Colleges in America Amass Billions While Claiming Financial Strain as Trump Takes Aim at Federal Funding

Two decades ago, or even just a decade back, I would have been appalled by reports of administrations slashing grants to universities and eliminating thousands of campus jobs.

However, the current barrage of education-related tales is riddled with a significant omission.

Consider Johns Hopkins.

NBC News was among several outlets to report on the “severe consequences” stemming from the new administration’s policies on this renowned institution, emphasizing that “the changes will also have an economic impact in Baltimore, as the university is Maryland’s largest private employer.”

NBC noted that “approximately half of Johns Hopkins’ funding last year originated from federal research dollars, according to a letter from Ron Daniels, the university’s president.”

It struck me as peculiar that the “largest private employer in Maryland” relies so heavily on federal “research dollars,” but I brushed it off and visited the Johns Hopkins website to find Daniels’ letter.

When university presidents have a financial stake in the matter and the opportunity to articulate their thoughts, expect an avalanche of lofty rhetoric.

Daniels certainly delivered.

In a letter titled “Our bond in a moment of challenge,” he declared that Johns Hopkins holds “a special place in the landscape of American, and indeed, global higher education.”

Indeed, the landscape!

He continued: “Owing to our researchers’ remarkable success in securing merit-based grants and contracts year after year, we are, more than any other American university, intricately connected to the agreement between our sector and the federal government. For instance, nearly 50% of our total incoming funds last year were generated from research conducted on behalf of the federal government . . .”

Well endowed

A brief exploration of the JHU site later led me to the Johns Hopkins Public Interest Investment Committee’s annual report, released in January.

There, I discovered that “as of June 2024, JHU’s endowment consisted of over 4,700 funds, each allocated for specific purposes, schools, or faculty — totaling around $13.5 billion.”

This represented a 23% increase from the previous year, amounting to roughly a $2.5 billion rise.

Speaking of “our bond,” JHU has three corporate bond funds worth $1.37 billion.

Columbia University is in an even stronger position, boasting a $14.8 billion endowment as of last June.

Additionally, as student loan advocate and presidential hopeful Alan Collinge notes, the institution possesses $3.7 billion in unused cash reserves, beyond its endowment.

Keep in mind, publications like The New York Times have been churning out articles about Columbia with a similar narrative: “Pediatricians tracking the long-term health of children born to mothers infected with the coronavirus during pregnancy. Scientists searching for links between diabetes and dementia . . . [all] abruptly terminated . . .”

No one mentions that Columbia could likely fund treatments for those children and patients without even needing to touch its endowment.

They’ve opted not to.

No matter your stance on the cuts, witnessing a financial powerhouse like Columbia claim poverty is grotesque.

Hidden cash reserves

I first discovered the topic of schools hoarding hidden cash reserves years ago while reading Rolling Stone, when Collinge informed me about a remarkable blunder in Wisconsin.

Kevin Reilly, president of the University of Wisconsin, inadvertently revealed in a state hearing back in 2013 that his school was sitting on $648 million in reserves, above its endowment.

This figure had soared by 62% over the previous two years, after a period where tuition had increased by 5.5% annually since 2007.

This revelation came during a proposal to provide an additional $181 million in taxpayer funding to UW’s seemingly struggling budget.

“The good news is, no dollars have been reported missing,” Gerald Whitburn, chairman of the UW Regents’ Budget, Finance, and Audit Committee, quipped sheepishly.

Collinge graduated from USC with a degree in aerospace engineering in 1999, lost a job, and watched his $38,000 in loans balloon to $100,000. After struggling with depression, he vowed to expose Sallie Mae on “60 Minutes” if it was the last thing he did.

“Lo and behold, I ended up being interviewed by Lesley Stahl within about a year,” he recalled.

‘Pretend they’re poor’

Collinge’s platform, StudentLoanJustice.org, evolved into what he calls a “complaint box for the industry,” spotlighting the questionable financial practices within higher education.

“Colleges are more awash in cash today than at any point in US history, even when adjusted for inflation,” he asserts.

“Yet, here we are, watching them desperately try to act as if they’re financially strapped.”

Universities are so effective at marketing that many voters remain unaware of the multifaceted exploitation they engage in at taxpayer expense.

First, there’s the long-standing commitment of federal legislators to finance state-backed loans for “every student who wishes to attend college,” combined with the uncomfortable reality that anyone hoping for even a clerical position must now obtain a secondary degree (despite the degree offering little guarantee of employment). As a result, colleges have essentially become immune to market forces.

They thrive on significant subsidies through unlimited federal lending, enabling them to continually hike prices and spend extravagantly on administrative growth, seldom passing on savings to students while simultaneously enlarging their endowments.

University administrators, in their relentless pursuit of profit, prioritize lavish amenities such as rock-climbing walls, zip lines, and water slides over reducing costs.

Even lesser-known institutions now showcase more contracting inefficiencies than the average Forward Operating Base, with extravagant dormitory constructions serving as glaring symbols of taxpayer funds: GENEROUSLY SUPPORTED BY YOUR ENORMOUS FEDERAL LOANS.

Between opulent architectural endeavors and annual headlines celebrating endowment growth, it’s difficult to sympathize with universities lamenting even substantial federal funding cuts.

While it’s easy to empathize with impacted employees and researchers, these are extraordinarily wealthy institutions that, despite often being led by incompetent management, have been blessed with a riskless profitability model akin to that of too-big-to-fail banking or NFL ownership.

It’s virtually impossible for Ivy League institutions to incur losses, prompting one to question professors claiming they’re being “picked apart and destroyed” over a $400 million reduction in taxpayer funding while sitting on $20 billion in assets (or, in Harvard’s case, losing $686 million while holding $53 billion).

Do they understand how that sounds?

‘Myopic & exploitative’

That said, subsidizing high tuition, extravagant construction, and an increase in non-academic personnel might be acceptable if universities were genuinely educating the youth and conducting meaningful research.

Instead, schools have morphed into public-private hybrids thriving in what Austin Powers would refer to as a “consequence-free environment,” unresponsive to market demands (which would call for enhanced teaching or affordability) or voter concerns (the same).

They compete on prestige, granting degrees steeped in self-centeredness and intersectional nonsense that primarily serve the networking needs of the affluent, offering little else.

In recent years, taxpayers have funneled hundreds of millions into supporting censorship, gain-of-function research, and a plethora of pointless DEI programs that mainly function as job creation for under-skilled upper-middle-class individuals.

While many good individuals are likely facing hardships due to the recent funding cuts, and there are indeed genuine concerns around free speech, the academic reaction suggests these institutions are so shortsighted and fundamentally exploitative that they cannot be salvaged without first being dismantled.

They need to be brought back to reality, but if they resist, what options do we have?

Reprinted with permission from Matt Taibbi’s Racket News.