Colleges’ investments net good returns; why are costs rising?

Many thanks to Andy and his capable work in my stead. I'm back, refreshed and ready to get to work again.

Now this today from the AP, wondering why colleges don't spend more of their income to keep tuition costs down:

By Justin Pope
Associated Press
10-15-2007

Colleges and universities raked in money by the billions last year. But their investing success now has a price — a movement in Congress to force the wealthiest schools to spend more of their money to keep down tuition.

In recent weeks, a string of colleges and universities have announced enviable investment results. Leading the way was Yale, which earned 28 percent over the year ending June 30, increasing the school’s endowment to $22.5 billion overall.

Harvard, the world’s wealthiest university with $34.9 billion, beat the market again with a 23 percent return. There also were good returns for smaller schools such as Bowdoin (24.4 percent) and William & Mary (19.2 percent).

But while those numbers were coming out, some members of the Senate Finance Committee in Washington were wondering aloud why the rise in endowments isn’t stemming tuition increases. At a hearing last month, lawmakers batted around the idea of forcing at least some of the wealthier colleges to spend more savings on reducing costs.

“Senators, what would your constituents say if gasoline cost $9.15 a gallon?” Lynne Munson, an adjunct fellow at the Center for College Affordability and Productivity in Washington told the committee. “Or if the price of milk was over $15? That is how much those items would cost if their price had gone up at the same rate that tuition has since 1980.”

In the mid-1990s, a billion-dollar endowment was a mark of the financial elite, a club with just 17 schools in its ranks. By last year, 62 colleges had hit the mark. Within a few years there will likely be 100.

See the full story here.