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Jonathon Trugman

Jonathon Trugman

 Business

Huge college endowments too rich for my taste

By
Jonathon Trugman
Published April 21, 2018, 9:33 p.m. ET

Nothing better demonstrates the utter gall of ultra-liberal socioeconomics these days than the sheer nerviness of large university endowments.

Case in point: universities that have well over $1 billion in “endowments” just sitting in their investment portfolios making money.

In the 2017 tax bill passed under President Trump, universities of a certain size will finally have to pay a minuscule tax on their “endowment income.”

The new tax has led to absolute unrest in the ivy-clad halls, and these liberal institutions are spending millions on an army of lobbyists to get it changed.

Interestingly, this fight comes at the same time high school kids have to look over their college acceptances and financial aid awards to determine which ones Mom and Dad can afford.

The size of the endowment plays no role in this decision, since it is not used for the benefit of lowering tuition. The financial tension — and burden — for families has never been so high.

According to the Bureau of Labor Statistics, over the past 20 years, college tuition and fees have risen 157 percent. The Consumer Price Index on inflation rose just 52 percent over the same period.

Back in 1995, the total of all college and university endowments was $109.7 billion. At the end of 2017, it stood at $566.8 billion, according to the National Association of College and University Business Officers.

That’s well over a half-trillion dollars of hoarded “not for profit” higher education capital.

At the same time universities have amassed this “trust fund,” student debt to cover tuition hikes has skyrocketed to more than $1 trillion.

Can you spell chutzpah?

In fact, the artificially high tuition prices are just that: artificially inflated, so that schools can now claim they are giving kids a break.

At most universities, professors don’t make a lot of money. The property is generally owned and paid for, and new expansion is financed through a new round of fundraising.

But there is money to spend on lobbyists in order not to be taxed 1.4 percent on just the “income” derived from these investments.

If it were up to me, I’d tax their “investment income” at regular capital gains and income tax rates.