Saturday, January 26, 2008
The Heat Is On
It becomes more and more apparent that Harvard's recent move to expand financial aid was primarily motivated by a desire to fend off political pressure from Washington.
Unfortunately, that strategem doesn't seem to be working. Yesterday the Times reported that the Senate Finance Committee has signaled that it will continue its push to compel "well-endowed" colleges such as Harvard and Yale to spend a greater percentage of their endowment annually.
The Senate Finance Committee, increasingly concerned about the rising cost of higher education, demanded detailed information on Thursday from the nation’s 136 wealthiest colleges and universities on how they raised tuition over the last decade, gave out financial aid and managed and spent their endowments.
... “Tuition has gone up, college presidents’ salaries have gone up, and endowments continue to go up and up,” said Senator Charles E. Grassley of Iowa, the ranking Republican on the committee. “We need to start seeing tuition relief for families go up just as fast.”
A fascinating abandonment of the free market by Grassley...but then, since universities such as Harvard enjoy non-profit status even while they rush to monetarize everything they discover in their non-profit science labs, there is some legitimate government jurisdiction here.
This is a big test for Drew Faust...and truth be told, Larry Summers might have been better-equipped, given his Washington experience and economic know-how, to repel such Washington pressure.
It will be fascinating to see how Drew Faust responds.... ¶ 7:35 AM
Unfortunately, that strategem doesn't seem to be working. Yesterday the Times reported that the Senate Finance Committee has signaled that it will continue its push to compel "well-endowed" colleges such as Harvard and Yale to spend a greater percentage of their endowment annually.
The Senate Finance Committee, increasingly concerned about the rising cost of higher education, demanded detailed information on Thursday from the nation’s 136 wealthiest colleges and universities on how they raised tuition over the last decade, gave out financial aid and managed and spent their endowments.
... “Tuition has gone up, college presidents’ salaries have gone up, and endowments continue to go up and up,” said Senator Charles E. Grassley of Iowa, the ranking Republican on the committee. “We need to start seeing tuition relief for families go up just as fast.”
A fascinating abandonment of the free market by Grassley...but then, since universities such as Harvard enjoy non-profit status even while they rush to monetarize everything they discover in their non-profit science labs, there is some legitimate government jurisdiction here.
This is a big test for Drew Faust...and truth be told, Larry Summers might have been better-equipped, given his Washington experience and economic know-how, to repel such Washington pressure.
It will be fascinating to see how Drew Faust responds.... ¶ 7:35 AM
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Gee Richard, this seems like a no-brainer. Harvard can offer full scholarships to all students who go into public service professional schools, where enrollments have declined sharply in recent years.
# posted by 
: January 26, 2008 11:07 AM
: January 26, 2008 11:07 AM
I've agrued that universities have to take a very long term approach to their endowments, in contrast to foundations which have different financial parameters. Below is what President Bienen had to say about it. If Grassley and the other pompous Senators get their way and require universities to spend 5% or more of their endowment each year, I think that one of these years, professors at Harvard will be in for a rude shock in terms of funds available for them.
Of course, SE thinks 5% is too low (right my friend?; by the way you never got back to us as to what you think the endowment will earn, compounded, during the next 15 years; come on, you're a very bright guy... it can't take you that long and besides you haven't had classes for a few weeks).
"Henry S. Bienen, president of Northwestern University, in Evanston, Ill., said that while he believed that putting more information into the open “will help eliminate many myths and misunderstandings,” he rejected the proposal that universities be required to spend 5 percent of their endowment assets each year.
“Universities are not like foundations,” Dr. Bienen said. “They have operating budgets which they cannot easily adjust with the ups and downs of markets."
Of course, SE thinks 5% is too low (right my friend?; by the way you never got back to us as to what you think the endowment will earn, compounded, during the next 15 years; come on, you're a very bright guy... it can't take you that long and besides you haven't had classes for a few weeks).
"Henry S. Bienen, president of Northwestern University, in Evanston, Ill., said that while he believed that putting more information into the open “will help eliminate many myths and misunderstandings,” he rejected the proposal that universities be required to spend 5 percent of their endowment assets each year.
“Universities are not like foundations,” Dr. Bienen said. “They have operating budgets which they cannot easily adjust with the ups and downs of markets."
# posted by : January 26, 2008 11:34 AM
: January 26, 2008 11:34 AM
How about appointing more faculty members? That would use up some money and reduce class size as well.
# posted by : January 26, 2008 3:16 PM
: January 26, 2008 3:16 PM
Harvard's move was a hastily conceived political ploy meant to grab some headlines for a new president. Not well thought through, it is backfiring and increasing the critical heat on the very few hyper-wealthy institutions: Harvard, Yale, and Princeton and maybe one or two more. Other colleges and universities have, at best, modest endowments, and they have lots more students, alumni, and supporters than the fattest few. As Berkeley's chancellor and Northwestern's president argue in recent op-eds, leaders in the broader ranks of higher education need to explain how university finances and purposes are very different from foundations and make the case for equitable approaches to financial aid and enlarged access via enhanced private donations and better federal and state policies. Perhaps they can make headway. They surely have access to many more congressional reps!
# posted by : January 27, 2008 11:44 AM
: January 27, 2008 11:44 AM
So, if Harvard had a religous affiliation would there be a separation of church and state issue at work here? Are places like BC, Holy Cross and Notre Dame exempt?
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# posted by : January 27, 2008 11:44 PM
: January 27, 2008 11:44 PM<< Home
