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Colleges Shouldn't Be Run Like a Hedge Fund

How unbelievable is this: in order to raise money after its endowment took a 19 percent hit in the second half of 2008, The University of Pennsylvania has increased the price of undergraduate attendance by 3.8 percent. Other private universities have been slashing financial aid in order to compensate for their shrinking endowments.

At a time when fewer and fewer people can afford to pay for college, these schools are going out of their way to make higher education even more expensive. Their justification? Oh, well, the huge pools of money that they manage, which before last year had been on a roll, haven't done so well lately. Since when did Penn or Harvard or Yale become for-profit institutions?

Does anyone remember tuition going down back when University endowments were soaring? Didn't think so. What are the people running America's top schools thinking? When our endowments make boatloads of money, we have to increase tuition! When they lose money, increase it some more! Poor Penn's endowment has shrunk to a mere $5 billion, give or take a few million.

Repeat after me: a University is not a hedge fund, and it shouldn't be run like one. You'd think this would be obvious right? Apparently not to the people in charge of these Ivy League schools. They seem to care more about their endowments then their students. But what's the point of having all that money if you don't spend it on anything useful?

Look, it's one thing if the University of Phoenix Online, DeVry, or ITT Tech want to raise tuition right now. They're all for-profit, publicly traded companies that exist to make money.

Penn, on the other hand, does not exist for the purpose of capital appreciation.

Questions? Comments? Send them to millennialmoney@cnbc.com