It sounds like big bucks. Yale University is upping the ante in what's turning into an academic-generosity bidding war by announcing that it will withdraw an extra $24 million from its endowment to slash the cost of attendance for students from families that earn up to $200,000 a year. The news follows similar, though more modest, announcements by Harvard, the University of Pennsylvania, Swarthmore, Pomona, and dozens of other high-priced colleges.
But the initial gratitude of students and parents was quickly followed by "Is that all?" disappointment. That big jump in Yale's spending amounts to about one tenth of 1 percent of the university's $23 billion fund. Indeed, an analysis due later this month is expected to show that colleges are earning double-digit returns on their tax-free endowment funds but spending, on average, less than half of those profits. Those numbers raise the ire of critics like Sen. Charles Grassley, who has been pushing for a law requiring colleges to spend at least 5 percent of their endowments. Grassley last week challenged other rich schools to chime in with financial aid increases. "More than 60 other colleges and universities with endowments of at least $1 billion are making church mice sound loud by comparison," he says.