<p>Re your comment : “Sustainable growth implies that any university can only use approximately 5% of its endowment in a given year, the larger the endowment the greater that 5% is. If they were to use much more of it each year the endowment would shrink and eventually nothing will be left of it, then we’ll really be saying “yay progressivism!”.”</p>
<p>Try taking a few math and statistics courses before you blast other people’s comments. For the past ten years, endowments have earned on average 15% per annum. If you spend 5%, you are left with a 10% increase. If you spend 10% you still have an increase of 5% etc. Your assertion that “sustainable growth” prevents universities from spending more than 5% in a year is inane. The 5% figure keeps popping up because of IRS regs pertaining to non-profit charitable foundations (Congress is now comparing colleges to these). Foundations are required to spend 5% per annum or face adverse tax consequences. Presently, colleges are not even required to spend this much ; but some are now raising their expenditures to about the 5% level because they fear that Congress will take away their tax exempt status. The 5% number you have heard about has nothing to do with “sustainable growth.”</p>
<p>Also, do you have any idea of how much money 15% per annum on a $7 Billion endowment represents? It’s over $1 BILLION a year. Do you know what it would cost to afford free tuition for all undergrads (say to 4,000 students)? Less than $150 MILLION. Despite this most if not all schools, fund their far more limited undergrad financial aid budget, in part, from general revenue sources, as opposed to funding it entirely from the endowmwnt. The largest single source of these general revenue sources is? Come on you know the answer, it’s the tuition and fees of other students. </p>
<p>Who exactly is the naive one here?</p>