Universities earning 15% on investments - expect lower tuition?

[ChairOne]

"The 707 endowments surveyed by the research arm of Commonfund, which helps manage money for 1,600 nonprofit institutions and foundations, earned an average of 14.7 percent in the 12 months ending June 30."

http://story.news.yahoo.com/news?tmpl=story&u=/ap/20050106/ap_on_re_us/college_endowments

You might think that tuition would decrease, or at least stay flat, with these wondrous earnings. NOT!

"College tuition rose at a slightly slower rate this year, climbing 10.5 percent at public four-year colleges and 6 percent at private ones, according to a new study."

Woohoo! Tuition increased SLIGHTLY slower than in the previous year!

Something ain't right here...

[Worst Username Ever]

1. Not lower tuition, but maybe a slightly smaller increase.

Doubtful though, since there are more cuts coming.

[Xithras]

2. Most invested endowments are already spoken for

Our college, for example, has millions invested and makes a reasonable return on them, but that money is already allotted for specific purposes. As an example, one recent alumnus died and left about a million to the college to sponsor an Agricultural Studies professorship. We might be making money off that investment, but we are still limited to spending that money on that professorship, and any attempt to spend it on other things (like lowering tuition) would be a breach of contract and allow the estate of the deceased alumnus to sue us for repayment of all of the donated monies AND the money we made on its appreciation.

In other words, this article is misleading. The specific invested endowments may be seeing increased returns, but the colleges and universities as a whole aren't seeing any kind of general gain or profit from it.

[ChairOne]

3. Ok, then please explain to me.....

... the increase in costs that requires 10-15% tuition increases please?

Such increases have been pretty consistent over the last 10 or so years haven't they?

[Xithras]

5. Pretty simple really

They are simply passing on increased costs. Just like every other segment of society, colleges and universities are being hammered by everything from rising insurance and workers comp costs, to an increase in pension payouts and medical benefits for staff and faculty. There was a big flap at my college last year over how much employees pay for benefits...apparently in 1990 medical insurance for faculty and staff was less than 5% of our overall operating budget. Today that number is more like 30%.

You also have increased expectations for technologies that didn't exist until recently. Our college spends over $20,000 a month for our Internet connection and about seven million a year on technology staff and hardware alone (with 12 computer labs and more than a thousand desktops on campus, replacing computers is a neverending task). As recently as 1995 our "Information Technology" department consisted of two people maintaining a mainframe and fifty desktops working on a budget of less than $200,000 a year.

Increased enrollment also means having to add more faculty, build more classrooms, and hire more staff. All of these things increase cost, and that increased cost is passed on to the student in the form of increased tuition.

For the state colleges you also have the added insult of decreased taxpayer funding. When the budgets get tight the states compensate by taking money from higher ed, and then make up the deficit by passing those costs on to the students via tuition. The state colleges and universities are usually helpless to block these kinds of increases.

[brokensymmetry]

4. expect lower tuition? (LOL!)

Surely you jest!

Seriously, in state supported universities the trend of funding is down sharply.

With *'s changes in Pell grants, I suspect the day will come when the average person has little hope of a college education.