School Daze 

I must admit that it has been difficult to concentrate on any topic other than Ukraine recently. Yet, I have nothing new to say about that evolving situation. Until the invasion and the sanctions play themselves out there is nothing I can add to the plethora of on-going coverage. Putin has made his gambit, and we must watch as it germinates (apologies for the mixed metaphor). 

In the meantime, an article came to my attention that sparked smoldering coals that have been simmering for some time (I am on a mixed metaphor roll). It was reported by the Council for Advancement and Support of Education that donations to U.S. Colleges and Universities totaled $46.73 billion last year. Twenty-eight percent of that amount went to just 20 schools. Harvard topped the list, bringing in $1.4B, and I am sure that you can guess the others.  

Not surprisingly, Harvard also tops the list of the largest endowments, with a slush fund in excess of $40B. Also not surprisingly, the schools with the top twenty endowments largely track the list of colleges receiving the most in donations. I think that you can see where I am going with this. 

Often these donations to well-endowed Universities are equivalent to the rich giving to the rich. Bill Gates giving his money to Warren Buffett. Alice Walton “donating” to Julia Koch. Elon Musk making a contribution to Jeff Bezos. The fact that the donee is an institution rather than an individual is immaterial. The scenario is the same. 

Of course, people can give their money to whomever they want. That’s none of my business. Plus, there is no doubt that these are fine schools, worthy of support. However, please don’t try and convince me that someone who makes a $25M gift to the University of Pennsylvania, with its $14B endowment (a mere pittance compared to Harvard, I know), is a philanthropist. They may be giving their money to a worthwhile institution, but it is not a needy one. 

With all of the donations that continue to pour in, I wonder what these schools are doing with their endowments. Penn just announced that the cost of attending will exceed $80k in the coming academic year. Financial aid will also increase, to $288M per year, but that will hardly put a dent in their coffers. There seems to be little, if any interest, in containing costs, but then why would you bother when you are sitting on that much cash? 

Penn also recently announced a scholarship program for low-income students attending Wharton Business School that is being funded by a $10M grant. The announcement went on and on about the importance of this program. While I laud the donor, and hope that the scholarships have the desired impact, I have to ask why, if the program was so vital, Penn wasn’t already providing such scholarships. Clearly, it was not due to lack of funds.  

What is especially galling is that these donations are tax deductible. That means it is not just rich that are supporting these institutions, but all of us as well. We are, whether we want to or not, subsidizing universities that are sitting on the GDP of a small nation, and using that endowment, if at all, to benefit a select few. How does that make sense?  

This is not to denigrate the important role these elite schools play in this country. They provide a standard of excellence that makes America a destination for collegiate education around the world. However, there are many, many other institutions that maintain that standard as well, and they are struggling to stay both competitive academically and affordable. 

Less well-endowed universities also often provide access to students that might never go to college otherwise. Most of these students do not have the grades, or resources, to go to a Harvard or Yale, but benefit greatly from the collegiate experience. Unfortunately, many are not able to complete their degree because of money issues, or leave college with significant debt. This is a tragedy on a personal and national level.      

We need to find a better system of funding our colleges that provides education to everyone who wants it. Perhaps we eliminate the tax deduction to universities that have an endowment over a certain level. Maybe we require that a university spend a certain amount of their endowment annually, much the way that a tax-exempt foundation must distribute a certain percentage of its holdings each year. Even if these colleges are “private”, we support them in myriad ways, so we should have the right to hold them accountable. 

As is clear, I don’t have answers. All I know is that our lopsided collegiate system is not serving our country well. It is exasperating imbalances that exist throughout society. We must find way to balance those scales so that higher education is available to everyone that wants it.