Democratic gubernatorial candidate Jay Gonzalez has proposed a tax on Massachusetts’ wealthiest universities — Boston University being one — to pay for his education and transportation plans.
Gonzalez said the proposal is a “fair” way to fund the state’s public transportation and public schools without raising taxes on residents. The money would help make child care affordable for all residents and fully fund public schools.
Nine private colleges in Massachusetts currently have endowments exceeding $1 billion because they’ve been exempt from taxation. Gonzalez’s proposal to tax each college’s endowment by 1.6 percent would generate more than $1 billion a year, and if this were in place this year, Harvard University would have had to pay $563 million.
It’s true that Massachusetts’ richest universities have accumulated an excessive amount of money that they’ve tucked into their back pockets with no visible purpose — endowments are often invested into private companies for the purpose of simply growing the money rather than, say, reducing tuition.
On one hand, BU is a business operating in the community of Boston. They’re selling a product, which is education, and if they want to do so, they should contribute to the community around them. Universities pay a toll on the area they operate in — they raise rents, induce gentrification and displace residents. As students impacting the lives of city residents, perhaps we have a responsibility to contribute to the upkeep of the T or a middle schooler’s education.
However, multi-million dollar institutions don’t have a good track record of response behavior when their taxes increase — students cannot trust that BU won’t raise tuition beyond a reasonable limit to make up for what they’re losing. If BU is forced to pay taxes, it very likely will come back and bite the most vulnerable students.
It’s wrong for Boston’s public schools to be so sorely underfunded while Massachusetts colleges hoard enormous endowments. But just because a university has a large endowment doesn’t mean its students are wealthy. In his efforts to equalize education funding, Gonzalez could be harming a large population of lower and middle class college students. If these endowments should go to anything in the immediate future, they should go toward meeting 100 percent of need-based aid and reducing tuition.
Many students at BU scrape by to pay tuition — about 39 percent of undergraduates receive some form of financial aid. But out of about 45 percent who apply for need-based aid, less than 25 percent have their need fully met.
On average, BU meets a little more than 80 percent of need. This might sound like a significant contribution, but considering that four years of tuition and fees at BU total out to just under $280,000 without aid, the 20 percent of need that BU does not meet is a huge chunk of money that students are expected to pull out of a hat.
Gov. Charlie Baker, Gonzalez’s opponent in the upcoming November election, said he opposed the plan because the majority of endowment money is used for scholarships and financial aid. But BU’s scholarships and financial aid are not adequate in meeting student demand. If BU doesn’t want to use its endowment money for public purposes, it needs to use it to reduce tuition.
One factor BU does have to contend with, providing a check on some level, is that the more they increase tuition, the more they lose out on talent. If tuition prices go up through the roof, their chances of recruiting talent that will pay off way down the line will significantly decrease.
Gonzalez is currently far behind in the polls, so it’s unlikely that this plan will ever be implemented. In any case, students need to hold the school accountable for putting its endowment money to good use. Our president should not be getting around $1.5 million a year from BU and other related institutions while students are reprimanded for taking an extra piece of fruit out of the dining hall.
CORRECTION: A previous version of this article incorrectly spelled Jay Gonzalez’s name. An updated version reflects this correction.
