Over the last few days there’s been quite a to-do about colleges and universities with endowments that, in the case of wealth-leading Harvard, could buy almost eight aircraft carriers, nearly 1.7 million Toyota Priuses, or about 87 million 16GB iPod Touches. Just yesterday, in fact, Senators Max Baucus (D-MT) and Charles Grassley (R-IA) sent a letter to the 136 top colleges and universities on the latest endowment ranking asking what, exactly, all their booty was going to, and why it wasn’t being used to keep tuition down.
Grassley especially has been on a crusade over the last year-or-so to cajole wealthy institutions of higher education into keeping tuition down by spending from their endowments. If they don’t, he has threatened, federal law might be changed so that they have to spend 5 percent of their endowments annually to keep them tax exempt.
While it is absolutely legitimate to argue that government shouldn’t give preferential treatment to wealth hoarders, this is political grandstanding. Politicians use higher education as one of their greatest sources of middle-class bribery, and all the aid they lavish on students is almost certainly a much greater tuition inflator than tight-fisted endowment managers. Moreover, while Harvard has a ton of money, very few of the nation’s over four-thousand degree-granting institutions have even close to the kingly Crimson sum: only 19 have sufficiently hefty endowments to buy even one aircraft carrier, only 76 have endowments exceeding $1 billion, and most have either small endowments or none at all.
Interestingly, at almost the same time the annual endowment ranking came out, an article was published in Change magazine that gives the lie to one of the biggest justifications offered for throwing public money at students and schools: to survive in the flat world, almost everyone will need a college education. The final report from the Secretary of Education’s Commission on the Future of Higher Education put it right up front, declaring that, “ninety percent of the fastest-growing jobs in the new knowledge-driven economy will require some postsecondary education” and therefore “colleges and universities must continue to be the major route for new generations of Americans to achieve social mobility.”
According to Paul Barton, an analyst at, of all places, the SAT-producing Educational Testing Service, the notion that we’ll need vastly more college-educated people to fill the future workforce is pretty much bunk. He breaks down many workforce projections to make his point, and you should read his whole piece, but I’ll give you just one glimpse of why you shouldn’t take a politicized statistic like the one trumpeted by the higher education commission and make policy based on it:
Looking…at the 10 occupations with the fastest or highest rate of growth, six of the 10 require either an associate's or a bachelor's degree; the other four require from short-term to moderate-term on-the-job training. But looking at the projected increase in the number of jobs in the 10 fastest-growing occupations, 61 percent of those new jobs will not require college and 39 percent will.
Even among the fastest growing jobs, it turns out, most positions won’t require any college education, which means that policymakers are wasting a lot of resources shoveling money into student aid and creating cozy conditions for colleges on the grounds that they need to ensure that more and more people can afford a college education. Don’t expect, though, to hear about that from any senators, colleges, or students. After all, like normal human beings, it’s not really what’s best for the country that they’re after, but what’s best for themselves.