Elite Schools Hoarding Wealth

Wealthy institutions are fighting legislation that would require them to earmark 5% of their endowments for financial aid. Yes, just 5%.

Should U.S. colleges and universities with large endowments be required to set aside at least 5% of their money for financial aid and to offset tuition costs? Several proposals in Congress back this demand-- and quite a few well-endowed school are fighting back with lobbyist muscle. From a city with more than its share of wealthy and prestigious institutions of higher learning, here's a story about the issue in The Boston Globe:

Colleges Guard Soaring Endowments

Why are colleges and universities opposed to this legislation? Much as they may sound like misers, their reasoning is sensible, at least somewhat. Endowment money, which largely comes from alumni donations, is invested tax free and is used as a buffer to prevent against hard times. It makes sense to use endowments conservatively. In addition, schools are always nervous about government involvement, as freedom of speech and expression in the academy is a crucial principle to preserve. On top of that, schools argue that financial aid to elite schools has increased quite a bit in recent years, and many students from less-than-wealthy families are attending at little to no cost.

But did I mention that this argument is only about 5% of the endowment?

Elite institutions like Boston College and Harvard University can't spend 5% of their endowments to help offset student costs? As The Boston Globe article points out, Harvard's endowment is bigger than the gross domestic product of Montana.

And 5% is unreasonable? Give me a break.