Cramer's Outrage: College Tuition Increases

Cramer's Outrage of the Day

Cramer is outraged at private universities that are raising tuition during the worst economic downturn since the Great Depression.

Somewhere along the line universities seemed to have prioritized their endowments over their students, Cramer said Tuesday. How else would the University of Pennsylvania’s mid-recession tuition hike be explained?

UPenn’s cost of attendance just went up 3.8% to just under $50,000 a year, according to Bloomberg. Apparently the school’s endowment lost 19% in the second half of 2008, so the administration’s taking steps to shore up its reserves. In fact, a lot of universities right now are either increasing tuition or cutting back on financial aid for this very reason.

Strange, though, that these supposed nonprofits choose asset classes over, well, classes. Penn is sitting on $5 billion, so it’s not like the institution’s broke, Cramer said. Couldn’t some of that money go to students in need? And how come tuition wasn’t cut during the boom periods when those endowments were raking it in?

The bottom line here is that universities are being run like hedge funds, Cramer said. Money has become more important than students, but that just shouldn’t be the case. Instead, colleges should use their endowments to fund education rather than raise tuition to offset losses in those endowments.

Alumni – think twice about donating to a school that’s hoarding cash at a time when student loan money is becoming more and more scarce.

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