The rich get richer

Forty-seven U.S. colleges and universities have reached or passed the $1 billion endowment mark, reports AP. Yet costs to students keep rising.

Despite tripling its wealth over the past decade, the average billionaire college has nearly doubled its price. Tuition and fees at the average private billionaire college hit $29,002 in 2004; at public universities in the group, it cost $7,230 to attend the typical flagship campus.

The costs have provoked criticism that the richest colleges should use more money from their savings than they do now — at most schools, about 5 percent per year.

Rich colleges are offering more grants, rather than loans, to students who demonstrate financial need, but low-income students rarely qualify for admission.

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  1. Richard Nieporent says:

    Despite tripling its wealth over the past decade, the average billionaire college has nearly doubled its price.

    It’s simple economics, namely the law of supply and demand. As long as the number of students applying to the elite colleges far exceeds the number admitted, they can (and do) keep increasing their tuition.

  2. Half Canadian says:

    Colleges no longer compete for students. They are competing for faculty.
    That’s my theory, at least.

  3. Walter E. Wallis says:

    The takeover of foundations by radicals has made the perpetual private foundation too powerful and irresponsible. Tax all foundation income in excess of foundation expenditures.

  4. The main culprit is government-sponsored financial aid, which – like all market subsidies – distorts the market price for an education.

    Given the politics involved, I don’t think college aid to the middle class will be scaled back any time soon – but the universities aren’t stupid, and they are simply pegging their fees to rake in the subsidy, on top of which folks take out the same loans they would anyway.

  5. John from OK says:

    Ditto on Shuali’s point. Offer to pay for half, and the universities will find a way to double the price.

  6. Let’s not forget that for a long time colleges colluded in the setting of prices – click – and may be doing it yet.

    It’ll take a real trail-blazer to put a stake throught the heart of this practice and no trail-blazers come readily to mind.

  7. Sandy P says:

    And don’t forget the pork.

    Let me at the US budget.