A Century of Influence: How Financiers Came to Rule the Ivory Tower

In his recent study, Elite Embeddedness, sociologist Charlie Eaton, alongside Albina Gibadullina, delves into the increasing presence of financiers on university boards. Their research reveals that private equity and hedge fund managers have become disproportionately represented among trustees at elite universities. This trend is not merely coincidental; it reflects a broader historical pattern of financial elites seeking influence within higher education institutions.

Eaton's findings indicate that these financiers often experience enhanced investment returns after securing trustee positions. The access to privileged information and networks within these academic institutions provides them with strategic advantages in their financial ventures. This dynamic underscores the symbiotic relationship between elite universities and the financial sector, where academic prestige and financial capital mutually reinforce each other.

This phenomenon is not new. Over a century ago, Thorstein Veblen's The Higher Learning in America (1918) critiqued the commercialization of universities and the encroachment of business interests into academic life. Similarly, Upton Sinclair's The Goose-Step (1923) exposed the influence of wealthy elites over educational institutions, highlighting the erosion of academic independence. More recently, Davarian Baldwin's In the Shadow of the Ivory Tower (2021) examines how universities have become entangled with urban development and corporate interests, often at the expense of their educational missions.

Eaton's earlier work, Bankers in the Ivory Tower (2022), further explores this entanglement, illustrating how financial elites have not only shaped university governance but also influenced policies that affect student debt and access to education. The increasing reliance on endowments and financial markets has led to a stratification within higher education, where elite institutions thrive while others struggle to maintain funding and accessibility.

The implications of this financial entrenchment are profound. As universities become more aligned with financial interests, questions arise about their commitment to public service, equitable access, and academic freedom. The historical trajectory from Veblen and Sinclair to Eaton and Baldwin suggests a persistent pattern of financial influence that challenges the foundational ideals of higher education.

Understanding this century-long evolution is crucial for stakeholders aiming to reclaim the educational mission of universities. By recognizing the historical context and the mechanisms of financial influence, there is an opportunity to advocate for governance structures that prioritize educational integrity over financial gain.

As Eaton's research highlights, addressing the overrepresentation of financiers on university boards is a step toward restoring balance and ensuring that higher education serves the broader public interest rather than narrow financial agendas.

US Department of Education Heightened Cash Monitoring List

Here's the list of the US Department of Education's schools under Heightened Cash Monitoring 2 as of December 2024. The list includes a number of religious colleges, cosmetology schools, and career colleges as well as four schools outside the US, two HBCUs, and a tribal college.  

Schools may be placed on the HCM 2 list for a variety of reasons, including administrative capability, adverse actions taken by accreditors, severe findings in audits, severe program findings, and financial responsibility problems. 

A school placed on HCM2 no longer receives funds under the Advance Payment Method. After a school on HCM2 makes disbursements to students from its own institutional funds, a Reimbursement Payment Request must be submitted for those funds to the Department.  

The Higher Education Inquirer will be observing whether a list for March 2025 will be issued, or whether reporting like this will be terminated under the Trump administration. 

Northern Technical College	Pine Bluff	AR
River Valley School of Massage	Russellville	AR
NewSchool of Architecture and Design	San Diego	CA
Premiere Career College	Irwindale	CA
San Diego Christian College	Santee	CA
Belle Academy of Cosmetology	Waterbury	CT
East West College of Natural Medicine	Sarasota	FL
Hobe Sound Bible College	Hobe Sound	FL
Reformed University	Lawrenceville	GA
Trenz Beauty Academy	Calumet City	IL
Kansas Christian College	Overland Park	KS
Ideal Beauty Academy	Louisville	KY
Moore Career College	Baton Rouge	LA
Northpoint Bible College	Haverhill	MA
Skin Institute	Saint Louis	MO
Urshan University	Wentzville	MO
Saint Augustine's University	Raleigh	NC
Nueta Hidatsa Sahnish College	New Town	ND
Robert Fiance Beauty Schools	Perth Amboy	NJ
Sotheby's Institute of Art - NY	New York	NY
Transitions Career Institute School of Nursing	Flushing	NY
Yeshiva of Nitra Rabbinical College	Chester	NY
Gerber Akron Beauty School	Akron	OH
Lakewood University	Cleveland Heights	OH
Randall University	Moore	OK
Summit Salon Academy - Portland	Tigard	OR
Cheyney University of Pennsylvania	Cheyney	PA
Cambridge Technical Institute	Caguas	PR
CEM College	San Juan	PR
Rosslyn Training Academy of Cosmetology	Aguada	PR
Allied Health Careers Institute	Murfreesboro	TN
Jenny Lea Academy of Cosmetology	Johnson City	TN
Paul Mitchell the School Knoxville	Knoxville	TN
Barber Institute of Texas	Longview	TX
Northwest Educational Center	Houston	TX
Pearlands Innovative School of Beauty	Pearland	TX
Valley Grande Institute for Academic Studies	Weslaco	TX
Eastern Wyoming College	Torrington	WY
American University of Antigua College of Medicine	Coolidge
CETYS Universidad	Mexicali
Cranfield University	Bedford
University of Buckingham	Buckingham

Trump Administration Threatens to Cut Off Grants to Higher Ed

More information at the College Investor. 

Wealth and Want Part 1: Multi-Billion Dollar Endowments

US higher education reflects and reinforces a world of increasing inequality, injustice, and inhumanity. This system (or some would call it an industry) should function as a conduit between good K-12 education, good jobs, and the wellness of all its citizens, whether they attend or not. But increasingly, it does not. 

The first installments of the Wealth and Want series examine the concentration of wealth in the US higher education system.  And this article focuses on loosely regulated university endowments. While many American schools struggle to provide basic amenities and academic resources, elite universities boast endowments that rival the GDPs of small nations. And they pay little in taxes. 

The Endowment Elite and Ill-Gotten Gains

At the pinnacle of higher education wealth are Harvard ($49B), The University of Texas System ($44B), Yale ($40B), Stanford ($36B), and Princeton ($34B). These institutions have amassed endowments that provide a steady stream of income for investments, scholarships, and research initiatives. How their money is invested is rarely known.  

Endowment managers at elite schools typically make more than a million dollars a year. The most elite schools pay their managers $5M-$10M a year, with compensation largely based on returns. But those managers still get hefty salaries even when they lose money.

There are more than 120 schools with endowments greater than a billion dollars. But the 20 richest university endowments together hold more wealth than the other 5000 or so other higher education institutions combined. 

Elite endowments are often the result of centuries of fundraising, donations, and strategic (sometimes shady) investments. For many of the most prestigious schools, it began with land theft and generations of forced labor. 

For other wealthy schools, it was the result of philanthropic robber barons like Johns Hopkins (who also held captives), Andrew Carnegie, Leland Stanford, John D. Rockefeller, Cornelius Vanderbilt, and James Buchanan Duke who made their wealth through mass exploitation of people and the planet. 

For wealthy flagship state universities, it also came from land theft. In the case of the University of Texas, its wealth largely came from, and to some degree still comes from the exploitation of fossil fuels that jeopardize the planet.

Historical Context and Structural Inequality

• Land Theft and the Founding of Institutions: The establishment of many American universities, including Ivy League institutions and those founded under the Morrill Act, was often intertwined with land theft from Native American tribes. This practice, often referred to as "land dispossession" or "Indian removal," was a key component of Manifest Destiny and the expansion of European settlement across the continent.
• Ivy League Universities: Institutions like Harvard, Yale, and Columbia were granted land by colonial governments, which often acquired these lands through treaties that were coerced or violated. They also used enslaved labor to build and maintain their wealth.  
• Funding Models: The funding models for public higher education often favor larger, research-intensive universities. This can lead to underfunding for smaller, less prestigious institutions, particularly those serving marginalized communities.
• Endowment Inequality and Profits Over People and Planet: Endowments are a powerful tool for wealth accumulation and institutional advantage. The concentration of endowments in a few elite universities can exacerbate existing inequalities and create a self-perpetuating cycle of privilege.  These endowments have also engaged in shady investments that perpetuated worker oppression, genocide, and environmental destruction. 

Related links:

Pay and Chief Investment Officers: Good Money while It Lasts

Tax Wealthy Private Universities Now (Paul Prescod, Jacobin)

Have Revenues Peaked For US Public Higher Education?

Student higher education enrollment has been headed in a downward trajectory for about 14 years. So, at some point we should have expected revenues to drop. This revenue decline, according to the US Department of Education statistics, finally happened in 2022, the last year reported.  

But until ED updates higher ed revenue numbers, we won't know if we are seeing a statistical blip or something bigger and more long-term. These are numbers that some in the higher ed business may deny, hide, or rationalize for years to come. 

Alabama, Michigan, Missouri, Texas, Vermont, Virginia, Washington, West Virginia, and Wyoming had similar looking revenue drops in 2022. States with years of consistent declining enrollment, and there are many of them, are difficult to assess without more data.  Some states, like Pennsylvania, have long flat line revenue trajectories that show obvious trends of stagnation. States with growing populations (aside from Texas) appear to have upward revenue trends.

Did federal money received during the Covid crisis artificially lift revenues, leading to an eventual short-term correction, or is there something more to look at?  Saying it's a short-term correction would be a simple answer that higher ed industry proponents could use on the front stage, whether or not it's completely true. But it may be too simple. 

In the future, we will drill down into these numbers and examine revenues in subsets of public higher education, to include community colleges, HBCUs and other minority serving institutions, state universities, and flagship universities in various regions of the US. Private schools (which we will discuss later) may be in a deeper revenue decline. There are few apparent patterns, other than that the rich have gotten richer and the poor poorer (this too we will discuss in another article).

If higher education revenues continue to decline, as they appear to be doing for 2024-2025, what will we see on the ground level? Will there be budget cuts and layoffs?  The California State University System is already bracing for a $1 Billion shortfall, and they are not alone. 

What happens with higher education revenues as the enrollment cliff approaches and states are considering higher education budget cuts?  What happens to schools that rely mostly on tuition and fees with few other sources of revenues? Should institutions expect to receive more federal funds again in the next (inevitable) economic downturn?

 

Related link:

State Budgets Are Downsizing (Pew)

College Meltdown 3.0 Could Start Earlier (And End Worse) Than Planned

Baby Boomers Turning 80: The Flip Side of the 2026 Enrollment Cliff

When will US higher ed revenues peak?

State Universities and the College Meltdown

"20-20": Many US States Have Seen Enrollment Drops of More Than 20 Percent 

Interview with Dahn Shaulis - Higher Education Inquirer (College Viability)

"Let's all pretend we couldn't see it coming" (The US Working-Class Depression)