Last summer in The New York Times, Victor Fleischer, a law professor at the University of San Diego, took several big-name schools to task for the ways that they handle their endowments. Fleischer cited Harvard, the University of Texas, Stanford and Princeton — but he reserved his harshest criticism for Yale University, which he says pays private equity firms $480 million a year to handle its endowment. Meanwhile, he says the school spends only $170 million dollars on financial aid for students — while tuition constantly rises.

“As some of these endowments grow larger and larger, the group that benefits the most is not students; it’s not faculty. It’s the fund managers who manage the money,” Fleischer says. “What is the endowment there to serve? It should be to advance teaching, research and scientific inquiry.” He points to the ways the universities managed their money during the tough financial losses of the financial crisis. “It’s striking that, in those circumstances, where you would expect the universities to tap into the endowment for a lot of support, they didn’t. Instead, the focus was on growing the endowment back to the previous size.”

Malcolm Gladwell, the author and New Yorker writer, commented: “Is our educational system better or worse off for having a small number of schools with a massive amount of money, and a very large number of schools who are hurting? There are tons of students at other colleges who are carrying enormous debt loads through their 20s and even into their 30s because school has gotten so expensive. I think Yale should say, at the very least, “We do not deserve to have tax-exempt status for our endowments. It’s one thing if a school has an endowment of $500 million that they are stretching a million different ways to meet the needs of its students, to say that as a society, we should allow them to escape taxes so they can spend their money on education. That logic does not hold when you’ve got $35 billion in the bank, as Harvard does. I think people are free to pay money managers what money managers charge, and money managers are free to do with their money whatever they want. The issue is that all of this circular system is tax-deductible. You and I, and everyone else in America, are subsidizing this activity.”

A group called Nexus calculated the per student annual taxpayer contribution for different kinds of educational institutions in the US. For the typical community college in this country, it comes out to [between $2,000 and] $4,000 per student per year. For a typical state school, it’s $10,000 per year. For Harvard, it’s $48,000 per year, for Yale,$69,000 per student per year, and for Princeton, it’s $105,000 per student per year of taxpayer subsidy. There’s something wrong with a society that spends 50 times more subsidizing the students at Princeton than it does subsidizing the students of a typical community college. That’s wrong.