HIGHER EDUCATION BUBBLE UPDATE: Why should elite universities get more taxpayer support than regional public colleges?

Public institutions frequently go begging because they are supported by a combination of steadily rising tuition and declining tax revenue. And state legislatures must publicly balance the share of tax revenue allocated to these colleges against competing budget demands, such as highways, health care and public K-12 education.

In contrast, taxpayers, for the most part, unknowingly support private institutions primarily through tax deductions and exemptions. For example, gifts to university endowments are tax deductible and the earnings on these endowments are exempt from taxation, as are the endowments themselves. For elite private institutions, those with endowments in the billions of dollars, the size of these tax breaks can dwarf the direct subsidies that taxpayers send to public institutions.

These tax breaks are rarely debated because they are hidden in the tax code. Meanwhile affluent private universities, claiming their importance to the realization of the American dream, do everything in their power to silence any questioning of their right to enrich themselves through favorable tax treatment. However, it is important to remember that these tax breaks are not divinely ordained.

No, they’re not. Plus: “Few students attend these elite private schools. In contrast, the vast majority of American students enrolled in four year schools attend regional state universities. These unassuming institutions are the workhorses of American higher education. Yet compared to the level of taxpayer subsidies received by their rich private brethren, these regional campuses are grossly disadvantaged.”