Thursday, September 27, 2007

Ivy League Champ Yale 28, Harvard 23

The Game in November probably won't be that close. Our headline refers to endowment returns. Yale recorded a 28% return for fiscal 2007, The New York Times reports, easily topping Harvard's 23%.

Those investment returns aren't quite as amazing as they would normally seem. For the same period, even an S&P 500 index fund returned close to 20%.

What's truly awesome? Yale's annualized ten-year return: 17.8%

Over a decade, at that rate, $10 billion turns into $51 billion.


Jim Gust said...

And don't forget, those are after-tax returns for Yale and Harvard. I'm glad that the S&P 500 index allocation of my 401(k) plan returned 20%, but that entire return will be reduced by ordinary state and federal income taxes when I withdraw it--I'll be lucky to net a 12% return.

JLM said...

In past posts, Jim Gust has questioned why universities don't pay income tax on their endowment earnings. In other times he might have a point. These days...well, just ask yourself the question:

Who would spend those dollars less foolishly, the current crop of politicos in Washington, D.C. or the Fellows of the Yale Corporation?

Yale's trustees include Time-Warner COO Jeffrey Bewkes, investment guru Charles Ellis, Silicon Valley Entrepreneur (and Apple alum) Donna Dubinsky and producer/developer Roland Betts --not to mention a federal judge, a Newsweek editor and Maya Lin.

It's no contest!

I do have a thought on how Yale, Harvard and other rich univerities might spend some of their loot wisely. They could help revive and expand the G.I. Bill. On NPR this morning it was pointed out that we need to do more for returning veterans and offer greater encouragement to recruits, who often join the regular forces or National Guard in order to get financial help with college.

Let's expand the G.I. bill (this country's greatest idea to come out of WWII) to give qualified vets good scholarships at state schools. Say, $12,000 a year. Then let's convince Yale, Harvard and other Ivy's and near Ivy's to grant additional scholarships to the most promising vets.

A year at Yale, *everything* included, probably costs $50,000 or so. If the federal government chipped in $10,000 or $12,000 per student and Yale chipped in $40,000 per student, our vets could enjoy the same quality college education that the vets of WWII enjoyed (and that ended up enriching this country beyond measure.)

Come on, Yale! You need spend only $4 million a year to grant $40,000 scholarships to 100 vets.

David Swensen should be able to make you that much in one morning.

Jim Gust said...

I'm with you on this one. But I much doubt that Yale would participate.

I don't think that they allow ROTC at Yale, for example. And I know that they barred military recruiters for years, and just recently lost their appeal to the Federal Courts over the practice.

Yale and the rest of the Ivies have planted themselves much too far to the left to provide benefits to veterans.

I'm certainly not defending the spending practices in Washington DC, by the way. I just want a level playing field for investment income, either I get to use the endowments' tax rules or they have to use mine.

Jim Gust said...

Let me correct the above post, Yale does permit its undergrads to participate in ROTC. I guess I was confusing it with Columbia. The classes are at UConn or Sacred Heart University, and Yale provides the necessary transportation for its students.