$53.2 billion endowment. $86,705 annual student cost. 1,352 administrators for every 1,000 students.
We cite the case of Harvard University only as an example. It is the wealthiest university in the US, but hardly the only wealthy university. Moreover, the structural inefficiencies at Harvard, long overlooked by government funders, are matched, more or less, by other universities.
Watch that key phrase: “more or less.” To research the actual financial conditions at Harvard is maddening. Is the total number of undergraduate students 5,699 or 9,095? Both answers (and a third one too) come up repeatedly. Is the average professorial salary $147,000 or $211,924? Again, both answers come up, as well as another. In fact, every fact that impacts the finances of the university is elusive. Wide margins characterize the discrepancies.
That said, look how much money Harvard takes in, however you figure it, then ask: Why should taxpayers pay for research at Harvard? The issue isn’t the research. The issue is whether public funds are needed to sustain it — whether Harvard can sustain the research with the resources it already has — if it’s willing.
A few financial perspectives:
Income from students. If one takes even the lower number offered for undergraduate students, and multiplies it by their tuition alone (not including fees and other costs), Harvard earns more than $336 million annually from its undergraduate students. Of course, some students are on scholarships, but these are covered by fundraising and other Harvard resources. Of course, the $336 million isn’t income to the university free and clear, since professors must be paid and there are other costs. But observe: One recent survey shows 1,352 administrators for each 1,000 students. This is administrative bloat in the extreme. This is sheer waste. Cut that waste and there you have hundreds of millions of dollars for research stemming from tuition and fundraising alone.
Income from endowment. But Harvard’s income doesn’t come from tuition and fundraising alone. It also comes from its gargantuan endowment of $53.2 billion. One recent argument for government funding for research at Harvard noted that the university endowment endowment provides “only” 37% of Harvard’s costs. Ask anyone outside the university bubble who has to meet a budget how it would feel if 37% of the budget were automatically covered! Only in the academic bubble — the bloated university context —with its super-high student costs and super-high employee benefits, would a 37% return on an endowment trigger the claim that if not for government funding, research at Harvard would be doomed.
Donor directed funds. A significant percentage of Harvard’s endowment consists of donor directed funds, not available for general operations. But what percentage? Good luck trying to find that out. But whatever the exact figure, donor directed funds alleviate the need for direct university support across virtually countless fields and programs. A donor directed endowment benefits Harvard one way or another. Clearly, these funds also reduce the overall financial burden on the university.
Income from tax breaks. Tax breaks benefit universities well beyond a university’s tax exempt status. Whether Harvard has violated its tax-exempt status, as the Trump administration charges, we shall leave to the lawyers. Whether Harvard faculty benefit from the same tax breaks that faculty at other elite universities benefit from, we cannot determine. But either way, the question remains: Why should American taxpayers finance elite universities through tax breaks that ordinary citizens do not enjoy? And how can elite universities plead poverty if the government stops funding their research?
Take Columbia, for example. According to the Wall Street Journal, Columbia pays a significant portion of K-12 private school tuition for the children of professors, while Princeton pays 100% — and the faculty need not report this as income! If a private school charges $55,000 a year, why should a faculty member not need to report this free (or partly free) tuition as income? The issue with universities is not only inefficiency, it’s fairness.
Another example: Stanford builds entire neighborhoods for faculty and makes it available at below market rates — savings that the faculty need not report as income. Harvard offers interest-free loans to faculty for the benefit of their children. Other Americans do not enjoy these benefits tax-free. Why should taxpayers shoulder this burden — and also send hundreds of millions of dollars to universities for research?
One cannot escape the conclusion that the complaint by Harvard (and other elite universities) against the government for cutting or threatening to cut government funds for research does not stem from concern for the research. It stems from the universities’ objection to having their gross inefficiencies exposed. It stems from the unique sweetheart tax deals the government extends to universities. It stems from the public expecting the university radically to reduce their inefficiencies before pleading poverty as the justification for government funding.
What is the true financial need of universities for government funding for research? The universities know how to extract every last detail of the financial status of a scholarship applicant, but don’t apply the same standard to themselves when, in effect, they apply for scholarships from the government.
© IJN 2025
