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Inequality Today
Occupy Higher Ed?

A tiny number of superstar colleges are getting the lion’s share of endowment contributions—making them immune to the disruptions reshaping the higher education sector—while middle- and lower-tier colleges are getting squeezed tighter and tighter. From Inside Higher Education:

College endowments may have grown last year by the smallest amount since 2012, as reported elsewhere on this site today, but institutions got some good financial news in the 2015 fiscal year: charitable contributions to colleges and universities rose to a record level, $40.3 billion, the Council for Aid to Education reports in its annual Voluntary Support of Education survey.

Even so, a small and exclusive coterie of institutions is disproportionately benefiting from donors’ largesse. The top 17 colleges and universities — less than 1 percent of the total universe of about 3,900 institutions — accounted for more than a quarter of the contributions, $10.42 billion. And 60 colleges and universities, under 2 percent of all institutions, received $20.15 billion, half of the total.

This is partly a downstream consequence of income inequality: As alumni of the top colleges see faster and faster wage growth, their (tax deductible) donations to their alma maters will also increase. But it’s also a cause of income inequality, for it means that the educational, extracurricular, and economic resources available to Stanford and Harvard students will continue to expand, while the resources available to students at West Texas University or Cal State Chico stagnate. Yes, some of the endowment money at elite schools goes toward financial aid for disadvantaged students, but “the proportion of raised funds that are committed for financial aid has held relatively steady for the last two decades,” according to IHE.

Despite all the progressive rhetoric about equality that emanates from the Ivy League, elite education is one of the key vehicles by which America’s upper class sustains itself. People who are really interested in leveling the educational playing field need to think of more creative solutions than simply constructing more social justice centers on elite campuses. For instance, they could explore the possibility of creating a system of national exams so that students from lesser-ranked colleges have a better chance of competing for jobs, or, as Glenn Reynolds has suggested, the idea of capping the tax deduction for endowment contributions.

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  • Jim__L

    The elites in this country are simply too inbred and too exclusive.

    MOOCs can help counteract this, by efficiently creating an abundance of opportunities to learn. “Social Justice” wars that simply shift around the allocation of scarce Ivy League seats, cannot.

    • Fat_Man

      It is going to take a lot more than MOOCs. The Ivies don’t teach anything anymore that can’t be learned in a hundred other venues. Any bright kid in this country can get into a college that can teach him anything he needs to know to succed in life, other than the who. As in it’s not what you know, it’s who you know. Seriously, Harvard is not a better school than Michigan State, or any other major state university in this Country.

      It is not about the curriculum, it is about the social system. That system needs to be smashed, and I think the way to do it is admission by lottery.

  • qet

    You could expropriate Harvard’s entire endowment and give it to Chico State and in 50 years you would have the same results as you do today. Harvard, Stanford et al. attract the best students because of their reputations. Kids vie with one another for entry. Chico State with $30+ billion will still be Chico State. You’d do better to require that Harvard, Yale, Stanford and the other 57 use their endowments to quadruple their enrollments and build the necessary facilities for that. Assuming that there is not one elite 1% scion who is currently being relegated to Chico State, all of those extra places will automatically go, if not necessarily to “the disadvantaged,” at least to the “more deserving.”

    • Fat_Man

      A distraction at best. The point is not to shower the money one one particular place, the point is to more fairly allocate the resources that the taxpayers are investing in the system. Harvard by reason of its tax exemptions, tax deductible donations, und so weiter, is subsidized by the taxpayers at a level far above Chico State or Michigan State or any other public college serving the middle class. That is unfair. Especially considering that Harvard and its cohort enroll a far higher proportion of the rich and well born who have no need of the subsidy.

      • qet

        Unfair perhaps, but the thrust of TAI’s writing on this subject is not to do with some fundamental unfairness but with the production of outcomes. Redistributing the Ivy’s billions to Chico State might be per se more “fair,” but the TAI argument is that the Chico State graduates will then receive the employment opportunities presently afforded only to the Ivy grads. It is my belief that this is incorrect.

        TAI sometimes writes as though the Ivies (and I use this term not for just the 8 official Ivies but for all “elite” colleges, however that status is determined) are the sole possessors and dispensers of some unique public good, and that policy ought to reallocate that public good among many more colleges so that it can be bestowed by them upon their students. Other times TAI writes as though it is the admission to the Ivies themselves that must be reallocated according to some scheme so that “disadvantaged” persons can enter and, upon leaving, join the 1% or the elite.

        My view is that TAI’s latter instinct is closer to the truth than its former. The way to bestow the Ivy magic dust on more deserving persons than currently receive it is to require the Ivies to use their mountains of lucre to greatly expand their capacity so that all of the newly created admissions places can be allocated to the “more deserving,” which would occur of necessity as I suggested that there is currently not a single unworthy well-born legacy scion who is not already there.

  • Fat_Man

    “Paying Tuition to a Giant Hedge Fund: Harvard’s academic mission is dwarfed by its $30 billion endowment.” by Ron Unz.

  • Fat_Man

    The most urgent tax reform I can think of is to tax the trillions of dollars worth of assets that have accumulated in College and Hospital endowments, and private foundations. These institutions are rich, are heavily subsidized by the tax system through tax exemptions and tax deductions for contributions, and they do not adequately share their wealth with the public.

    To me, we need to draw a much sharper line for tax privileges. A school should not be able to claim that it is a charity if it demands tuition before enrollment. A hospital is not a charity if patients are legally obligated to pay for their care. A foundation that gives away less than all of its income and a portion of its principal every year is not a charity.

    If those institutions want to continue as they have in the past, fine, but they should be taxed like other business corporations.

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