This morning I was treated to not one but two infuriating articles on education. The first was a report that the Unviversity of Michigan’s endowment is now the seventh highest in the nation, just under elite insitutions like Harvard, Princeton, Stanford and Yale. U of M’s endowment grows by more than 9% per year, far outpacing most people’s retirement accounts and even outpacing that of the growth of many small developing countries. To put it in perspective, the entire budget of the country of Malawi, where 13 million people live, was approximately 845 million dollars in 2008.
The UM only pockets about half of what it makes from interest revenues and reinvest the remainder, but that still leaves it $266 million to spend at will. To be fair, the UM takes some of that money and invests it in start up companies and research, but, as far as I can tell, a sum total of ZERO goes to investing in keeping tuition fees low and creating scholarship opportunities for bright but financially handicapped students. For that, the UM shifts responsibility on to Federal and State governments to provide financial aid. The UM’s scholarship programs are notoriously pathetic.
Even Harvard does better than this. Kids who come from families who make under $60,000 go for free.
The incoming class at the UM in 2011 was 6,496 students, of which 3,893 were Michigan residents and 2,603 were out of state. Tuition is $7,023 and $20,121 per term for in and out of state respectively. A full term of tuition revenues totals $79.7 million dollars and a full year would be approximately $160 million dollars. This means that the UM could have paid the tuition of every freshman with profits from its endowment alone, and not lost a dime.
Now, this scenario is unrealistic, there are four times as many undergraduates as incoming freshman, but you see the point. The UM does not have to ask the exorbitant prices it does merely in return for joining its exclusive, but quality, club (I love UMich, always have, it’s a great school). They could easily drop in-state tuition to a quarter of what it is and bring it down to the price it was when I went, which any kid could make washing dishes for a summer. Loans would become moot.
This, however, is not on Mary Sue Coleman’s to do list. She’s too busy busting unions and serving a compensated position with Johnson and Johnson to be worried about the exploding costs of tuition.