Student Loan Blog : endowments

Colleges Want Piece of Federal Government’s “Bailout Pie”

Student Loan Girl — Thu, 20 Nov 2008 23:17:00 GMT

With 39 states anticipating budget shortfalls next year totaling more than $100 billion, colleges are urging Congress to include them in a second economic stimulus bill currently being drafted, The Chronicle of Higher Education reports (“As the Economic Crisis Hits Home, Colleges Seek Help From Congress,” Nov. 13, 2008).

Hard hit by the deteriorating economy and financial markets, many schools are dealing with declining endowments, reduced support from the state, and higher numbers of financially needy students. To help schools overcome these challenges, college lobbyists are asking Congress to include funds for financial aid, research, and infrastructure as part of the new economic-stimulus bill.

The Association of American Universities and the American Association of Medical Colleges are specifically lobbying Congress for more money for research, emphasizing the ways colleges support the economy by creating new jobs, graduating work-ready students, and promoting business development.

In a recent letter from the AAMC quantifying its claims, the organization stated that medical colleges were responsible for about 3 million jobs, $20 billion in state tax revenue and injected $451 billion into the economy last year.

Billions Requested by College Associations

Many college associations representing a wide array of interests have petitioned Congress for several billion dollars, each for distinct purposes:

The AAMC is requesting $1.9 billion for the National Institutes of Health.
The American Association of State Colleges and Universities and the Student Aid Alliance are asking for more than $5 billion to make up for a projected shortfall in Pell Grant funding and for Congress to provide enough funding to meet a recently passed $500 increase to the maximum Pell Grant award.
The Association of American Universities wants bailout money set aside for campus construction projects that have halted across the nation.

In their pursuit of funds, schools are competing with state governments, as well as the ailing airline and auto industries. And with the transfer of power on January 20, 2009 from the current Bush administration to the Obama administration, schools may have to wait until February or later to see if they get the capital infusion they seek.

With so many urgent needs confronting Congress — including the possible collapse of Ford, Chrysler and GM, and the loss of millions of jobs if the automakers don’t receive $25 billion in emergency government loans — colleges realize that they aren’t likely a top priority to receive government aid, the Chronicle suggests.

Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities said, “There are so many people going to the trough who have legitimate needs that it’s going to be hard.”

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College Offers Students a No-Cost, No-Student-Loan Education With Funds From Its $1.1 Billion Endowment

Student Loan Girl — Tue, 22 Jul 2008 22:39:00 GMT

Berea College is drawing the attention of lawmakers for its no-frills approach to education and its free tuition policy.

The private Kentucky college — founded 150 years ago to educate freed slaves and “poor white mountaineers” — accepts only applicants from low-income families and charges no tuition, according to an article in The New York Times (“With No Frills or Tuition, a College Draws Notice,” July 21, 2008).

Every Berea student is awarded a four-year tuition scholarship and the school doesn't offer student loans.

School Spends Endowment on Students, Not on High-End Amenities

Despite its $1.1 billion endowment Berea, unlike other colleges with large endowments, has no football team, coed dorms, hot tubs, or rock climbing walls. Students eat food from the college’s own farm, make the furniture used to furnish the school, and are required to work 10 hours a week in an on-campus job.

Although Berea keeps costs down with its streamlined approach to higher education, without tuition revenue to supplement its funding, Berea relies on endowment income to cover 80 percent of its $43 million education and general budget, and about two-thirds of its $55 million operating budget.

“You can literally come to Berea with nothing but what you can carry, and graduate debt free,” says Joseph Bagnoli, the school’s associate provost for enrollment management. “We call it the best education money can’t buy.”

A Push to Use Endowments for the Public Good

News of Berea’s unusual approach to higher education is spurring debates about whether the nation’s wealthiest universities are doing enough for the general public to warrant their tax-exempt status, or if they’re simply hoarding money to serve an elite few, writes New York Times reporter Tamar Lewin.

In January, the Senate Finance Committee requested detailed endowment and spending data from the 136 colleges and universities with endowments of at least $500 million, with an eye toward possibly forcing them to spend at least 5 percent of their assets each year, as foundations are required to do.

Dozens of wealthy colleges have since increased their financial aid to low- and middle-income students, in some cases, replacing loans with grants. More than three-quarters of the students at Berea already receive Pell Grants.

“You see some of these selective liberal arts colleges building new physical education facilities with these huge sheets of glass and these coffee and juice bars, and charging students $40,000 a year, and you have to ask, does this contribute to the public good, or is it just a way for the college to keep up with the Jones?” says Berea’s president Larry Shinn.

He adds, “We are a tax-exempt institution, so I think the public has a right to demand that out educational mission be at the heart of our expenditures.”

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Sale of Latin American Artwork Brings $6.4 Million to Virginia College

Student Loan Girl — Fri, 30 May 2008 20:30:00 GMT

Randolph College sold its Rufino Tamayo painting “Troubadour” — one of four paintings being auctioned by the college to bolster its $153 million endowment — for a record-breaking $7.2 million.

“Troubadour,” the lead piece of 320 paintings and sculptures sold during a two-day sale at Christie’s auction house in New York, had been estimated to bring in as much as $3 million.

Instead, the 1946 painting set a world auction record for Latin American art, besting the $5.6 million sale of Frida Kahlo’s “Roots” painting, writes Christa Desrets of Media General News Service (“Randolph College Painting Fetches $7.2 Million at Auction,” May 28, 2008).

After Christie’s $800,000 auction-house fee, Randolph will receive $6.4 million from the “Troubadour” sale.

The sale of the painting and the auctioning of the three other pieces from the school’s art collection are part of Randolph’s controversial plan to save itself from having to close its doors.

The college announced the move to sell off some of its artwork last August, amid public opposition, and the associate director of Randolph’s art museum resigned in protest.

Critics contend that “if not for years of fiscal mismanagement,” the school — which was being reviewed by its accrediting body, the Southern Association of Colleges and Schools — would never have had to resort to such drastic measures. Professors, alumnae, current students, and others unhappy with Randolph’s direction have succeeded in putting a significant dent in financial contributions to the school by appealing directly to donors to withhold their gifts.

Nonetheless, the school’s remaining paintings — George Bellows’ “Men of the Docks,” Edward Hicks’ “Peaceable Kingdom,” and Ernest Hennings’ “Through the Arroyo” — will be sold “when the timing is most financially advantageous,” Desrets writes.

In addition to selling its artwork to keep afloat, Randolph, previously Randolph-Macon Woman’s College, opened its doors to men for the first time in its 115-year history last fall in an effort to reverse a trend of shrinking applicant pools and declining enrollment.

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