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If you look at the American higher education system today, you will notice a startling but unfortunately true fact. Our government today spends dollars on the elite universities run by private businessmen.

At these private universities, you can find only the elite, upper-middle class, wealthy children being educated. When actually, the public dollars must go to the ailing public universities where a large population from the working class study, the money is used to pamper the elite universities. If you think this is depressing news, read on.

Charitable contributions are made by people to leverage the advantage of tax deductions and these dollars go directly towards private universities as subsidies. Looking at the scenario closely, we can see that tax deductions directly translate to taxpayer contributions as they can be equated to federal spending.

Another trend today is the donations made to elite universities by extremely rich parents of rich students. These contributions are either as a thank you gesture after their children complete their education or to institutions where they want their children to be educated.

In our country, a handful of prestigious institutions hold whopping $550 billion endowments. If you look at recent statistics, we find that Princeton holds around $18.2 billion as endowments, Stanford at $18.6 billion, Yale at $20.8 billion and Harvard over $32 billion. There was an increase of 1 billion endowments just over one year, last year.

As if this were not enough, these institutions continue to campaign for more support. A capital campaign was launched last year by Harvard to raise another $6.5 billion. One dollar out of three contributed are eligible for federal tax deductions due to the contributions being charitable by nature.

Here is another statistic. Hewlett-Packard CEO Meg Whitman did Princeton a huge favour by donating $30 million. She in turn received a huge favour that saved her $10 million in the form of tax breaks. So, what does this translate into? Technically speaking, only $20 million was contributed by Whitman and the remaining $10 million came from US treasury, which means from us taxpayers.

If you look at the smaller number of elite students attending these universities, subsidy per student is definitely out of proportion. Almost all private institutions, including Princeton benefit to a great extent through government subsidies.

Princeton University students, for example, receive about $54,000 as annual government subsidy. Public universities, in contrast, suffer a sorry plight. They have no endowment income and have been getting subsidies only from the state government.

Today, these subsidies are shrinking as they are constantly being inflation-adjusted. As compared to a decade back, state and local public higher education financing for last year was 10% lesser.
For a student studying in public universities, the average subsidy works out to lesser than $4000.

Compare this with what a Princeton student gets and you will agree that this is indeed a vast disparity. Where is the justification in this? As far as I can see, there is absolutely no justification. The only way we can comfortably educate more number of students in our country is to reduce this blatant disparity.