There’s a certain delicious irony in seeing Harvard finally face threats to its tax-exempt status. One might suspect it’s just political revenge for ideological excesses, and perhaps in part it is. But far more overdue is the substantive question: why should one of the richest corporations in the world—functionally a $53.2 billion hedge fund—enjoy the tax privileges of a charity?
If the revocation comes, it should not be because of what Harvard says (though it is nice to see them finally discovering the virtues of free speech), but because of what Harvard is: a financial empire, no different than any on Wall Street, that shields itself from taxation by tethering itself to a university. A wealth-hoarding nonprofit that behaves more like a sovereign wealth fund with lecture halls stapled to it. A luxury brand with admissions. And lest you think this an exaggeration, consider that if Harvard’s endowment were treated as the hedge fund that it is, it would be the 6th largest in the U.S.. It sits alongside firms like Bridgewater, Millennium, and Elliott, pays no corporate tax, no capital gains, and no property tax on its vast holdings, save for a minor excise fee.
Consider also the salaries at the Harvard Management Company, which runs the school’s endowment. Its CEO earns $9.6 million. The CIO pulls in $7.6 million. Portfolio managers rake in $5 to $6 million each. These are not faculty. They don’t teach. They don’t research. They extract—and they do it all under the sacred protection of a nonprofit charter.
Harvard is not alone. Yale, Princeton, Stanford, and Penn all follow the same model: hoard multibillion-dollar endowments, pay Wall Street salaries, build bureaucratic empires, and expand campuses like conquering monarchs commissioning palaces. It is the great con of higher education: a tax-free cartel of credentialing, wealth preservation, and administrative indulgence.
And that’s just the beginning. University presidents routinely earn seven figures. Bureaucrats now outnumber faculty. Adjuncts teach the courses while vice provosts for student wellness earn $300,000 to oversee “belonging initiatives.” Dining halls serve gourmet vegan cuisine while humanities departments fight over crumbs. And the buildings—designed by starchitects—look more like tech campuses than places of learning.
Meanwhile, American students drown in debt. As I’ve previously written, universities are not victims of the student loan crisis—they are its beneficiaries. They raise tuition with impunity, knowing either the students, or Washington will foot the bill. Then they wash their hands of the consequences when students are shackled with debt for decades.
So what should be done?
First, no nonprofit—university or otherwise—should be allowed to pay any employee more than the President of the United States. If you’re tax-exempt, you shouldn’t be shelling out hedge fund salaries. Period.
Second, endowments should be taxed not just on income but on principal. The current 1.4% excise tax on income is a fig leaf. Once a university sits atop more than, say, a billion dollars in endowment assets, it should face a progressive tax on all of it—just like any trust or estate would, and it should be prohibited from receiving federal money.
Third, no school receiving federal money should be permitted to charge their students more than $10,000 per year.
And finally, the revenues from the endowment taxes should be redirected to forgive the very student debts these institutions helped create. If universities can charge like luxury brands, pay like hedge funds, and behave like corporations, then they, not the American middle class which is already stretched thin enough, can pay the bill when students are left bankrupt.
This isn’t an attack on education. It’s a defense of it. Because education is not what these institutions are selling anymore. They are selling exclusivity. They are selling access. They are selling tax-exempt privilege disguised as moral authority.
Strip away the Latin mottos and neo-Gothic towers, and what you’re left with isn’t a university. It’s a hedge fund with a mascot. It’s time we called it what it is—and sent the bill.
