Elite Universities Hoard Education Funds

By Sam Pizzigati, Too Much: A Commentary on Excess and Inequality. Posted February 5, 2008.

How would a smart nation go about getting the most bang for the higher education buck?

Would a smart nation smother a handful of colleges and universities with more money than they could ever possibly put to sound educational use? Or would a sane nation spread resources for higher ed around, to give every student a shot at a quality education?

Any reasonable nation, of course, would choose the latter course.

The United States has chosen the former.

Not consciously, to be sure. Americans have never gone to the polls and cast their ballots for a enrich-the-few approach to higher education. But the United States has taken that route anyway.

And the result has now become too embarrassing to ignore. The enormous wealth now pouring into elite U.S. private colleges and universities -- at a time when average families are struggling to afford rising tuitions at budget-cutting public colleges -- is finally beginning to become a political issue.

The Senate Finance Committee late last month asked the nation's wealthiest colleges and universities to turn over financial data on everything from what they give out in student aid to how much bonus cash their investment advisers collect.

How wealthy have higher ed's wealthiest become? The industry's scorekeeper -- the National Association of College and University Business Officers -- now counts 76 institutions with endowments worth at least $1 billion.

But the bulk of this endowment wealth sits with a few handfuls of elite schools -- the Ivies, Stanford, MIT, the wealthy liberal arts colleges -- that together educate less than 100,000 of America's 20 million postsecondary students.

Harvard now boasts a $34.6 billion endowment. Princeton has over $2 million behind every student.

Overall, the 22 richest higher ed institutions hold more wealth than the entire rest of the 785 institutions the college business officers are currently tracking.

What's generating this concentration of wealth at higher ed's summit? The concentration of wealth at America's summit. The more that wealth in the United States concentrates in elite pockets, the more the wealthy contribute to the nation's elite universities.

America's rich don't give to soup kitchens. They give to dear old alma mater. In 2007, notes the Chronicle of Philanthropy, the gifts America's 50 "most generous" gave to higher ed "far outpaced" the gifts these 50 deep-pockets gave "to other types of charities."

The 20 top university endowments, as a group, have seen their total dollars multiply nearly eight times over since 1986.

What have elite institutions done with all this money? Have they welcomed more students from families of limited means?

Hardly. Over the last decade, undergrad enrollment at the Ivies, MIT, and Stanford has actually dropped, by 1.4 percent. And elite institutions are filling their fewer seats with more students from the upper reaches of America's income distribution.

One recent study analyzed the make-up of student bodies at 19 elite colleges. Only 6 percent of the students at these schools turned out to be "the first in their families to attend college."

Roger Lehecka, a former dean at Columbia, and Andrew Delbanco, an administrator there now, added last month that "between 2004 and 2006 -- an era of enormous private wealth accumulation -- 27 of the 30 top-ranked American universities" actually experienced a decline in their percentage of low-income students.

So where, if not to expanded access, are the billions in elite endowments going? They're going into projects that better fit the priorities of wealthy funders. Elite institutions are building up a storm, erecting lavish new facilities that trumpet, naturally enough, the names of their funding benefactors.

Yale University, the New York Times reports, is a> its huge, rapidly growing endowment" to "renovate 54 buildings and construct 16 new ones."

At Princeton, one new student residence, named retiring eBay CEO Meg Whitman, offers rooms with "triple-glazed mahogany casement windows."

Stanford, reports Business Week, "spent $4 million to restore" an equestrian center that "now provides a place for undergraduates to house their own horses at a cost of $500 a month."

See more stories tagged with: hedge fund, endowment, inequality, education

Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.

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