October 20, 2007

Congress considers forcing Universities to make college cheaper

This is one of the most asinine things I've heard about in a long time.Iowa Senator Chuck Grassley (R) (who was profiled by TNR here) has considered drafting legislation that would force Universities to stop saving their endowments and start using them to drop tuition rates:

Grassley’s proposal would require colleges with endowments exceeding $500 million to spend at least 5 percent of their endowments on an annual basis. Such a requirement would increase Yale’s endowment spending by more than $280 million this year, potentially allowing the University to freeze tuition or increase financial aid. Undergraduate tuition and fees rose by 4.5 percent this year to $45,000 and has increased 49 percent over the last decade.
I'm not really sure where to begin.First, the Universities that have huge endowments charge very little for tuition. Of course, the sticker price is high, but affordability isn't an issue. Harvard, Princeton, and the big schools (the ones that have massive endowments) guarantee a free education to students from families that make less than $60,000. That is well above the median household income in the US. Second, this guy is a Republican. This is the party that loves Federalism and giving people the freedom to spend their money how they feel is best. Forcing private institutions to spend money in a certain way is ridiculous. If you want tuition to become cheaper, subsidize it, don't force the provider to lower prices.Is college expensive in the US? Yes, but making it easier for families in the top 10% of income in the US to send their kids to college is a pretty poor reason to intervene in how Colleges spend their money.