Dr. Richard Vedder, Distinguished Professor of Economics Emeritus at Ohio University and Director of the Center for College Affordability and Productivity, was quoted by NPR on “Colleges Pressured To Spend More Endowment Funds On Student Aid.”
As college tuition continues to rise, some lawmakers and education advocates are calling on schools to spend more of their tax-exempt endowment funds on scholarships for low-income students. Those with endowments in the billion-dollar level are especially targeted by critics, who accuse school administrators of hoarding the endowment money.
To be sure, most higher education institutions are not in the billion-dollar endowment club with Harvard, Stanford or Duke, whose funds range from $7 billion to more than $37 billion.
Dr. Richard Vedder
Only 1.6 percent of schools fall in that category, according to the American Council on Education. The majority of public and private institutions, 84 percent, have endowments of less than $50 million.
That said, critics accuse colleges and universities of being too frugal when it comes to using endowment money to keep tuition down and help needy students. Schools spend an average of a little more than 4 percent of their endowment funds annually. That’s not enough says Andrew Nichols of the advocacy group Education Trust….
“Endowments aren’t generally used to lower tuition,” said Richard Vedder, an economist at Ohio University, testified before the House Ways and Means Committee last year. “Typically less than 20 cents of every dollar of endowment income is used for scholarships to lower fees for students. Making college more affordable is not the dominant use of endowment resources.”
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