Like many people, I’ve long argued that Britain’s best universities should abandon the public sector, building up and relying on endowments to fund students from modest financial backgrounds. I’d routinely cite Harvard where anyone with a family income of below US$60,000 pays no tuition, and those on US$150,000 only pay the equivalent of ten per cent of that figure and no more.Anyone advocating such a system has to consider what has happened at Harvard in the wake of the crisis in the financial meltdown, which had reduced the value of the endowment by forty per cent. Huge building projects have been kicked in to touch, leaving a giant hole where a new science centre was to stand, while humanities departments are facing cuts of twenty per cent and more. Students are being deprived of cooked breakfasts, free coffee and a campus bus service. One reason for this parlous state of affairs is that for years the Harvard Management Company, which invests the endowment, was allowed to run amok, investing in ever more dodgy financial instruments. The fund managers lacked oversight, and were more interested in racking up salaries of upto US$ 10 million a year.
It is all very well to recommend that a few British universities go down this route, but we should be clear about the possible downsides.