After all the jumping and screaming the first thought that came into my head when I found out that I was accepted into the University of Miami was “How am I going to pay for tuition?!” Year by year college tuition rises while the endowments that the universities receive continue to flow. An endowment is a donation to an institution that is usually seen as an investment and yet according to USA Today, a national and daily American newspaper, endowments last year increased an average of 17.7% but only 4.2% was spent on financial aid. Coming from an unstable financial background, I believe that these wealthy institutions should use more of the donations they are receiving in order to assist their students pay for studies rather than hoard the money and not put it to good use. “Some universities with hundreds of millions of dollars, even billions, are sitting on them rather than using them to reduce tuition” ( USA Today, par 4). I do not believe that just because a student can not afford to pay for tuition it makes the institution responsible for them but rather that they should make an investment in the student’s future.
According to Gifts of Time and Money, author Arthur C. Brooks writes to describe how many of the endowments received by institutions come from alumni or graduates with a great amount of education. This education could not have been achieved had it not been for the finances that were invested in their schooling whether it was through their own family spending or financial aid (Brooks, 185). These donors make “Colleges and Universities our nation’s wealthiest institutions. Today, at least 62 schools have endowments of more than $1 billion” (Munson, par 3) and while those numbers increase so does tuition, and the only numbers that appear to be decreasing is what’s being spent to help students. One great example of this can be seen in the University of Michigan which “recently raised their tuition 7.4% but announced that they would only spend $69.1 million on undergraduate financial aid in 2008-less than 1% of its endowments” (Munson, par 5). “If any reasonable amount of endowments spending would be used to help students, it would mean real savings for families. In the University of Texas system, all of their undergraduates could attend tuition-free if they would spend a mere 5.6% on aid, which is less than half the amount the university’s endowment grew last year” (Munson, par 7).
I believe the question that needs answering is why the decline? These endowment expenditures were not always at such an all time low. According to Planning, a peer reviewed journal on higher education, the sharp drops occurred after the year 2000. For a decade, from 1990 to 2000, endowments increased immensely permitting spending on undergraduate tuition to grow significantly. The amount in endowments in Williams College, for example, “increased by 331% from 1990 to 2000” thus allowing the college to “freeze their tuition in 2001”. “Princeton University’s endowment grew by 232% from 1990 to 2000, helping Princeton replace loans with outright grants in its undergraduate financial aid packages” (Basch 5, par 1). After the decade, though, came the sharp drops in the stock market that has led to a lot of the endowment declines today.
Many reasons have been stated as to why these institutions save their money rather than use it to lower tuition. Some college endowments are a compilation of gifts by donors who request it for a specific purpose such as the arts and sciences. It seems as though these institutions fear even more of a decrease and are saving the money for the future thus forcing the current undergraduate students today to take out more loans or resort to cheaper institutions, if any. These institutions see a trend in that in the future high school graduating classes will continue to shrink as they have progressively started to do and they will be forced to compete for poorer students of a minority who will require more assistance, which is not a bad thing for them but is affecting the current students (USA Today, par 6).
Some believe that attending a public institution rather than a private institution would save them from the increase in costs of school but unfortunately the increase in tuition does not discriminate from private and public institutions. According to Businessweek, a business magazine with global coverage that publishes biweekly, “The average tuition and fees at four-year public colleges for 2007-08 academic year increased 6.6% from the previous year and these numbers do not include room and board and other expenses. Costs at private universities saw similar increases to those at four-year public schools. Tuition and fees saw a 6.3% increase” (Damast, par 7).
Another debate on the disbursement of endowments for financial aid is what students should be receiving the assistance. Should it go solely towards students whose families annual income is less than the tuition of should it benefit all students? In my opinion I would believe it would be fair for the endowments to benefit all students by lowering the cost of tuition but at the same time, I find myself in the position of a student whose family income is not large enough to cover the costs of tuition so I believe that assistance should be provided to students who can not afford the cost of the school but who at the same time are able to maintain high academic standards.
Fortunately, it is not all institutions that make a minimal effort to assist students in paying for higher education. Endowments should always be a figure to keep in mind when looking at tuition because colleges tend to spend that small 4% to 6% as part of their annual budget towards tuition (Damast, par 9). Many schools other than the ones previously mentioned use their endowment earnings to cover the costs of grants to students. Though it is not extremely common, with less federal grant aid, it is by the amount of endowments that are received that the institution determines the cost of tuition (Damast, par 12). Fortunately, many colleges with over $500 million in endowments were called to consider spending more from their endowments and to target tuition assistance for working families and much of the results have already begun to come in. Donald Heller, a professor of education and senior scientists who is director of Pennsylvania State University’s Center for the study of Higher Education, says that “without endowments, students would be paying a lot more than they actually are” (Damast, par 14). Institutions such as Vanderbilt University and elite prep school Phillips Exeter Academy have already begun allocating a good percentage of their endowments toward their students’ tuition. Vanderbilt has an endowment of $3 billion and has contributed $125 million to the school’s operating budget.
Critics have suggested that it’s time for colleges to spend more of their endowments on current needs (Jaschik, par 9). Anyone attending a higher education institution as well as parents with college-age kids recognize that paying for education isn’t a thrifty matter. All students deserve the best education but the unfortunate thing is that it can not always be afforded. I myself am in the position where I, for now, depend on the University’s endowments to provide me with the financial assistance that I have received so far. Hopefully we will begin to see all numbers equally balance out and hopefully these institutions will begin to put their money to better use so as to make the proper investment for which they receive the money in the first place.