Higher Education Hoarding

Lynne Munson, an Adjunct Fellow at the Center for College Affordability and Productivity, has given the Senate Finance Committee an earful. She states that

our colleges and universities are sitting on some of the largest fortunes amassed by any institutions in the history of our nation. These riches are proof of America’s economic strength and of the boundless generosity of its citizens. But I’m afraid to report that, in too many cases, this wealth is being hoarded instead of shared.
College and university endowment spending practices are stuck in a past when endowments were small, investment gains were marginal, and economic rainy days were frequent. Today higher education endowments are massive and…aggressively invested. Returns often exceed 12% or more year after year. Yet endowment payouts are miserly—averaging just over 4% last year.

To the question – is the public benefiting enough? – Munson gives a resounding “no.”
Relatedly, the Wall Street Journal has just reported that Yale University’s endowment earned a whopping 28% return in the fiscal year ending June 30. Curious about the significance of these earnings, I asked Munson to comment. She responded:

We can get some insight into Yale’s spending plans by parsing the following sentence from today’s New York Times piece concerning Yale’s endowment: “Projected spending from the endowment in the university’s 2007-8 fiscal year is $843 million, or 37 percent of Yale’s net revenue.”
Spending 37% of their revenue sounds like a lot, until you look a little closer.  $843 million is just 3.75% of the value of Yale’s now $22.5 billion endowment.  A 3.75% payout if outrageously

low–and approximately half the level of spending of the average private foundation.
Yale also tells the WSJ today their financial aid outlays have doubled since 2000.  Here’s another

statement intended to make the school look generous. Again, let’s look closer.  Yale hasn’t yet announced their financial aid budget for 2007-08 but they spent $59.9 million on aid in 2006-07.  Assuming a generous (though probably unrealistically high) increase of $10 million to a total financial aid spending of $70 million, Yale would be spending a mere .3% (basically 1/3%) of the value of their endowment on aid.  And that is aid for all students, including graduate students. 
So even if Yale is accurate in saying their financial aid budget has doubled since 2000, it still adds up to an incredibly miserly sum.  And Yale’s endowment has doubled just since 2003.  So what took them so long to “catch up”?