Universities racking up the endowments

Princeton recently replaced loans entirely with grants, and Yale and Harvard eliminated tuition for students from low-income families. Among public schools, the universities of Virginia, North Carolina and Michigan have recently implemented or announced more financial aid for low-income students.

“Right now, the wealthiest schools are remarkably accessible to low-income students,” said Gordon Winston, a higher education economist at Williams College ($1.23 billion), which recently reduced or eliminated loan burdens for students from families earning less than about $60,000.

In 2002, Boston College joined the small group of colleges that promise to find funding for all accepted applicants. For a school founded to serve impoverished Irish immigrants, the financial aid policy is a source of pride.

But no matter how wealthy BC gets, Leahy doubts it ever will stop raising tuition.

“A billion dollars is a great amount of money, but it by no means eliminates all the pressure,” he said.

Leahy does his part; as a Jesuit, he declines a salary. But he notes that as costs such as heating oil, health insurance and technology increase, there’s no obvious way to offset them through more “efficient” teaching and researching.

Prices also rise, however, because billionaire universities have an endless list of things they want to do.

Wealthy universities “have many more ideas than they have money to spend on them,” said Charles Clotfelter, a Duke economist and author of “Buying the Best: Cost Escalation in Elite Higher Education.”

BC is whittling down a list of 200 proposals for new initiatives. Leahy wants to make BC a top-tier science power but also boost Greek and Latin programs, which are close to his heart and increasingly popular among students.

“We could use another billion,” Leahy said, and the school is planning a campaign to raise it. With money, “the appetite intensifies to do great things.”

“Great things” require great buildings, and the billionaire colleges are adding them in droves. Many, including BC, Richmond and Swarthmore, have built or renovated science labs in recent years. But they are also adding “atmosphere” and “experience” — better food, cutting-edge computer networks and health-club-style gyms. Duke ($3.3 billion) even experimented with giving iPods to all incoming freshmen.

“We don’t have dormitories anymore, we have ’living and learning units,”’ said Ronald Ehrenberg, an economist at Cornell University ($3.24 billion). “What these students are getting facility-wise is enormous.”

Wealth does not equal quality, but many students at billionaire colleges do enjoy extraordinary opportunities: funding for research, travel to conferences, and the chance to learn from top researchers and scholars. Including the University of California system, 11 of the 15 American Nobel Prize winners in the last two years work at billionaire schools.

In justifying the schools’ spending and expense, some argue that society benefits when the best scholars and students teach, learn and research together.

“It seems to me there’s something really useful about having the really turned-on kids go to schools that provide them with the really turned-on resources,” said Winston, the economist at Williams.

Others, however, contend the richest schools are hoarding their money, that they could spend more of their endowments to temper tuition increases.

“Endowments represent money that’s not being spent on education,” said Henry Hansmann, a Yale law professor, who has criticized endowment stinginess. “That doesn’t make much sense, because the next generation of students is almost certainly going to be more prosperous than this one.”

Others worry the “arms race” for superstar faculty is costing many nonbillionaires, especially public universities, their best talents: researchers such as Hanna and Antonio Damasio, two neuroscientists who recently left the University of Iowa to start a brain institute at the University of Southern California ($2.4 billion).

The drain to richer colleges is a “huge problem,” said William Kirwan, chancellor of the university system of Maryland. “As talent ebbs away, and I think we’re seeing that happen, it really affects public higher education.”

Ian Newbould, president of North Carolina Wesleyan College in Rocky Mount — No. 702 of the 741 schools in the college business officers’ latest endowment survey with an $8.5 million endowment — believes his school could do more with society’s next dollar than could Harvard.

“There are hundreds and hundreds of small colleges,” said Newbould, whose school dips into its operating budget to support financial aid for the 90 percent of students there who require it. “There is the democratization of education, but in fact, there are a large number of students who need support and need resources.”

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