To the Editor:
College affordability is an equation with several variables for most students and their families, even with the 2012 Pell Grant appropriation of $30.3-billion. Here’s the $50-billion question: If President Obama asked Congress to appropriate sustainable financial aid for students attending public colleges and universities, above and beyond current funding for Pell Grants, could it earn bipartisan support? If it did, new federal dollars would flow to more than 70 percent of the nation’s public colleges and universities—all with the stipulation that the funds are restricted to endowments and the subsequent drawdown from the endowments would be limited to direct financial aid to students. With an average grant of a $100-million, a four-percent annualized drawdown from an endowment would support about 2,300 students at each institution. This could help about 1.1 million students across the United States.
Each of these students could receive about $1,700—roughly 20 percent of tuition, based on statistics provided by the College Board that the average tuition at a public four-year colleges this year is $8,655. This $50-billion infusion into banks would result in a greater economic impact, dollar for dollar, than the federal government’s previous investment in the Troubled Asset Relief Program. Colleges, students, and their families would directly benefit each year. In fact, assuming a compounded rate of return of 7.2 percent per year, the number of students helped could increase by approximately 50 percent in 10 years, assuming a yearly tuition-rate increase of less than 3.6 percent.
Mr. Obama could use his State of the Union Address to ask Main Street and Wall Street to champion the same legislation. If they did, would this initiative garner the necessary votes in the House and Senate to have a White House signing ceremony? I believe it would. Here’s why: The numbers speak for themselves. The $50-billion of taxpayers’ money would become perpetual pools of assets, unlike most federal spending. States could direct additional support to K-12 education without raising taxes, and more colleges and universities may be inspired to launch capital campaigns. Surely, some families would need to spend this savings, while others would borrow less or be spared from dipping into their savings and retirement accounts. Are there other benefits for society from having more college graduates with reduced indebtedness? Yes, it’s actually an important facet of the American spirit.
According to the U.S. Census Bureau, last year 30.4 percent of people over age 25 in the United States held at least a bachelor’s degree, and 10.9 percent held a graduate degree, up from 26.2 percent and 8.7 percent 10 years earlier. Another Census Bureau report said that over an adult’s working life, a person with a bachelor’s degree would earn almost a $1-million more than a person without a bachelor’s degree; the holder of a master’s degree can expect to earn almost $1.5-million more.
Larger endowments are the answer for reducing dependency on state appropriations for public colleges and universities. The largesse that today benefits far too few students—mainly those attending Ivy League institutions—is unlikely to result soon from fundraising campaigns at public colleges and universities. If Congress acts, however, $50-billion of taxpayers’ dollars can be leveraged to generate more than $1-trillion of economic impact from the future earnings of each graduating class. With 500 public colleges and universities benefiting, the impact of the multiplier effect would strengthen local economies across the nation.
Mark M. Spradley
Chevy Chase, Md.