Stop Universities from Hoarding Money

Sure they do. If universities are getting juicy tax subsidies, then taxpayers have some right to set reasonable guidelines.

If the universities don’t like it, then they should just eschew the tax-free goodies and change their status to For-Profit enterprises.

Wasan’t there a bill introduced in Congress a few years ago on this issue. It was promoted by Sen. Grassley. It would have required colleges with huge endowments to spend a certain percentage every year or lose tax exempt status. That effort must have died.

I wouldn’t donate to a charity that did not spend it’s money on its mission.

Or Congress could attack the issue from the other side. No tax deduction for those who give to institutions that don’t spend a certain percentage of their donations on their mission.

GMT PLUS7
only hillsdale college has the right (and rightfully so) to ignore the federal government.but for other schools there are two problems one is it is a slippery slope and two the current president and academia and the administrative side of colleges and universities are very cozy and supportive of each other. so nothing will change for years if ever. so it is just pie in the sky.

Lil bit off-topic but @blossom

I’d rather that than have my tax money going toward the “food” called chicken nuggets and fries.

Kids will eat if they are hungry in my experience, even if it is healthy stuff and they’d prefer junk food. And apparently many kids are doing exactly that…which saves us tax $ down the road.

http://www.medpagetoday.com/Pediatrics/Obesity/38327

…agree with everything else you said :slight_smile:

I say there should be a cap on endowment for all schools in order to remain in the ‘non-profit’ category, and that cap should be enforced retroactively. Schools with endowments over the cap can choose to either invest back into the school, spend it on science/medical research, donate it, or have it dispersed to tax payers. Hopefully this would provide an incentive to stop hoarding cash, as well as to discontinue use of endowment size as a rankings metric.

Federal Government is subsidizing students at these major universities who have huge endowments.

If there were stipulations put on endowments to lessen the load on the government (aka taxpayers) you bet these schools would do more for students and hoard less. Mark it down.

Those are separate issues. It would be very easy for the Federal Government to just stop “subsidizing students at these major universities”…(however you define the term, subsidy).

It is unbelievable how people act here–this is not the USSR. These endowments are not “for the people.” They were raised by the school FOR the school.

Then the schools should just use the endowment money FOR the students and stop expecting taxpayer handouts. Why the heck are taxpayers on the hook for Pell grants to Harvard, when Harvard’s $32B hoard produces 6-figure earnings per student per year???

This is welfare to the college 1%.

For what it’s worth, even though I am glad that universities tend to be conservative with their money, I am absolutely against Pell grants and related programs being used for private schools. I believe public funds should be reserved for public schools.

I think Pell grants to rich schools should be means tested.

I think some of you people have a hard time understanding the big picture. Somehow, the concept of a $32 billion dollar lump has you blinded to reality. Harvard and the like sell their product at below cost due to their endowments. They represent a tremendous public good.

Yeah, but they could EASILY afford to give it away for FREE, but instead, they have taxpayers pick up part of the tab.

I don’t see the issue as that cut and dried.

I think the question is primarily a philosophical one about public policy - Are we giving money to poor students to get an education, or are we giving money to colleges to educate poor students?

The current Pell program gives grants to poor students, and they can decide which accredited college will give them the best education. The student then pays with their own money plus the Pell grant plus financial aid.

With this philosophical stance, saying that a student can only use their Pell grant at a public college would be strange. It would be like saying that welfare recipients aren’t allowed to shop at the same grocery stores as non-welfare recipients; they should only be allowed to buy food at public institutions like … say, the government surplus cheese store. With this philosophy, only allowing Pell grants to be used at public colleges treats poor students like second class citizens. (Of course, there are almost no public grocery stores and public housing isn’t considered very good, while there are many wonderful public universities.)

An alternative philosophy is the one behind public education. There, the state / local government runs the school and supplies some or all of its budget. The government’s money goes to the school, not the student. The government gets to run the school - they can practice open admissions (K-12) or selective admissions (public universities); they can set tuition ($0 for K-12, $$$$ for public universities); they can control the curriculum (tightly for K-12; loosely for public universities).

With this philosophical stance, the government could abolish the current Pell program and replace it with further subsidies for the tuition of poor students. Poor students can decide whether they want to attend a cheaper public college or a more expensive private college. (One complication is that the Pell program is a Federal program, while it’s the state governments that run the public universities, so I suppose the Federal government might want to take control of public universities so that poor students didn’t have to pay out-of-state tuition unless we also forced poor students to stay in-state.) Remember also that state governments spend a chunk of money running community college systems. Their mission is often focused on educating low income students at low cost.

I guess we could convert systems, but it seems like a lot of work for little-to-no gain to me. I don’t think it’s a national tragedy that a relatively small number of Pell grants are being used to help send poor students to schools like Harvard. Honestly, in my case I thought it was quite a good thing :wink:

We means test the students already. How do we means test a school? Does this mean that poor students should only be allowed to attend schools that are near bankruptcy? Public universities like the University of Michigan have operating budgets of billions a year and almost $10 billion of endowment, so it would probably fail a means test. I suppose you could concoct a means test that Michigan passed but Harvard failed, but it seems quite mean to discourage poor students from attending Harvard and Stanford.

Harvard returns more than enough good to society to make up for whatever they greedily manage to grub from the poor overworked American taxpayer.

Do you have any concept of what life would be like for many of you if those who could up and only took care of themselves?

This is simplistic thinking. The endowment size could easily be assessed per capita.

OK, On a naive basis, there are only about 34 colleges which have higher endowment per capita than Michigan - mostly selective universities and LACs. I think it’s a little mean to discourage poor students from attending these colleges and I’d rather see public policy encourage more socioeconomic diversity at these schools rather than less. Oh well.

Also, there is an subtle economic point that might (or might not) change your opinion. The annual state appropriation that Michigan gets is economically equivalent to an annual draw from a “phantom endowment”. It’s as if Michigan has an endowment of $7 billion in addition to the $10 billion that you can see. In other words, Michigan’s budget is the same as an identical private university with an endowment of $17 billion, not $10 billion. So, on an apples-to-apples basis, Michigan’s endowment per student puts it ahead of Ivy’s such as Penn, Brown, and Columbia (and possibly Cornell too but Cornell also receives state subsidies so I’m not sure how the math works out) - I’m trusting Wikipedia’s math.

Public universities alternately highlight and hide this point depending on the audience and the message they want to convey to them.

In terms of the federal money elite institutions receive Pell grants are small potatoes.

In 2012 Harvard students received less than $14 million in Pell grants.
(6,700 undergrads x 17% receiving Pell grants x an average grant of $12,000)

At the same time Harvard received around $135 million in federal research grants.
http://www.thecrimson.com/article/2012/12/30/sequestration-research-budget-cuts/

If we’re willing to subsidize Harvard’s research budget why not its teaching budget? You could say that federal research money encourages essential research, but doesn’t federal FA make it easier for places like Harvard to accept students with full financial need? Do we really want to give elite universities a disincentive to educate low income students?

edited to correct typo

There are many questions:

  • should endowments be taxed
  • should churches be taxed
  • should corporations be taxed for off-shoring
  • should hedge fund transactions be taxed

There are many ways to make college more affordable. And it doesn’t help when people fixate on rankings and rankings reward bloated schools. Let them sell tee shirts and bumper stickers and get out of the way for schools that will help create the next generation of innovators and leaders.

@bluebayou - why should the government have to pay Federal Work Study grants for students to work at a school with billions in endowment?