Last fiscal year, for instance, universities averaged just over a 20 percent return on their endowments. Alas, such dramatic changes in tuition rates or educational investment are not on the horizon. Unlike private nonprofit foundations, which are required to spend at least 5 percent of their assets each year, colleges and universities are under no such obligation. When asked about increasing that percentage, university officals insist that such a move would be unwise because, even though times are high today, the school must be prepared for when the economy turns sour. But it's not going to last forever.
Most institutions have to be responsible.
We have to be prudent. But from our top private universities, with their multibillion rainy-day funds, such sentiments seem disingenuous. Even accounting for inflation, we're talking about sums these schools could never have imagined 50 or even 20 years ago. If our thrify parent, for instance, becomes so obsessed with saving that he refuses to spend on books or tutoring or other items to nurture Little Susie's intellect early on, that hefty college fund will be of little use. With universities, there is no particular reason to believe that there will be a better use in the future and every reason to believe the reverse is true.