If the Ivies lost their tax-exempt status what would the impact really be?
A much better solution would be to require the schools to increase their payout. Require them to spend 6 or 7% of the endowment every year, which is more than they spend now. Whether they spend it on financial aid, research, facilities etc. is up to each of them. However, they will still be using it to make improvements in educational opportunities for current students and faculty, which is much better for everyone than hoarding it forever. There is no reason to give them tax-free status on the endowment if they are only going to hoard that money forever and not spend it to improve education.
The reason that they don’t spend more now is that they want to be conservative since they do not know what will happen to their investments in the future, so they tend to keep spending low and accumulate assets. It looks like they need a nudge to spend a bit more of for its intended purpose: to enhance current education at their institutions.