By now, probably everyone has heard the righteous wailing from Washington, led by Sen. Charles Grassley (R-IA), over well‐endowed institutions of higher education that don’t spend their cash to keep to tuition low.
“Parents and students have a right to expect these universities with big endowments to end the hoarding and start the helping with skyrocketing tuition costs,” Grassley declared last month.
Grassley’s assault on wealthy colleges has generated lots of press and made for great grandstanding, and there’s certainly something wrong when ivory‐tower endowments, which are tax exempt because colleges supposedly serve the “public good,” lose hardly a tuppence in service of the public. But the fault lies with government for giving colleges favored status, and endowment hoarding is hardly driving tuition costs.
Just look at the number of schools with big endowments. A few weeks ago, Sen. Grassley and Sen. Max Baucus (D-MT) sent a letter requesting information to every college and university with an endowment over $500 million. How many schools was that? Just 136, or about 3 percent of the nation’s nearly 4,300 colleges and universities. That’s hardly enough to make much difference on overall average tuition levels.
Despite the small number of schools being directly harassed over their endowments, most higher education lobbyists are on high alert, especially against threats from Grassley and others to make colleges spend 5 percent of their endowments annually. Unfortunately, to protect themselves colleges and their Washington defenders are pointing at an even more popular scapegoat for rampant tuition inflation than Harvard and Yale: tight‐fisted states.
“A primary reason that tuition has been rising is that state funding has been flat,” Sen. Lamar Alexander (R-TN) told a gathering of higher education officials in Washington last week, exhorting them to close the “communication gap” between themselves and politicians on Capitol Hill.
But Washington pols, as the HEA reauthorization bill proves, have been hearing that message loud and clear. If the bill passed yesterday is enacted, the federal government would withhold funds from any state that cut higher education spending below its previous five‐year average. In other words, states would have to spend taxpayer money to make taxpayer money.