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Comment by the_watcher | Hacker News Reader

Tax-exempt endowments seems like the absolute most logical loophole to close (perhaps a minimum size, but the point stands). They're some of the largest institutional investors in the country, yet they're taxed like a non-profit. Even if donations aren't taxed, just treat the endowments like any other institutional investor.

NOTE: This should not in any way rule out additional tax reform, whatever your preferred mechanism. The point is to treat multibillion dollar institutional investors like multibillion dollar institutional investors, however we wind up choosing.

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> They're some of the largest institutional investors in the country, yet they're taxed like a non-profit.

Is there a reason we shouldn't treat major educational institutions as non-profits, assuming we accept the concept of non-profits in the first place? (Note that the rules for non-profits already require spending a certain amount of the endowment every year.)

I think the argument is that they are much less accessible to students with less privileged backgrounds.

If one views the subsidy associated with the non-profit status as a form of education spending, it's fair to ask whether that is the best use of that money.

> I think the argument is that they are much less accessible to students with less privileged backgrounds.

That's exactly backward though. The Ivy League schools all have need-blind admissions and meet 100% of demonstrated financial need (for U.S. students)

And yet the median income of the students parents at ivy league is something like $125k while the median income in America is more like $50k right?

It would be shocking to me if the profile of students applying to Ivy League schools didn't skew substantially high on median family income, highest degree attained by parents, and SAT scores.

Successful parents breed (read: raise) successful children. Surely not in every case, but in aggregate. As a successful graduate of a small tech school in Cambridge, I was aided by my parents' educational bent, bias, and investments of time and money. They were aided by their parents, just as my wife and I will aid our children.

sjburt said they are less accessible to poor students, which I was defending as true.

Is accessibility best measured by:

P ( student_is_poor | student_attends_ivy )

P ( applicant_is_admitted_to_ivy | applicant_is_poor )

I take the view that the latter is the better measure, but I can see people arguing that the former has some relevance.

The point is that both are low, I would accept the second metric and I don't think it shows what you seen to claim it does. If you take all the applications submitted, income would be positively correlated with acceptance even though it is "needs blind". Some of that is implicit, but some of it is likely explicit (admit kids who played polo over kids who worked at McDonald's if everything else is equal)

I agree that both are low. MIT's acceptance rate is a little under 1 in 12, and several Ivy League colleges have an even lower acceptance rate.

I further agree that there is a positive correlation between income and acceptance. I further agree that there is a positive correlation between income and application. What I don't see is any productive way to 100% eradicate those correlations.

I'm only familiar with the admissions policies as practiced by MIT in the late 80s and early 90s. There was explicit bias for diversity (which is good; no one wants an utterly homogenous population), but I also think it's perfectly reasonable to deny admission to a very selective university to a student who is utterly undistinguished in all aspects of their high-school career. Admissions to selective schools ought not become a totally random lottery.

I think that removing financial gates for those students who are accepted (need blind admissions) is mandatory and effective. Going beyond that is fraught with peril I think.

Even if your tuition to Harvard or Yale was $0/semester, you still need to live nearby to attend. And if you're going to succeed, you're not going to want to have to take a minwage job in order to eat/stay warm/have clothes. Having the money to set up a student in a completely separate apartment (or whatever) means you're more likely to be in that $125k range than not.

This is "not even wrong."

Residential life is part of the package of top-tier universities - you live in the dorms first year by default, and are usually required to. When students migrate to nearby apartments depends, and is sometimes never.

Financial aid offices "meet demonstrated need" and don't typically differentiate between tuition, fees, and room and board.

If a student with a full ride moves off, financial aid cuts them a check for living expenses. Sometimes this amount is calculated based on the expectation that the student will work a campus job (with govt-subsidized wages - Work Study) and sometimes not.

Do you know what the median parent income is like for students at Stuyvesant High School?

Non profit charities MUST spend 5% of their endowments on charitable projects. Some argue universities should do this too.

Building the future doesn't count as charitable?

No, because you could use that same vague statement to describe Google since they are building self driving cars.

Many endowments at least aim for this. Harvard's target every year is to spend 5-5.5%. Actual spending over the last decades has been 4.2%-6.1%.

> Is there a reason we shouldn't treat major educational institutions as non-profits,

Because universities are increasingly operating like businesses, using technology transfer offices to bring in revenue and using graduate students to cut labor costs.

Just their endowments. Their endowments are not even taxed on gains. As I mentioned, a good first step would just to be treating the endowments like the institutional funds the behave like. Keep donations to the school (which fund the endowment) tax-free, if you want.

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