How Tax Breaks Help Richest U.S. Colleges Get Richer
During his successful quest to win Pennsylvania’s 20 electoral votes, Donald Trump told the state’s voters that colleges are fleecing taxpayers and enriching Wall Street.
“What a lot of people don't know is that universities get massive tax breaks for their massive endowments,” he told a crowd in suburban Philadelphia. “These huge multibillion-dollar endowments are tax-free, but too many of these universities don't use the money to help with tuition and student debt. Instead, these universities use the money to pay their administrators, or put donors' names on buildings, or just store the money away. In fact, many universities spend more on private equity fund managers than tuition programs.”
Trump promised to make universities’ tax breaks contingent on schools’ willingness to reduce tuition prices—and lawmakers are now considering bills to do just that. New data released in April could fuel those legislative initiatives.
According to a study by Stanford University scholar Charlie Eaton, universities are using their endowments to haul in more than $19 billion in tax subsidies every year. The analysis, which compiled data from 1976 to 2012, found that as the tax expenditures have flowed to college endowments, those endowments have exponentially grown—and have funneled billions to Wall Street money managers who make big fees off the pools of cash.
Despite the tax breaks and the flood
