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Comment by smeyer | Hacker News Reader

Thanks for the useful information, but do you have a source for the university endowments claim? Are their schools where tuition funds go towards expanding the endowment? At my alma mater it was the other way around (endowment made billions a year and paid some of that out to operate the school) and I thought it was similar at most schools with sizable endowments.

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Mostly anecdotal, which is why I said "suspects". I'd love to see a comprehensive comparison of university endowment growth over the last few decades. I suspect the data's all there, but nobody's pulled it together. I've come across a number of articles discussing large increases in endowment size and a number of universities of late, seems to be a common theme as more and more people are starting to ask why college has become so expensive. For example there was recently a story in the Washington Post about Washington and Lee University which covered how it had gone in the 90s from a school with a relatively paltry endowment to land in the top 30 overall.

These two sources are interesting:

http://www.jbhe.com/features/57_pellgrants.html

http://en.wikipedia.org/wiki/List_of_colleges_and_universiti...

The first source leaves little question that it's happening at top tier universities, but I'm interested in the trend and second- and third- tier schools.

edit: As another commenter points out, most schools aren't sitting on large endowments. There probably isn't a single unified cause to explain rising costs. Endowments are probably part of the story for higher-profile schools, but not so much for others.

I think you're getting a bit mixed up here. For example, I went to Harvard, which has a large endowment which has grown substantially. But the endowment definitely didn't grow by moving tuition money into the endowment (it goes the other way around, with parts of the endowment helping to fund financial aid). Endowments tend to grow through donations and hedge-fund style management.

It may be the case that some universities are pulling less from their endowments to cover certain costs, covering those costs with increased tuition, and leaving the endowment free to grow more quickly, but I'm pretty confident that universities aren't just siphoning money from tuition straight into the endowment.

I think you'd have to show that universities are spending a smaller fraction of the earnings from their endowments, rather than just that the endowments are growing.

I'm not getting mixed up about the direction the money flows; see my quote down-thread: "endowments come from donors by definition"

When asking why is tuition growing, I was saying exactly what you state: that for universities that are focusing on increasing the size of their endowments, something has to cover the costs that would formerly have been funded by endowments, that "something" being tuition.

I misunderstood you; thanks for the correction. I still think the useful data here is the fraction of the endowment income that goes towards expenditures, rather than the raw size of the endowments, but I definitely see where you're coming from. I wonder what fraction of the rise in tuition has to do with this.

> at most schools with sizable endowments.

Well there's your problem, most schools don't have sizable endowments. Endowments for rich schools have performed fairly well over the last couple decades, not so much for those with smaller endowments. So if you use tuition and fee money on things that might have previously been funded through endowments while you attempt to build (or re-build), it's really the same thing.

The tuition and fees are being used for things that have traditionally been funded by endowments rather than for things that have been previously funded by endowments. Schools with small endowments are expanding via fees in areas where other schools have used endowments to expand in the past.

For example, Ben Hill Griffin gave money to the University of Florida [endowed school] to expand their football stadium. Down the road in Orlando, University of Central Florida used student fees to build an on-campus football stadium. It did not have one previously -- nor a football team to fill it until relatively recently (the DI team was also built largely based on student fees).

All that construction requires fundraising and together generate lots of administrative positions, and that's where rising fees and tuition go.

This is particularly true for universities like York University. (For those who didn't read the article, it's a university in Toronto and is the subject of the article.) Born in a more socialist era, the University put little effort into building up an endowment fund, since the government (i.e. "the people") would simply provide all of the money necessary to run the institution. As government funding has decreased over the last few decades, they're making greater efforts to build larger endowments, however, it'll take them a long time to catch up.

I know that most schools don't have sizable endowments, but I also don't think most of them are diverting tuition towards their endowments.

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