Sunday, June 08, 2008

Yale Is Listening

By Richard Vedder

A few months ago, I had an op-ed in the Washington Post entitled "It's A Start Yale. Now Do Something Serious," referring to Yale's decision to increase financial aid for a large portion of its students. In the article, I mentioned the possibility of increasing supply --expanding enrollments or opening new campuses.

Yale is apparently listening. It has announced it will open two new residential undergraduate colleges and expand undergraduate enrollment by around 800 students, or 15 percent. The move is vastly overdue, but is welcomed nonetheless. Colleges have viewed restricted admissions as a virtue --a means of raising prestige. Education is the only business I know where success is obtained by turning customers away and snubbing them. Yet Yale is already about as prestigious as you can get, and its per student endowment is about even with that at Princeton and Harvard at a near obscene two million dollars per student ($100,000 a year). The much discussed increase in student aid absorbed only EIGHT percent of the new spending out of endowment funds associated with Yale's decision to spend five percent of endowment principal annually. This will absorb some more, and appropriately so.

I decry federal intervention into almost anything, but I must say that the threat of federal legislation often brings religion, virtue and common sense to some university leaders. Senator Grassley's fight for higher spending from endowment may be having further payoffs. The Ivy League alone cannot increase the supply of places enough to meet the insatiable demand of Americans for quality higher education, but it can set an example, leading maybe Stanford to start a Stanford U in the South, or Princeton a university in Arizona.

If the Mayo Clinic, Cleveland Clinic and other great, prestigious medical institutions can open up major satellite operations in places like Florida, why cannot universities do the same?

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