https://www.nytimes.com/2017/11/10/opinion/ivy-league-offshore-tax-stanford.html
And the UC system is increasingly financially out of reach of many middle class families. I attended a UC back in the 80’s and was able to graduate debt free. That would not be the case for my son…
He is currently benefitting from a very generous Ivy League education where FA is calculated on a need based level. Many of my son’s classmates come from low and middle income families. Should the Ivies increase their enrollment? Probably…
While I agree that the returns from the endowments should be taxed at a low rate, it’s a false argument to look at a static freshman class size. Increased aid to students is a better metric. Berkley is also known for impacted majors and students having difficulty scheduling classes. Growth of freshman classes requires growth in infrastructure, and academic and support staff.
Yale did just increase it’s freshman class size but they will never be the size of a flagship in one of the largest states.
While Harvard might help hundreds low income students a year-- remember,the Ivy League schools have consistently maintained a 50% FULL PAY student population for years–The UC’s help tens of thousands flow income students. Imagine if they had one quarter of the financial resources that the Ivy League and other private schools have, what social good they could be doing. I just can’t understand how Stanford, Harvard,Yale etc are major contributors to the common good and why their huge endowments shouldn’t be taxed. They help a minute number of students compared to public universities. And I say this as an undergraduate of one of the private elites, but whose two kids have and are attending UC’s with fantastic results. UC’s are the true social levelers inCalifornia and if thy had more funding, perhaps the complaints about overcrowding and impacted majors could be remedied. My kid managed to graduate on time with no problems from Berkeley BTW, not to say there isn’t room for improvement.
If the government taxes endowments, the top schools will raise tuition even more, and admit fewer low income students.
It is a huge benefit that most of the world’s best schools are in the United States. We don’t want to screw the up. States are already slashing public funding and it is also increasingly difficult to get research funded.
The problem with public U’s like Berkeley is they haven’t effectively used their alumni base to build their endowments over time, like they should have (Except Michigan and Texas
Why should Harvard, for example, with a 30 BILLION dollar endowment HAVE to raise tuition. That’s just greedy and another clear example of how it isn’t an institution that is working for the public good. Same for all the tippy tops with huge endowments. Make your endowment really work for the public good or pay taxes like the rest of us.
I’m kind of disturbed by the anti-intellectual/anti-collegiate tone of a lot of reporting these days, and this article adds on to that. They push colleges to increase enrollment, but where do they think all of these new students are going to live? How many kids per class are there supposed to be? I know a lot of big name colleges are building new dorms and recruiting new professors, but in the end you don’t want to give tomorrow’s students a worse experience than today’s. There are only so many star professors, and if you want a campus to remain walkable you can only build so many dorms, especially if there’s already a city surrounding your college.
I agree that it makes sense to consider taxing endowments. However, I don’t think it is true that keeping a constant study body size means that private schools aren’t providing benefits to the public. There are a lot of ways to benefit the public, including research breakthroughs, cultural activities, etc etc.
Nothing wrong with that, since the top 5 per centers will just pya more. heck, i have no doubt that the top 1% would easily pay $100k/yr for HYPS, if their scion could get in.
Nah, that would not happen. The bad press from the NYT would embarrass the heck out of them. Not to mention, Congress would raise the tax even further. 
Are churches also fleecing the taxpayers? How about charitable institutions?
If we’re going to start taxing non-profit institutions to pay for huge tax cuts to businesses and multi-millionaires, why stop at elite colleges?
Colleges become “elite”, and rich, in part because of the many votes of confidence they get from alumni contributions and research grants. They serve the public by discovering and sharing new knowledge. Elite colleges typically grant need-based aid to about half of all enrolled undergrads, with grants averaging $30K-$50K or more. In constant dollars, the net cost to attend elite schools after average n-b aid has not increased significantly in decades.
There is however a supply-demand problem. Nearly all elite colleges were built over 100 years ago. Meanwhile the population has tripled, with higher overall percentages attending college (and more doors open to women and minorities). Just taxing endowments won’t address this problem, not without a plan to direct new revenues to higher education. How likely is that to happen?
The issue is, what does “work for the public good” really mean?
To have been recognized as a non-profit educational institution implies that at sometime in the past the then-arbiters of these things decided that the institution’s expressed mission (research as well as education), and thus essentially the institutions very existence, in and of itself constituted a “public good.”
And just to note, there is already a system of accreditation in place to periodically review what’s actually happening at these institutions in order to ensure that they are living up to their stated missions.
“It is indefensible”.
I’ll have a go at it.
Why not attack the Penn State’s of the country- public institutions with nosebleed prices, which have been investing in athletics at the expense of academics for over a decade? I won’t bother to list all the institutions where athletic coaches make more than world class professors and researchers. Or public universities which focus on building state of the art dorms, stadiums, and recreational facilities while letting labs and archives languish.
If you live in a state where your flagship has luxurious changing facilities for varsity athletes but has closed or consolidated academic departments- well, start there.
Private institutions are private. Its the so-called public U’s which are bleeding the middle class of their states dry to focus on some pretty dicey priorities. You have states with huge populations of under-served citizens with chronic health issues which haven’t increased the number of spots in their flagship U medical school or nursing school in over ten years.
To me, THAT’s what’s indefensible. Do I care what Harvard does with its money? Frankly, no. But a flagship U which isn’t serving its population in public health, dental and medical care, elementary education? I care about that and you should too.
You can take a look at the vast economic engines-- Harvard, MIT, BU Northeastern and the like- and what they have done to the entire economy of Boston and the surrounding region- and then argue about how they are living on taxpayer dollars. These universities are huge drivers of innovation, entrepreneurship and employment and the cities and states where they are located understand very, very well exactly what they contribute both to tax rolls (payroll taxes) and to overall economic wealth. Cities want the hospitals and labs and hundreds of PhD’s which private universities bring-- why? Not because of federal student loans, that’s a drop in the bucket. They want them for the economic benefits they bring to the entire region.
Exactly how is Harvard taking your hard-earned dollars? Yes, they benefit from federally backed student loans. But if those loans went away tomorrow, Harvard would still be Harvard but the third tier public college down the street from me (which is essentially a Pell grant factory- it will take ANYONE who can get a Pell, and its graduation rates are obscenely low, and the employment rates of its graduates is equally obscene) would close in a nano-second.
So go ahead- tax endowments, eliminate federal student loans and grants. And see which colleges have been good stewards of their resources and which ones have not been.
Are colleges also not typically exempt from paying property taxes? Presumably that is a large benefit or “cost” to taxpayers.
Might answer your question on how some are taxed and the “benefit” that is given to the taxpayers of some of these communities.
Why does this often feel like tearing at the elites rather than insisting publics clean up their financial facts? And that the states meant to support them are doing it well (and appropriately for their people?)
It seems to me, as some have suggested, that the real issue is whether universities (private or public), churches or other non-profits should be tax-exempt if they take in revenue. There is no compelling case for separating private elite universities from churches that have huge real estate holdings or museums located in prime downtown neighborhoods. Either they should all have exemptions from taxes or none should. We’ve used tax policy to encourage contributions to charities and as a way of financing excellence in higher education without government expenditure. That has benefitted parts of the US economically but it has done so unevenly. Silicon Valley exists because of Stanford. The Boston area is the predominant area for biotech and increasingly for pharma research largely because of MIT, Harvard including Harvard Medical School, and probably Northeastern and Tufts. San Diego has a biotech hub because of UCSD, Austin because of U of T and state investment to build up a semiconductor hub, etc. It seems simplistic and naive to say that we don’t like this particular way of financing academic excellence without proposing another. In the current political environment, politicians won’t vote for support of academic excellence of any kind. Not clear why a far-sighted view about the economy of the country would suggest cutting of this financing mechanism.
I suspect that the uneven distribution of benefits from these gains is part of the cause of the resentment. Perhaps what we should be working on is how to ensure that a broader segment of the country participates in the gains in wealth that are being created rather than trying to tamp down the source of the wealth.
Politicians probably are not thinking further than the next election. And they probably reason that if they leave a long term mess (e.g. greatly increased national debt), it will be someone else’s job the clean up.
Considering that the general trend is for economic gains to be more concentrated to those at the very top, and politicians either do not seem to know what to do about it, or want to accelerate that trend, it should not be surprising that people are more prone to thinking of the economy in zero-sum or negative-sum terms, which makes for nastier politics in general, and a greater tendency for those who see themselves as future economic losers in the existing economic system to be more easily led to support things like racism or communism.
No one tells all those folks they have to give to Harvard. For various reasons, alums and “friends of the college” want to. My kids’ school does a great job of making us want to. (Not just tales of kids helped by finaid, more about the direction the school is taking to get better and better.) My own alma mater, not. And for years, DH wished his UG would forget his name (nothing wrong with the school, it’s more that in hindsight, it wasn’t perfect.)
We both did grad school at a well known top public. When they email (and for some reason, his email from the school or his dept comes to me,) my reaction is always “First, clean up your own financial act.”
Hard? Maybe. But you vote with your wallet.
For high achieving low to middle income students, many of the “elite colleges fleecing the taxpayer” provide a much more affordable education than the student’s home state U. Want to see a real example of non-profits fleecing the taxpayers? Don’t have to look to far to find Roy Moore and the amusingly misnamed Foundation for Moral Law.