Why? Basically, writes Andrew Manshell in this WSJ opinion piece, because the colleges know they'll pay up.
Jim Gust will likely second Manshell's opinion that endowments are under-spent:
While the prevailing wisdom in higher education (purveyed principally by endowment investment managers and advisers) is that even the 5% endowment payout rate targeted by most schools threatens the preservation of capital, well-designed financial research shows that, particularly given that colleges are constantly fund raising for new endowment resources, higher spending rates are sound. It could be argued that the richest institutions—such as Harvard, Williams, Wellesley, Amherst, Yale and Princeton—might be free and operate from only endowment funds, if they chose to.
2 comments:
Yes, I agree that they are underspending.
yes i do agree with you. wonderful article written.
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