“Then the school is still receiving taxpayer charity???” Not sure what you are referring to here, do you mean federal financial aid that students can get? That ‘charity’ is going to the student, to help them pay for an education, it isn’t going directly to the school. That doesn’t mean I am not critical, NYU (which I happen to be an alum of) is one of the biggest rip offs out there, they give very little financial aid and they these days have a huge endowment, that they use on things like buying townhouses for 10 million to attract some superstar professor. The ivies have large endowments (Harvard’s is some ungodly figure), but they also are pretty generous with aid, even if you aren’t dirt poor.
There are rules about endowments, the way endowments work is they are supposed to use the return on the endowment being invested to use for spending on things like teacher salaries, student aid, stipends for grad students and so forth, they generally don’t spend the capital itself. There are federal tax regulations involving these, and if they don’t spend a certain amount of their endowment each year they can get in trouble.
The other problem is with endowments, sometimes the universities hands are tied, they often get ‘targeted endowments’ that can be used, for example, to put up buildings with a benefactors name or be used to endow a chair to fill some desire of the donor, but can’t be used for financial aid or running costs. I have heard of money being endowed that schools literally cannot use the principal or investment return on anything, because the terms were that restrictive.
That said, as my comment about NYU above shows, I agree that someone should be asking questions about how these schools are operating. I will add that with endowments, you also have to be careful, because they also can be paper monsters, for example, if stock is donated to the school, and that stock’s price plummets, like after 2008, you will see the value of the endowment drop significantly. Unfortunately, endowment money often seems to be used on vanity projects, like a new building with some donor’s name, or as I noted on purchasing expensive things for the use of school administrators or star faculty, so I think these are questions that should be asked, I just think we also need to be careful of assuming that somehow a big endowment means they could operate on a tuition free basis. One thing they always claim is that the cost of tuition alone does not pay for the total cost of educating a student, that one I have never had totally proven out to me, I kind of wonder what kind of slight of hand the schools use with that one.