Colleges recoup recession losses - Big investment gains; tuition cuts unlikely

<p>Read an interesting article today from USA TODAY:

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Colleges recoup recession losses
Big investment gains; tuition cuts unlikely

By Jodi Upton and Christopher Schnaars
USA TODAY

Led by big investment gains in 2011, U.S. colleges have built investment behemoths and rainy day funds of more than $408 billion, and most have recouped recession losses, according to a USA TODAY analysis.
Even so, parents and students are unlikely to see much of a break in tuition.
In 2011, 74 U.S. schools had endowments of more than $1 billion, compared with 54 schools in 2009 after the recession hit, according to data collected annually by the National Association of College and University Business Officers (NACU-BO) and analyzed by USA TODAY.
By last year, nearly 70% of schools had either recovered from losses or were within 5% of their previous maximum amount, the analysis found. Gains include both investment returns and fundraising.
Nearly 40% of the largest endowments are at public schools, The University of Texas System's endowment of $17 billion is higher than Princeton's, Stanford's and MIT's. Nevertheless, few public schools use their endowments to offer no-loan programs or steeply discounted tuition for middle-class families.
"Colleges and universities are sitting on more wealth than has been amassed by any other group of non-profit institutions in the history of our nation - including private foundations," says Lynne Munson, an adjunct research fellow at the Center for College Affordability and Productivity. "Tuition accountability is long overdue."
From 2006 to 2011, tuition fees rose 30% above inflation at public, four-year schools, according to the College Board. Rising costs have led to more student debt. In 2005, the average student-loan debt was $15,651, according to a Federal Reserve Bank of New York study. By 2012, that had increased to $24,301.
The issue of how to deal with rising education costs has become part of the 2012 campaign as President Obama courts young voters by promoting more tax credits and expanded Pell grants to pay for school, while Repulican challenger Mitt Romney has pushed for reduced federal spending.
Congress has noticed, too. The Sentate Finance Committee held hearings in late July, which included questions on why tuition has increased so rapidly when schools have such large endowments. More hearings on financing higher education are expected to be scheduled this fall.
In spite of 2011's strong gains, not all schools have caught up to where they want to be, NACU-BO President John Walda cautions. The endowment fund still has to earn management fees, cover inflation and the 4% to 5% schools spend each year - which is sometimes used for new buildings or to pay for faculty positions.
"Based on our data, it's clear schools are using endowments wisely and spending as much as is prudent," Walda says.

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I wanted to skip the last bit of political baggage in the article, but decided to leave it to keep the integrity intact.</p>

<p>Read an interesting article today from USA TODAY:

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