The next stage for the richest universities: attract more rich families

It’s well known that the wealthiest American universities have enormous endowments.  This has actually become a policy topic of late, even a bipartisan one, especially as family income inequality continues to deepen, and as many non-elite colleges and universities struggle with financial pressures.  The question arises: what should the Harvards of this world do with their riches?

One economist proposes an answer which should attract at least some academic leaders.   Instead of diverting more funds to expand access to the poorest and otherwise marginalized,  Tyler Cowen argues that the richest schools should focus on recruiting even more students from the wealthiest families.

Why and would would this work?

One reason is reputational, based largely on continue to further these universities’ research strengths: “why not expand the profit centers of America’s top universities?”

A second is the ongoing, widely disliked, nearly universally embraced amenities arms race. Cowen identifies an “unfortunate reality… that some donors might limit their support if say Princeton offered them and their children a less tony and exclusive experience. ”

But the largest reason is, to echo Willie Sutton, that’s where the money is.

[I]n an age of high income inequality it seems America’s top schools have hardly tapped out this pool… The actual constraint on how big top schools could grow is how many eligible donors they can find and cultivate, if only through admitting their children.

I’ve heard similar sentiments from all kinds of American institutions, from private colleges to public universities, public libraries to private museums.  If the rich are getting richer and the bottom 50/60/70% are not, it makes sense to follow Willie Sutton.  I’ve written about this new form of patronage – surely someone will dub it “Patronage 2.0” – previously.

To his credit, Cowen isn’t urging those richest universities to become more exclusive.  That short column includes several good reasons for the toniest campuses to not resist admitting students of the 99%.  Expanding recruitment from the richest is the way to make this growth of access occur:

It’s hard to believe that America’s top schools are not exclusive enough, so let’s have a few scale up their entering freshman classes very rapidly. And let’s have extra legacy admissions — or rather some of the wealthy parents — foot the bill.

In a sense this is just the most advanced form of what we already do with discount rates.  (That refers to the difference between a campus’ sticker price – published tuition etc. – and what students actually pay, once various forms of aid have been factored in.  I have some helpful posts on this very topic.)

There’s some fascinating discussion in Cowen’s blog post comments section.

One question I have for you all is this.  How far will America go with this?  Just what are we willing to do in redesigning higher ed around the economic power of an increasingly distant upper crust?  Are we quietly accepting the emergence and strengthening of something close to a hereditary elite, where income, education, and assortative mating coincide to reproduce a new gilded age semi-aristocracy? (cf this pro-legacy cri de coeur for one especially pungent example)

One last question: when will the rich decide to stop footing the bill for the rest of us?  When will the 1%, roughly, determine that they have met their social obligations, that there’s a limit to their n0blesse oblige when it comes to higher education funding?  How will they signal this opinion?  What actions will they take?

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