Roundup: Week of October 1 – October 5

Wealthy College Endowments Keep Increasing

The endowments of the nation’s wealthiest universities continue to soar. Stanford University reported this week that its endowment grew by 23 percent to a staggering $17.2 billion in the 2007 fiscal year. Stanford’s announcement follows those of Harvard and Yale, which reported gains of 23 percent and 28 percent respectively. Endowments have drawn the attention of the Senate Finance Committee lately, which has questioned the types of investments that colleges have been making. The panel is also considering a proposal, which Higher Ed Watch supports, that would require wealthy colleges and universities to spend a minimum percentage of their endowments each year. Predictably, college leaders and lobbyists have denounced the plan. But we at Higher Ed Watch believe that such a requirement could be used to significantly increase socioeconomic diversity at elite colleges.

Sallie Mae Rejects Lowered Buyout Bid

The student-loan giant Sallie Mae this week rejected a lowered buyout offer from an investor group that had agreed to buy the company in April. That group, led by the private equity firm J.C. Flowers & Co., had initially agreed to purchae Sallie Mae for $25.3 billion, but that agreement fell apart last week following claims that the company would be worth less following the passage of legislation cutting student lender subsidies. Instead, the buyout group offered $21 billion for the company, which would be $10 less per share than the original $60 per share offer. Despite Sallie Mae’s position, Higher Ed Watch and market analysts believe that a deal will eventually be struck.

Graduation Rates for Big-Time Sports Programs Remain Low

The graduation rates of mens college basketball, football, and baseball players increased slightly last year, but continued to lag behind those of male athletes taking part in all other collegiate sports, according to new data released yesterday by the NCAA. Of athletes who entered college between 1997 and 2000, the NCAAs data shows that only 64 percent of basketball players, 67 percent of Division I-A football players, and 66 percent of baseball players had graduated within six years. Many of the most successful sports programs posted the lowest graduation rates. For example, in mens basketball, not a single University of Maryland scholarship player graduated within that time period. Comparatively, the University of Texas graduated 33 percent of its scholarship players, and Ohio State graduated 40 percent. The NCAA uses a “Graduation Success Rate” (GSR) metric to track athletes instead of using the federal graduation rate, which tracks only first-time, full-time students. The GSR does not count athletes that leave school “in good academic standing” but it does count athletes who transfer into an institution.

Ed Dept. Will Stop Program Aimed at Keeping Student Loan Default Rates Down

Citing its cost, the Department of Education announced that it will discontinue a program that had been used to keep borrowers from defaulting on their student loans. Under the “Voluntary Flexible Agreement Program,” guarantors are rewarded for keeping borrowers out of default rather than for collecting on defaulted loans. When Congress created the program in 1998, it required that it be “cost neutral” to the government. Education Department officials argue that the program should be ended because it doesn’t meet that requirement. In response to the department’s announcement, Senators from the five states that have guarantors that participate in the program wrote a letter to Secretary of Education Margaret Spellings expressing their displeasure. Were concerned that the Department may terminate a model that has been successful in preventing students from defaulting on their student loans, they wrote. If these guarantors are forced to rise to the traditional guaranty agency model, its obvious that student loan default rates will rise.