This fall your president has been on the receiving end of gifts exceeding $100 million. Since I've spent most of my life as a teacher, taking in such sums has not been an everyday occurrence for me, and in case you wonder, I will tell you: This work is hugely fun! But what really delights me is that these gifts were made for what I regard as the best of causes, to support financial aid. Let me explain why securing permanent support for aid is so critical for Duke right now.
Education is only partly about the transmission of knowledge and skills. At bottom, it's a process of enablement: It's about giving the young the exposures, stimulations, hard trials and challenges and encouragements that allow them to realize their powers and build the most capable version of themselves.
We get the good of education when people are able to live up to their potential and deliver on their promise. I have fresh in my mind some Duke graduates I heard from this weekend: people like Judy Woodruff, one of this nation's most trusted news correspondents; or John Mack, the leader of Morgan Stanley; or Carlos Bagley, a Duke football player and Duke med grad who is completing his residency in neurosurgery at Johns Hopkins. Going to Duke didn't make such people what they became. They had to have it in them to do what they later did. But if they started with a gift, schooling let them deliver the social payoff of their gift.
When people can afford good education, they ought to pay for it, for there's nothing of greater value in our world. But we need many more people to get the benefit of education than those whose families can pay the bill. As you know, inequality of educational opportunity is a profound problem in America, and in tolerating this fact this country pays far too little heed to its social cost: the losses we incur through the talent we're failing to develop.
No university has the power to solve the whole of this problem, but just for that reason, we have an obligation to do what we can. When Duke makes outstanding education available to talented students without regard to their family's financial circumstances, we're doing our part to assure that the promise of today will be able to deliver its benefits to the world tomorrow. The three people I mentioned were all able to attend Duke thanks to financial aid.
Last year Duke spent $129 million on financial aid: $59 million for undergraduates, $50 million for graduate students and $20 million for other professional students. About 45 percent of all Duke undergraduates received aid from the University, with the average need-based grant running in excess of $21,000 per student per year.
Since we're able to afford these hefty contributions, it may seem that Duke is well positioned to meet this need, and in significant measure, we are. But the underlying facts are sources of concern. Duke's financial aid costs have been growing rapidly in recent years, far faster than revenues that might offset them. Duke's budget for need-based undergraduate aid rose nearly 75 percent between 1999 and 2005 while tuition and fees rose 26 percent.
The reasons for this increase are various and they will continue to be felt. Duke's costs have been driven up by the increased financial need of our students' families, including middle-class families who find it increasingly difficult to meet college costs. Over time, the declining share of federal co-investment has raised the share that falls to colleges and universities. Twenty years ago, federal funds supported 20 percent of Duke's need-based aid; the number is 8 percent now. In addition, our costs have grown through increased benefits Duke offers to students on aid-for instance, the grants now available in lieu of summer earnings so students can take advantage of summer opportunities-and through the introduction of aid to international undergraduates, in amounts I'm eager to expand.
Duke is pledged to meeting all these costs. But to meet mounting obligations we need new sources of funding, and we need to put this cost on a more reliable foundation. At Duke's strongest rivals, as much as 80 to 90 percent of the financial aid budget is supported by endowments dedicated to this purpose. At Duke, a much younger school, less than 20 percent of annual need-based aid costs are thrown off from endowment gifts made for this cause. What this means is that Duke meets most of its aid commitments out of operating funds that support everything else, including academic programs. And what this means is that as Duke's aid budget continues to grow, our commitment to aid increasingly competes with our need to fund the programs that make top students and faculty want to come here in the first place.
I want to keep Duke accessible to talented students, and I want to prevent future collisions between two fundamental imperatives, our obligations to social openness and to academic excellence. Let's be clear: Students benefit from both, and students will have the most to lose if we ever have to sacrifice either good to the other. In seeking $300 million to endow financial aid in all schools, the Initiative aims to give permanent support to our most fundamental missions.
Last week, I was presented with a petition signed by nearly 3,000 of you in support of this good cause. It means a lot to me that Duke students want to be active partners, not just passive recipients of University aid. It also delights me that you recognize that aid benefits not just the students who receive it, but every student at Duke. In truth, this school gives a better education to everyone who comes here when we bring together the most intelligent, most dedicated, most high-spirited and most thoughtful students we can find, irrespective of family economic circumstance. I thank everyone who will be working for this cause-and everyone who understands why it matters.
Richard Brodhead is president of Duke University.
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