UNLESS YOU ARE AN ATHLETE: DO NOT APPLY TO THE UW
Over at the Berkeley Blog, Robert Reich has written a disturbing essay on the effects of endowment of private, elite schools, on the US governments subsidy for education of the wealthiest Americans:
“(Given the) relatively small number of students attending America’s well endowed probate elite institutions, the amount of subsidy per student is huge. The annual government subsidy to Princeton University, for example, is about $54,000 per student, according to an estimate by economist Richard Vedder.
(In contrast) the average annual government subsidy per student at a public university comes to less than $4,000. (Even the poorest students, the oncs) receiving Pell rants, get a maximum of $5,645. ”
Reich’s essay has special impact at the UW, a state university that is ranked internationally within the top 16 of all colleges in the world. Being admitted to the Udub seems to be a great opportunity, a bargain for the top Washington state kids who might otherwise be faced with the onerous fees and tuition of a nationally elite school. 
Amazingly, these national schools actually cost less than the UW. Other than elite athletes, students at the UW have the challenge of a huge and increasing debt. College means not only tuition but the soaring cost of housing in Seattle and the costs for books and materials. Ironically, this means that Harvard does not need to offer athletic scholarships to some kid from a poor class because almost all Harvard students get a full boat! And, the student athletes at Harvard get academic scholarships not subject to the whims of the Athletic Department and the coaches,.
Academic scholarships are not a problem for students at elite private universities. Harvard, Princeton, University of Chicago, Vassar and others boast of offering even middle class students a full boat … four or more years of all costs … including for students from the left coast … air fare to fly home twice a year! Harvard brags about not weighing its students down with the kinds of college debts students at the UW have to bear.
The wonderful privilege of this gift (for those who can get it) is a great tribute to the elite colleges determination to reach beyond their normal pool of upper class students. Nonetheless, the elite colleges’ selectivity is confounded by the huge advantage wealthy and middle class kids have in our system. Only 16 percent of students at the elite colleges receive Pell Grants, on average, compared to 59 percent at the public campuses. Even the top public campus in the US, UC Berkeley, has 33 percent students getting Pell grants while nearby Stanford has only 18%. Reich points out that “the University of California at Berkeley has more Pell eligible students than the entire Ivy League put together.”
How do the elite colleges accomplish this miracle? ENDOWMENT. Private university endowments are now around $550 billion, …. tax free money that grows because donors get a tax subsidy of one dollar for every three donated. A gift of nine million dollars, means the US government pays 3 million. Currently Harvard’s endowment is over $32 billion, followed by Yale at $20.8 billion, Stanford at $18.6 billion, and Princeton at $18.2 billion.
This endowment-driven generosity is a good thing because these schools work hard to find the best and the brightest. Harvard for example brags that it can admit an entire class with perfect college entrance scores but instead reaches out to find kids whose success measured against modest backgrounds is impressive. Whatever the good intent, this huge government subsidy applies equally to a Mexican immigrant or .. one assumes .. the future enrollment of the children of Harvard Alum Bill Gates. While Bill and Melinda’s kids come from a family with too much money for a full boat scholarship , even full tuition is heavily subsidized by the endowment. The current campaign goal at Harvard is $6.5 billion.
The increased concentration of money in the hands of the 1% means that these tax subsidies to elite schools have risen magically. Donating money to a great university is not only pleasurable, it is remunerative because of the tax deduction. The wealthy can even donate money in ways that provide them or their children with life long incomes … an annuity … while reaping a tax benefit!
This is the gift that keeps on giving. Once the institution has this money, any income or increase in capital also becomes tax free! In other words, the mega donor not only gets a tax subsidy, he or she can enjoy participating in the activities they fund knowing that any investments will not be taxed. The donor may even collect income from the donation if he or she has some paid role in directing the fund. Tax lawyers use this trick to allow the rich to endow incomes for their children by stipulating that the children serve as directors of the activity funded by the gift. This may be less common with gifts directly to universities than it is when the gifts indirectly come from foundations. It would be interesting to know whether Paul Allen’s sister receives a salary from the Allen Foundation!
We need a major reform of our scholarships both here in Washington State and across the US.
From the UW website: state-sponsored scholarships have no money, just a handshake:
“The Washington Scholars program recognizes the accomplishments of four high school students in each of the state’s 49 legislative districts, three Washington Scholars and one Washington Scholar-Alternate.”
“The state’s biennial operating budget does not include monetary awards for new Washington Scholars in 2013 and 2014. Scholars selected in earlier years will continue to receive the monetary benefit.”
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The UW says 3,000 students, including athletes, are on some kind of scholarship (from all sources).
In other words .. if you qualify academically for a scholarship go to a private school!