School choice: Middle class priced out of endowment enclaves

Each March, hundreds of thousands of families with high-school seniors gather around their kitchen tables to decide which college the kids are going to attend in the upcoming fall.

These families, from all socioeconomic backgrounds, have to wrestle with college decisions that affect the lives of the entire family.

Most kids going off to college do understand that the career track for those who go to college is broader and that the future employment rates are far better than for those who don’t.

But at what cost? Over the last few years, tuition at most private colleges has risen faster than the rate of inflation. The average cost of living at and attending a private college last year rose 4.3 percent, to $42,224.

Public universities raised their tuition and fees, on average, to $8,244, up 8.3 percent last year.

Community colleges — often seen as the best buy — billed an average of $2,963, up 8.7 percent, according to the nonprofit College Board.

Roughly 80 percent of the nation’s undergraduates attend public institutions.

As a result of the economic downturn and high unemployment, public universities’ and community colleges’ enrollment have become a hot commodity.

At a private college or university, an education can cost upwards of $200,000 per kid, with tuition, room and board commonly in the $40,000 to $50,000-per-year range, for 30 weeks of schooling.

That’s out of reach for the typical middle-class family. When their kids go to college, many end up in difficult circumstances, selling their home, going to one car from two and living around the poverty line just before their retirement years.

And yet year after year these private enclaves raise their costs while sitting on the proverbial pot of gold: the university endowment.

These “not-for-profit” institutions are fleecing Americans. The US taxpayer — all the families deliberating at those kitchen tables — directly and indirectly subsidizes college and university costs, which shield their multibillion-dollar endowments. Then these same educational institutions stick it to their students and their families, many of which are forced to take on massive amounts of debt just to pay their outrageous tuitions.

Private colleges and universities more closely resemble investment vehicles than educational institutions. The highest-paid employees are not the professors, but the investment managers who make millions.

Many of these managers come from the ranks of JPMorgan, Goldman Sachs and Pimco.

This comes in the trappings of a “not-for-profit educational institution.” At least JPMorgan, Goldman and Pimco pay taxes. Where’s a pay czar when you need one?

Not-for-profit institutions are supposed to be granted their tax-free status because they “perform a public good,” like a charity. But just how much “public good” are these private, overly endowed institutions actually doing?

No educational institution should be able to charge tuition while its endowment has billions in concealed capital invested all around the world — and while the US and its flawed tax system underwrite their finances.

In the end, the government has created the biggest trust fund babies of all — in our university system.