How Colleges Make Billions

Updated: Apr 18, 2021

College is a Business

Why does college cost so much? Because it’s a remunerative and grievous business, a business of shackling teens to horrifying mountains of debt. Colleges are a lucrative business; they make windfalls of money through Federal Loans that lend hundreds of thousands to reckless seventeen-year-old kids that are yet to be exposed to the hardships of adulthood. It is immoral, but it is highly profitable. Colleges use student loans as their primary source of revenue, and then use this money to further proliferate their capital for future ventures. College was a rare concept in the mid-1900s; it was extremely expensive and a small majority could afford it. As a result, the very first federal loans were issued, making education in fields of science, math, technology, and so on much more affordable. Students no longer had to pay for college from their own pocket, they could borrow fortunes to pay for their education and would pay back the money later. However, this senseless mindset is what would initiate the insatiable greed from colleges. As education became more affordable and college attendance arose, so did tuition prices. If the government was paying for all these tuitions, what was stopping colleges from raising tuition prices exponentially? Thus, a new era of debt enslavement began. Students were devoured by large amounts of debt after college, their financial conditions were unstable. The advent of student loans permanently changed society’s interaction with formal education, colleges now prioritize profits over the practicality of their education, as shown through their usage of tax benefits and establishment of billion-dollar endowments.

The IRS & Colleges

Businesses get taxed, citizens get taxed, so even colleges that are making billion-dollar revenues should get taxed too. Exemption from taxation is the focal point when it comes to a school’s structural integrity, and it serves as the primal cause for the greedy complexion in colleges. The government is not discreet about who they offer loans to; they distribute and offer them as if it were free money. This makes it easier for colleges to attract students. According to the IRS, under clause (C)(3), “Income from activities that are substantially related to the purpose of an institution's tax exemption..are not subject to federal income tax” (IRS C3). This would mean only tuition and donations are taxed, right? The millions in revenue from football games, concerts, basketball tournaments, all of those other recreational events that have nothing to do with education are taxed, right (IRS)? Once again, wrong (Valuetainment). Why are revenue sources that have nothing to do with college education exempt from taxation? What purpose does it serve? Unfortunately, its “purpose” is just to further fuel colleges' desire for money. It is high input and minimal output. It is windfalls of money in, and not a single dime out. Let us run the numbers real quick and take a look at one of the most recognized colleges in the U.S, Rutgers University. Rutgers has over 71,000 students who pay an average of $18,500 in tuition each, which adds up to nearly $1.3 billion from tuition alone (Tran). College is not just an educational institution; it is a cash cow, a lucrative business, a device that can generate billions from one source of revenue. It is all about one thing: money, money, and more money. An opposing side might claim that it is absurd to accuse a college of such grievous behavior and that colleges care for students and need large funding to support them. While it is a valid claim, it is crucial to question the morality of these institutions. Ask yourself: if colleges cared so deeply for their students, why do they increase their tuition as revenue skyrockets (CNBC)? Why dont they use those billions to cover tuition costs? Ask yourself, if colleges cared so deeply about the practicality of their education, why do they make their student loans immune to bankruptcy? It is all about the money. It has always been about the money. It did not stop there too, Rutgers was able to make an additional $900 million from “state appropriations”, which is nothing more than a genial term for free money from taxpayers (Tran). In all honesty, the only main distinction between some of the world’s biggest corporations and colleges is the fact that colleges get to keep their billions. It is absurd. With the billions in revenue from multiple sources, why do colleges still seem so fixated on raising their tuition costs? Why do colleges refuse to use that money to make tuition more affordable? The harsh reality is that colleges are prioritizing profits over the practicality of their education. They are prioritizing dollar bills over the financial conditions of students. Do not forget, an alarming amount of students struggle to pay their debts (Tran). Colleges should be lowering their tuition and appeal to the liking of their students. However, it does not stop there. It would be foolish to let all those billions be a victim to inflation as they sit still in a checking account. Colleges know that, so they establish “endowments” to further proliferate their capital and amass even more wealth.


Take a look at another example: “endowments”. It is such a cordial term for something that is nothing more than a money milking hedge fund. So, what are endowments? Endowments are an investment vehicle that by definition will “support the teaching, research, and public service missions of colleges and universities” (Investopedia). The amount of money stored in these endowments will BLOW you away. Yale’s endowment is $31 billion, while Harvard’s endowment is a shocking $40 billion. In fact, there are over a hundred countries with smaller economies than Harvard’s endowment (Valuetainment). Harvard, a reputable institution that should focus on practical education, can compete with the economies of several countries. Additionally, Harvard could utilize their endowment to pay the $50,000/year tuition for their 6,000 students for 120 years. Despite this, student debt and tuition prices continue to rise year by year (Valuetainment). Colleges have the money to steadily solve the national debt crisis, so why are they not taking action? For what reason does an educational institution need billions of dollars? While the opposing side might claim that colleges use the billions for other practical reasons like campus maintenance, supplies, salaries, and software, it is crucial to envision the bigger picture. Colleges do reinvest this money into their campuses, but they do not do it responsibly. Think of all the business that goes on campuses, think of all the amenities campuses offer. How are colleges able to continuously remodel and build stadiums? How are they able to offer amenities like pools, rock climbing walls, franchise restaurants, and more on their campuses? Money. They use the majority of their billions towards construction projects which will just attract more oblivious students. In fact, in 2018, only 5% percent of Harvard’s endowment ($1.8 billion), was used for the operating budget. Can’t the quarter-billion that was just used to build a football stadium be put towards free-tuition? Do students have to continue to suffer at the hands of student loans?

Why Should You Care?

The temporary convenience offered by student loans has permanently altered society’s interaction with formal education, colleges are consumed by grievous natures and now prioritize profits over the practicality of their education, as shown through their selfish usage of tax-exempt revenue and irresponsible managing of billion-dollar endowments. Colleges rack up billions of dollars in tax-exempt revenue, such privileges further amplify their greedy behavior as they continue to profit from state appropriations and student loan debt. Furthermore, as they hoard these billions, they refuse to provide free tuition. They stuff these billions into endowments, which are huge investment firms that amplify the invested capital. Even after all of that, they use this increased capital irresponsibly, still refusing to provide cheaper tuition. In reality, these methods just do not affect students; it has adverse effects that can deal detrimental damages to everyone in our nation. Colleges are making money from student debt, as more students apply for loans, the more money colleges make. But eventually, as this debt piles on, the economy will suffer, students will come out of college imprisoned by their debts, they will be unable to contribute to the economy as expenditure halts, and markets will eventually crash.



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CNBC. “How Harvard and Other Colleges Manage Their Endowments.” YouTube, uploaded by CNBC, 30 Mar. 2019,

“College: The Profitable Business of Enslaving Students.” YouTube, uploaded by Jake Tran, 25 Nov. 2020,

“How Do University Endowments Work?” Investopedia, Accessed 13 Dec. 2020.

“Freeloader U.” YouTube, uploaded by John Stossel, 10 Nov. 2020,