On Nov. 16, students at Roger Williams University organized what they referred to as “BlackOut” (pictured below) – a noontime demonstration in support of the students at the University of Missouri whose protests against the indifference of some senior administrators at the university to claims of racism on the campus led to the resignation of the system president and the campus chancellor.
RWU student leaders spoke and presented a proposed list of action steps they wanted to see taken by our campus and then invited me to speak. The prevailing mood at the demonstration was collaborative and civil – no “demands” were made, and no one’s resignation was sought. I was very proud of our students, and I told them that we would form a representative task force to develop a plan, with timelines and metrics, to address their entirely reasonable concerns. Then we returned to our offices and classrooms to resume the work of giving and receiving a university education. The local newspaper wrote a positive editorial about the event (“RWU students’ intelligent requests,” Bristol Phoenix, Nov. 19, 2015).
For the past several weeks, we have been considering the ramifications of a Moody’s study done in April of this year that noted a widening gap in wealth between a handful of very rich colleges and universities, and all of the other institutions of higher education in America.
Even as I was writing the posts in this series, something occurred that dramatically underscored my concerns about the wealth gap in higher education. John Paulson, a hedge fund manager and multibillionaire, gave $400 million to the world’s richest university: Harvard.
Wow! That’s an enormous amount of money! A gift of that size would have instantly placed the beneficiary among the richest 200 institutions of higher education in the country – even if that institution’s endowment had been zero when the gift was received. But think about this: John Paulson’s gift of $400 million is, on the one hand, the largest gift in Harvard’s 379-year history; but, on the other hand, it increases Harvard’s endowment by a little more than one percent, and, after taxes, it represents less than two percent of Paulson’s net worth. Isn’t it extraordinary that a gift of $400 million can be made with so little sacrifice on the part of the donor, and have so little impact on its recipient? And since $400 million is equal to the total annual income of all of the people in a city with a population of 25,000 (median family income in America is just over $51,000; assume three people per family, on average), this gift to Harvard epitomizes the outrage of many that our economic rewards system is completely out of balance.
In the first three parts of this series, we initially looked at a report from Moody’s regarding the growing separation by wealth between a small number of extraordinarily rich colleges and universities and the very large number of institutions that are heavily dependent on tuition to fund their annual budgets. Subsequently, we reviewed the history of wealth acquisition by the very rich campuses and noted that it was a relatively recent phenomenon. Then we examined the consequence of this imbalance in wealth in terms of the long-term viability of tuition-dependent colleges and universities.
Now, in Part 4, we will consider the relationship between historic patterns of public and private financial support for higher education, and the current very high level of frustration, on the part of parents, politicians and pundits, regarding the diminishing opportunities for young people to receive a college education that is both excellent and affordable.
In Part 1 of this series, I examined a recent report from Moody’s that predicted growing economic separation between a handful of the wealthiest universities and the rest of higher education. Media coverage of the report did not examine the consequences to either higher education or the American economy, should Moody’s prediction prove true, nor did the coverage assess the accuracy of the analysis, something that I sought to address.
In Part 2, I noted that extreme wealth in a handful of famous universities was not true historically, but is, instead, a relatively recent phenomenon.
Now, in Part 3, we look at the other side of the story: What does it mean to higher education in general that wealth is so unevenly and inequitably distributed across the 4,000-plus colleges and universities in this country? And why isn’t there greater concern about this extreme inequity on the part of the American public?
In Part 1 of this series, “It’s Good to Be the King,” I addressed a recent report from Moody’s Investors Services that predicted a growing separation of a relative handful of super-rich universities from the rest of higher education. I also considered the media coverage generated by the Moody’s report, and expressed my bewilderment that the report’s conclusions did not generate deeper analysis and greater concern.
Perhaps the reason that there was not more media attention and review was because Moody’s summation of the institutional wealth of the richest universities did not surprise many people. There is evidently a broad understanding – and perhaps even acceptance – that some universities have amassed significant wealth, and that the universities with the most recognizable names, and/or the strongest reputations, are often the wealthiest universities.
On April 16 of this year, Moody’s Investors Services published a report entitled “Wealth Concentration Will Widen for U.S. Universities.” This report was the subject of articles on the same day in such major media outlets as the Boston Globe, The Wall Street Journal and BloombergBusiness.
The underlying tone of the Moody’s report was fundamentally positive, as was true of the media reports referenced above. Given Moody’s previous grim reports regarding the perceived financial weakness of much of American higher education (see an earlier blog post in this series, Moody’s Blues, Feb. 14, 2013) a positive report on a few enormously wealthy AAA-rated institutions was presumably welcomed by many readers and investors.
In my last post, I considered the claim that more and better education is the answer to fixing our troubled economy. However, as I pointed out in the first post to this series (Sept. 8), there is a second explanation to the uneven nature of America’s economic recovery from the Great Recession: the game may be rigged to favor the very rich at the expense of everyone else. If this explanation has merit, then trying to repair the economy through more and better education will eventually prove to be not just futile but potentially very destructive to long-established institutions of higher learning.
Last week, I provided an overview on a topic of vital importance: the highly uneven nature of America’s economic recovery since the Great Recession of 2008. Corporate America and its shareholders are doing very well – but the great majority of wage earners are not. What accounts for this unevenness? Noted Harvard economist Gregory Mankiw is quoted as saying, “The best way to address rising inequality is to focus on increasing educational attainment,” (The New York Times, “Income Inequality and the Ills Behind It,” July 30, 2014). Is this statement true? Or does the real answer lie elsewhere?