Mean Spirited Universities Sit On Cash - Road to the Middle Class

OUR DEMOCRATIC friends in the House of Representatives recently passed an education bill to take $18 billion away from the evil student loan industry and give it to students. We at Road to the Middle Class have criticized them for this, a mindless shoveling of more cash and subsidies to the universities. Now Senator Kennedy is pushing the bill through the Senate.

But that’s not the real problem, writes Lynne Munson. The problem is that universities are sitting on piles of cash, like Scrooge, watching it grow through the magic of compound interest. But do they spend it? Oh no.

The value of college and university endowments skyrocketed 17.7 percent last year, while private foundation assets increased 7.8 percent. Just 3.3 percent of the increase in academic endowments is attributable to new gifts. Most of the gain is a result of stingy, outdated endowment payout policies that retain and perpetually re-invest massive sums.

Regular private foundations are required to spend out five percent of their endowments every year. But universities only average a four percent payout.

How does that work out in an actual university? Munson takes a look at Stanford.

Stanford University spends $76 million on undergraduate financial aid, a sum that sounds generous but amounts to a mere 0.5 percent of the value of its endowment. The university spends just 4 percent of its $14 billion endowment toward operating expenses. If the 5 percent payout rule required Stanford to spend another 1 percent of its endowment, and that money was directed toward financial aid, students would enjoy $211 million in additional support. That is precisely the cost of letting all 6,600 Stanford undergraduates attend tuition-free.

We know why the select universities all charge tuition. They charge because people will pay it. Parents are willing to pay big bucks to get their children into Stanford and other select colleges. Although colleges talk a good game about diversity and broadening access to higher education, in reality they charge whatever the traffic will bear.

Anyway Congress has the whole thing well in hand. It’s the student loan companies that are to blame!

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Ludwig von Mises, Human Action

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing

Churches

[In the] higher Christian churches… they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

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Francis Fukuyama, Trust

Class War

In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, “The Scientist as Rebel”

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What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
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Michael Novak, The Spirit of Democratic Capitalism

Drang nach Osten

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