By Dhanya Edoo
As tuition prices continue to increase, college presidents implore Congress not to spend more of their schools’ endowments, as reported in a recent New York Times article.
An endowment is money given to a university with a stipulation that the funds are invested to earn annual interest rather than spent immediately. A portion of the interest earned is then used to award student scholarships or programs. The rest of the earnings are deposited back into the fund’s principal to insure that the endowment continues to grow and yield more interest for future scholarships and support. However, there is no set amount of money a university is obligated to use towards student aid.
Georgia Tech is the 55th richest university in the country in terms of endowments, according to the 2007 Endowment Study Results released by the National Association of College and University Business Officers. At the end of the 2007 fiscal year, Tech reported an endowment of more than $122.2 million, a 17% increase from the previous year and a 39% increase since 2003.
Can forcing universities to dip deeper into their endowments make a difference in the ever rising cost of higher education? If Tech spent the entire sum of its endowment on tuition for every student currently enrolled, the amount still would not cover the cost.
This year, tuition alone, excluding fees and housing, will be $4,496 for in-state students, $22,220 for out-of-state and international students and $1,146 for mandatory fees, a 40.1%, 46.8% and 32.0% increase since 2004, respectively. Georgia Tech students received $123 million in financial aid this year. Of that, $108.92 million came from the institution, $55 million from federal funds, $26.63 million from the state (including $26.26 million from HOPE), and $14.11 million from private or outside sources. This may seem like ample financial aid, however, more than a third of that help, $50.97 million, comes in the form of student loans.
For Georgia students, HOPE contributes for a short while, but more than half of students lose HOPE by the end of their freshman year. Beyond tuition and books, HOPE does not cover other expenses associated with the university price tag.
Tara Bryant, a second- year EAS major, started college a year late due to the high cost of attendance. “I graduated from high school in 2006 with honors and would have received HOPE, but I had to wait a year before I came to school because I couldn’t afford [the] living expenses,” Bryant said.
Bryant’s parents do not pay for any part of her schooling. “I worked for a year to save up money for housing for my first semester. My mom and dad aren’t financially able to help me. I have loans to help pay for school, but I still have to pay those back when I graduate,” Bryant said.
Working part time in the GT recycling office covers rent; however books are a luxury, she cannot afford. Just over one year into college, Bryant is almost $7,000 in debt.
There is no doubt that a school as large as Georgia Tech has many expenses; whether or not its endowment is spent wisely is a matter of opinion. Total revenue for the 2007 fiscal year was $1.103 billion, while total expenses were $1.034 billion. Of that, $48.9 million was allotted to the Athletic Association, with only $14.1 million going towards scholarships, a $34.8 million difference in favor of the AA. With tuition at an all-time high and the cost of living where it is now, $34 million dollars could have made an impact on the pockets of Tech students across the campus.
Legislation forcing schools to use five percent of their endowments is a short term fix. With enrollment at an all time high this year and growing with each new freshman class, some believe the mandated five percent is not enough.