HARVARD'S ENDOWMENT is roughly $35 billion. Shrewdly invested, it has been earning a double-digit rate of return. If the rate for the new year is 10 percent, the endowment will rise by $3.5 billion, which is almost $10 million a day. Even the cash in Scrooge McDuck's money bank doesn't grow as fast. The question arises: How should these yearly gushers of new money be used?
One answer has been offered by Harvard itself. It is to use some of the money to cut the price of an education at Harvard College, even for students from households with incomes of up to $180,000. But such households are in the top 10 percent of the income distribution, and probably aren't particularly needy. And so a much different answer has been proposed by Herbert Allen, the investment banker.
Allen's plan is to tax all of the new money each year at the capital gains rate of 15 percent and send the proceeds to colleges whose endowments are small, the better for those endowments to grow. He hasn't singled out Harvard. He would see the tax levied on a number of other endowment-rich schools as well, including his own alma mater, Williams. Still, if Harvard's 2008 return were $3.5 billion, the sum that it alone would send to low-endowment schools would be $525 million.
But here's a third option: At its own initiative, Harvard could take 15 percent of its yearly return and hold on to it, and, rather than dedicate it to price cuts for the upscale, it could use the new money year by year to create a common-sense alternative to the prevailing definition of a good college.
Our common-sense definition of a good surgeon is one who can take on tough cases and get good results. The same holds for our definition of a good lawyer, a good plumber or a good auto mechanic. The same should also hold for our definition of a good college: It is a school that takes on academically tough cases and, on the strength of its excellence, gets good results. To use a figure of speech: A good college is one that takes a slice of bread and turns it into a slice of buttered toast.
But the prevailing definition is wholly at odds with a common-sense definition. Today, a good college is one that serves the easiest of the academic cases. These are the students with a history of top grades and high test scores - the slices of bread that have undergone some toasting and buttering already. If the logic of this definition governed our definition of a good surgeon, it would be a surgeon who can remove a wart - and a good mechanic would be one who can check the air in your tires.
The academically easy cases tend to be individuals who are the traditional age for college and have been raised by college-educated parents who are able to apply both a lot of money and a lot of human capital to the active and intensive cultivation of the academic skills of their children. The academically tough cases are individuals of the traditional age and older who show a spark - but whose life circumstances have denied them the advantages lavished on the academically easy cases.
As part of the effort, Harvard could educate a significant number of students who are custodial single parents. It could cover their living expenses, equip them with any tutoring that they may need, and provide the children with a private school education during their parents' years at college.
Such students needn't displace the academically easy cases. Amherst College is opening its doors to more students who come from less privileged backgrounds, and is doing it by expanding the size of its enrollment. Harvard could do the same.
Harvard knows how to be a place where students can enter with 1,600s on their SATs and leave with 1,600s on their Graduate Record Examinations. It probably doesn't know how to be a place where students can enter with 850s on their SATs and leave with 1,400s on their GREs. There's no shame in this. If there are any colleges that know how to do it, they have inexplicably kept it a secret. The shame lies in possessing the resources to become the first to learn how to do it - and thus show the rest of higher education how to do it, as well - but failing to use the resources for this public-interested purpose.
Ralph Whitehead Jr., a guest columnist, is a professor of journalism at the University of Massachusetts at Amherst.
