As organizations that confer social rank, social connections, and claims to moral superiority, colleges have become ever more important as sites where people vie for status and resources. The rise of student debt and bulging endowments is not just a story of inequality in higher education.
In Bankers in the Ivory Tower, I ask why and how these interwoven changes occurred. Observers also rarely recognize that these trends are connected.
We have even less research to explain the growth of concentrated endowment wealth and its overwhelming use for the benefit of a privileged few. At Harvard, only 2 percent of undergraduates today take out any federal student loans at all.Īlthough researchers have begun to study the consequences of rising student debt, few have investigated what caused it. This is because most wealthy students, including a supermajority of all students at elite private institutions, leave college debt-free. We do know, however, that student debt leaves borrowers at an economic disadvantage relative to wealthier students. Scholars have only begun to unpack the social consequences of these debts. In 1975, just one in eight students used student loans to pay for college. This spending has primarily benefited students from privileged backgrounds who dominate admissions to the most elite private universities.īeyond the Ivy League’s islands of wealth, the vast majority of students now leave college with the burden of student debt. As a result, spending on education-related costs by the top ten schools in the US News & World Report rankings grew from an already high $50,000 per student in 1988 to more than $100,000 per student since 2010. While the most elite private universities typically have grown their endowments tenfold, they also have hoarded this expanding wealth by maintaining undergraduate enrollments close to 1970s levels. The rise of wealthy college endowments and student debt have together contributed to increasingly obscene inequality in US higher education and in American society at large. Around the same time, and without a trace of irony, commentators debate the potential social consequences of the latest record-breaking growth in student debt. First, higher education watchers and the media gawk at whether Harvard, Yale, or some other elite school added the most cash to its multibillion-dollar endowment in the previous year.
Read More about Bankers in the Ivory Tower Read Less about Bankers in the Ivory TowerĮvery fall as students return to college, the United States observes two relatively new rituals. Eaton chronicles these transformations, making clear for the first time just how tight the links are between powerful financiers and America’s unequal system of higher education. And in the middle, public universities are squeezed between incentives to increase tuition and pressures to maintain access and affordability. At the bottom, takeovers by private equity transform for-profit colleges into predatory organizations that leave disadvantaged students with massive loan debt and few educational benefits. At the top, ties to Wall Street help the most elite private schools achieve the greatest endowment growth through hedge fund investments and the support of wealthy donors. The turn to finance, however, has yielded wildly unequal results. Beginning in the 1980s, the government, colleges, students, and their families took on multiple new roles as financial investors, borrowers, and brokers. With federal and state funding falling short, the US higher education system has become increasingly dependent on financial markets and the financiers that mediate them. However, as Charlie Eaton reveals in Bankers in the Ivory Tower, finance has played a central role in the widening inequality in recent decades, both in American higher education and in American society at large. Exposes the intimate relationship between big finance and higher education inequality in America.Įlite colleges have long played a crucial role in maintaining social and class status in America while public universities have offered a major stepping-stone to new economic opportunities.