Author Topic: How big government, colleges are making billions off kids  (Read 497 times)

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Offline jmyrlefuller

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How big government, colleges are making billions off kids
« on: May 26, 2014, 01:26:14 pm »
http://nypost.com/2014/05/25/end-joke-of-non-profit-u/

by Jonathan M. Trugman
May 25, 2014

It’s “Pomp and Circumstance” time across US university campuses, so let’s commence with what is wrong with colleges today. All involved have their hands in the students’ pockets, including Uncle Sam. Private colleges and universities now charge $40,000 to $50,000 a year, including room and board. Incoming freshmen in September will have a total student-debt load of more than $200,000, should they finish in four years. According to the Congressional Budget Office, the feds will turn a $127 billion profit off student loans over the next 10 years. School endowments now total $448 billion in assets under management — all tax free. So to the Class of 2014: You were screwed, and the sheepskin you picked up will not land you a job that will pay enough to afford you the luxury of both paying off your student loan and going out to eat once a week. Thank you. Please see the bursar before getting your diploma.

So this week, to mark graduation season, a conference call was organized by US Sen. Al Franken (D-Minn.). On the call was the economist Larry Summers, a former president of Harvard who also led President Obama’s National Economic Council. On the call, the participants made the point that interest rates on student loans were too high. Summers sharply diagnosed how student debt has slowed our housing recovery and is now becoming an impediment to overall US growth. All true, but to blame the interest rate is similar to blaming the loan shark for his vig being too high. Why are we making middle-class families pay close to a half-million dollars to educate two kids in the coming years, when everyone else in the process is making billions? Since I am not in Washington I can see, hear, smell and touch the elephant in the room. The inequitable tax status of colleges and universities as “not for profit” is insane.

But don’t tell that to the $18.2 billion Princeton Endowment. It just gave its four fund managers a mind-blowing 46 percent raise over last year for merely matching the average endowment return of 11.7 percent. The lucky four will split between $9 million and $10 million. The justly esteemed Princeton charges $58,965 per year for one of the best educations in the world. But if it opened its billfold, without spending a cent of its precious principal — just returns— 37,100 kids could become Princeton Tiger fans next year, for free. But since Princeton educates only 7,800 kids — 7,300 of whom are undergrads — it’ll even have a few bucks left over. Let’s look at the math: $2.187 billion of profit – (7,800 x $58,965: $460 million) = $1.7 billion left over with which to make exotic trades in far-flung investments.

So I say to the Class of 2014: You leave this august institution, which was meant to serve the greater good, a little poorer — but richer in the knowledge that the alumni association will be asking for donations in the coming months.
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