College endowments and “affordability”
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Following up on yesterday’s post regarding a proposal that rich universities such as Yale should be required to spend more of their endowments, in part to make college more affordable, it’s worth noting that going to Yale College costs its students essentially nothing.
Average debt at graduation for 2013 Yale grads: $2,081
Eastern Connecticut State on the other hand . . .
Average debt at graduation for 2013 ECSU grads: $22,040
Which school is more “affordable?” Well Yale’s cost of attendance for 2012-13 was $59,320, of which $42,300 was tuition. ECSU, by contrast, had a total COA of $23,395, of which $8,911 represented in-state tuition (it’s safe to assume the vast majority of the school’s students are paying the in-state rate).
How can this be? The answer is twofold: a whole lot of kids from really rich families go to Yale, and those that come from middle class backgrounds (in HYP land, “middle class” means a household income in the low six figures), or the (very) occasional kid who somehow manages to get in despite growing up in abject poverty, i.e., a family income of less than $60,000, pay either massively discounted tuition, or — in the case of our $60,000 Jude the Obscure — no tuition or room and board.
As to how exactly Yale affords the beneficence it bestows upon the lower orders, the following graph is instructive:
The problem with proposals to force colleges to use endowment funds to make higher ed more affordable is that the vast majority of institutions of higher education in the US have no endowment to speak of. Even the 95th percentile institutional endowment on the graph above (Connecticut College — it’s like rain on your wedding day) is a mere $278,000,000, i.e., barely more than one percent of the Smaug-like hoard that has piled up in New Haven over the years.
Over the past few decades, a handful of schools have acquired wealth uncountable — at this moment there are probably ten American universities with endowments of at least ten billion dollars — while a few dozen others have gotten enough money in their endowments to fund a significant percentage of their operations. But the 90% to 95% to 98% of schools outside the magic circle have gotten close to bupkis. This pattern is reminiscent of something else in the American economy, which in turn may bear some causal relation to these various developments.