Richard Levin: President of Yale And King Of Comedy

January 18, 2008

Re: Richard Levin: President of Yale And King Of Comedy.


Dear Colleagues:

You might never know it, but comedy is one of my favorite kinds of reading. There’s nothing like a good laugh. So I thank Richard Levin, the President of Yale, for providing one. He showed himself the Jon Stewart or Stephen Colbert of the university president world. Or by my lights, the Mort Sahl of that world.

Following Harvard’s lead, Yale, as the Chronicle of Higher Education said on-line last Tuesday, announced on Monday that it was greatly reducing the cost of a Yale education to students whose families earn $60,000 to $120,000 per year, and $120,000 to $200,000 per year. As well, parents who earn less than $60,000 per year will not have to pay anything toward their child’s tuition. The university now plans, all told, to raise its financial aid to students from 24 million dollars per year to 80 million dollars per year.

But why did Yale do this now? As the Chronicle put it, Levin told it that Yale’s “leaders had been considering the matter for a number of years, but that two factors had influenced the timing . . . .” One is “that federal lawmakers have recently urged colleges to spend a larger percentage of their endowments on student aid. The other was the growth of Yale’s wealth: The university had a 28 percent return on its $22.5-billion endowment in the last fiscal year. ‘It’s not that the spirit wasn’t willing earlier,’ Mr. Levin said, “But now the pocketbook is deeper.’” (The Chronicle, as is typical of the MSM, got part of this wrong. Yale did not earn a 28 percent return on an endowment of 22.5 billion dollars. Its endowment is now 22.5 billion dollars after the 28 percent return in the last fiscal year.)

So . . . . now the pocketbook is deeper, so that Yale can now do, with an endowment of over 22 billion dollars, what in previous years it couldn’t do with an endowment of, say, 17 or 18 billion or “only” 10 or 12 or 14 billion. Now, with an endowment of 22.5 billion dollars, Yale can spend 80 million dollars per year on student aid though it couldn’t afford this with a puny endowment of 10, or 12 or 14 or 17 billion. Now that is funny. That is worthy of a Mort Sahl. What a guy Levin is. You could fall off your chair laughing.

But it gets better. Yale has an investment guru, David Swensen, who has become justly famous running its money. For the last decade he has averaged a 17.8 percent annual return on Yale’s money (and in 2000 he obtained a 41 percent return). (Wealthy institutional investors like Yale and Harvard -- which has an endowment of 35 billion dollars -- can make all kinds of fancy high return investments that the ordinary bloke can’t afford, like investments in hedge funds, private equity funds, timber, oil and gas, etc.) On an endowment of “only,” let us say, 10 or 12 billion dollars, the amount of earnings, at just ten percent, would be 1 billion or 1.2 billion dollars a year -- and Swensen was doing way, way better than 18 percent. He was doing nearly 18 percent on average for a decade. But, Levin implies -- implies so plainly that his statement is the defacto equivalent of explicit -- Yale couldn’t afford 80 million dollars of aid on earnings which at 10 percent were at or over one billion dollars per year and which, more accurately averaged 17.8 percent a year, nearly double a “mere” ten percent per year. Oh, now, that is funny. Mort Sahl exceedeth himself.

One wonders: where does Levin come up with statements like the one the Chronicle says he made. Did the Chronicle misquote him or get it wrong, like the MSM gets so much so wrong? Did the Chronicle get it right and he was simply parroting what some P.R. flack told him to say? If so, he needs a new P.R. flack. Or did he really mean what he said? And if he did really mean what he said, isn’t his statement an implicitly adverse comment on him, his administration and the Yale Trustees (or the Yale Corporation, or whatever they call the highest mucky mucks) because it shows that, despite Yale’s fantastic annual endowment earnings, they previously did not have enough concern for parents’ financial problems to actually do something to alleviate the outrageous cost of tuition, but instead contented themselves with merely thinking about it? Moreover, isn’t it the truth that the sudden attention being paid by Congress to the fantastic earnings of schools like Yale and Harvard, coupled with their equally fantastic tuitions, is the only reason why Yale decided to move when its endowment reached 22.5 billion although it would not move when its endowment was a “mere” 17 billion or “only” 12 or 14 billion?

There is, of course, another and obvious problem. Yale and Harvard have acted. Other similarly high powered colleges could act, but are resisting it, pleading financial inability despite endowments ranging, roughly, from one billion to fifteen billion dollars. But even if a whole slew of them acted -- which probably ain’t gonna happen, Jack -- this would just be a band aid on a gusher. It would only help some thousands of students, maybe 20 thousand, maybe fifty or a hundred thousand, maybe even a few hundred thousand, who knows? But aren’t there literally millions of students who are facing, or whose parents are facing, debilitatingly high costs of higher education? Aren’t there more millions who simply can’t afford to go to college? If I am wrong about all this, please let me know. It would be great to stand corrected, but why do I think that’s not likely to happen?

So Yale and Harvard and their filthy rich academic brethren are reacting or will react to the immediate pressure of the moment, but their actions cannot even begin to solve the overall problem. Only a sea change in academic thinking and action, or in legislators’ willingness to provide tuition aid, could solve that. But not to worry. It’s no never mind, right? As the country goes down the drain for this and a myriad other reasons, usually involving mendacious fool politicians, dishonest businessmen whose sole God is gigantic profit, callous and uncaring federal judges, neocon inveterate warmongers, etc, we can at least have a good laugh at the statements made by the Jon Stewarts, Stephen Colberts and, when you get right down to it, the Mort Sahls of the academic world. As said, not to worry.*


* This posting represents the personal views of Lawrence R. Velvel. If you wish to comment on the post, on the general topic of the post, or on the comments of others, you can, if you wish, post your comment on my website, VelvelOnNationalAffairs.com. All comments, of course, represent the views of their writers, not the views of Lawrence R. Velvel or of the Massachusetts School of Law. If you wish your comment to remain private, you can email me at Velvel@mslaw.edu.

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