Tax policies and exemptions, reinforcing rich elite private schools in US

Il est évident pour satisfaire les petits rejetons du 1%, on doit s’assurer que les universités soient à leurs hauteurs, détournons les fonds américains pour qu’ils soient avantagés.


Source: Higher education wealth gap widens

Extrait de: 22 Richest Schools In America, By Richard Vedder and Christopher Denhart, Forbes, 7/30/2014

The 22 schools holding half of U.S. endowment wealth enroll just 5% of higher education students.  If anything, that’s an understatement. The concentration of wealth of the 22 schools includes three large public university systems with multiple campuses.

·       The eight Ivy League schools in the top 22, for example, alone have over 21% of the total American endowment assets, but well under 1% of the students.

Assuming a conservative 4% payout rate out of endowments, the two richest schools, Harvard and Yale,  are spending well over $2.1 billion a year  for 35,000 students, or  about $60,000 a student, about eight times the average appropriations state governments provide four-year public universities.

Moreover, many highly endowed schools also receive huge federal subsidies to support research. For example, Harvard and Yale in the 2011-12 academic year together received over $1.262 billion in federal support. Adding that on to endowment spending  (assuming a 4% payout), these schools are spending well over $96,000 per student –without considering revenues from tuition fees, foundation grants or alumni support. The typical state school spends less than $25,000 per student from all sources.

Contrast the highly endowed schools with those holding the other one half of endowments. The second half serves nearly 10 times the number of students as the top 22 schools. One of us attended one of the top endowed schools (Northwestern) as an undergraduate and teaches at a typical state school (Ohio University) today. Both have similar enrollments, but Northwestern’s endowment is nearly 18 times that of Ohio University. Assuming the same 4% payout rate, Northwestern has about $16,800 per student in annual endowment income, compared with less than $800 at Ohio University. Additionally, Northwestern receives vastly more in federal grants and contracts than Ohio University to support large research programs.

Do these disparities in funding impact reputation and performance? Yes. FORBES prides itself that its rankings are based on outcome based measures that interest students, such as whether they get good jobs, can avoid large student debt, or like their instructors. But money can buy good instructors or reduce debt. Wealthier schools can and do use their resources to improve their rankings. It is no accident that the top five research universities (as opposed to liberal arts colleges) on the FORBES 2014 Top Colleges list –Stanford, Princeton, M.I.T., Yale and Harvard –had five of the six largest endowments in the U.S.

These universities at the top are extremely successful in raising funds and managing their wealth.  We do not have a problem with large endowments, however, we do question whether the U.S. government should expend public resources to further this disparity.

Favorable tax policies and exemptions, unequal research funding and donor tax write offs all play into reinforcing disparities between rich, elite private schools and poorer public institutions. 

The federal government’s mission is to further education and research for the good of the broader public.

Yet its tax and subsidy policies are akin to give tax exemptions for donating money to the members of the top one percent.

It amazes us that so-called “progressives” who deplore the wealth and power of the top one percent usually call for expansion of the current system of financing universities, rather than reforming it to remove the advantages accorded to the rich school.

·       Maybe it is because so many of them personally were educated themselves at these citadels of privilege.


·       Perhaps schools with large endowments

Ø should not remain tax exempt,

Ø and maybe they should even pay an endowment tax,

Ø or, at the very minimum, they should have to dedicate more endowment funds to lowering tuition costs for their students.


·       Yet leading liberals like President Obama, Bill and Hillary Clinton and Elizabeth Warren (all of whom taught or attended either Harvard or Yale) are silent on this issue –does their loyalty to their alma maters blind them to addressing the financial power of the academic one percent?


(Click to enlarge)

Top 22 Richest Schools in America:

1.       Harvard University, $32,334,293,000

2.      Yale University, $20,780,000,000

3.      University of Texas System, $20,448,313,000

4.      Stanford University, $18,688,868,000

5.      Princeton University, $18,200,433,000

6.      Massachusetts Institute of Technology, $11,005,932,000

7.      Texas A&M University System and Foundations, $8,732,010,000

8.     University of Michigan, $8,382,311,000

9.      Columbia University, $8,197,880,000

10.  Northwestern University, $7,883,323,000

11.   University of Pennsylvania, $7,741,396,000

12.  University of Notre Dame, $6,856,301,000

13.  University of Chicago, $6,668,974,000

14.  University of California, $6,377,379,000

15.   Duke University, $6,040,973,000

16.  Emory University, $5,816,046,000

17.   Washington University in St. Louis, $5,651,860,000

18.  Cornell University, $5,272,228,000

19.  University of Virginia, $5,166,660,000

20. Rice University, $4,836,728,000

21.  University of Southern California, $3,868,355,000

22. Dartmouth College, $3,733,596,000