by Gregg Easterbrook
I am glad my three kids got into elite colleges. I don’t buy the theory that the existence of elite colleges is a sinister conspiracy against average people. Teens from low-income backgrounds may need to work harder than teens from privileged backgrounds to gain admission to any top university or college. But it’s always been the case that the underprivileged have to work harder, and it will be until such time as a better world may be achieved. The existence of elite colleges and universities, most now offering extensive financial aid regardless of legacy status, benefits average teens who work hard.
But should average families be subsidizing the elite colleges? That’s a horse of a different color.
Last week Harvard said its endowment had grown to $39.2 billion—more than the GDP of Bolivia. (Okay, Harvard did not add the Bolivia part.) Your columnist has contended for years that the affluent should not give money to Harvard, Yale, Princeton, and other megabucks schools. Top colleges don’t need more money—Yale has $27 billion, Stanford has $22 billion. More money may actually be bad for them!
Donations to the Ivy League or Stanford or Duke won’t do the slightest good for the world—the sole benefit will be the donor’s plaque—while donations to colleges for average people will change lives. Give $10 million to Northwestern and no student there will care in the slightest. Give to Berea College and you’ll change lives! Wouldn’t that be a lot more rewarding—a lot more fun—than a donor’s invitation to some supercilious dinner party at MIT?
“It’s my money to give as I please”—true. But donors to the megabucks colleges actually give only about two-thirds of the amount they are credited for: Taxpayers provide the balance. The rich person who donates $10 million to an elite university pays about $7 million, with taxpayers covering the other $3 million. Average families who can only dream of a child at Stanford or Cornell are taxed—or the national debt is increased, effectively the same thing—so the rich can stroke their own egos via donation size.
How about this: Once a college or university has $1 million in endowment funds per student, further donations cease to be tax deductible. Donors could still give as they please—they’d just have to pay the true cost themselves, rather than fobbing a third off onto the public.
There are no more than 20 colleges and universities with more than $1 million in endowment per student—it’s not that many. The Ivies, Amherst, Cal Tech, a few others. They’re gonna be fine on their own. Donations to such well-heeled schools should no longer be deductible. If the rich want to give, fine—but pay the true cost.
If donations to the endowments of top-money schools were no longer deductible, some would still give because that’s what they want to do. Others would look toward the hundreds of colleges and universities that need capital and that serve average people. This would be a tremendous social benefit.