay taxes, they get money from donors who get tax deductions, they get tuitions from people who have tax exempt/deferred 529 plans, government backed student loans and direct grants from the government.
    Let them pay taxes and the nonsense will end quick enough.

  4. Apparently the universities haven’t been coughing up enough cash to the politicians. Lobbyists will be hired, money will move, and the whole matter will be quietly dropped.

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