Wealthy Colleges Should Disclose Their Admissions Preferences

On April 14, the day Harvard refused^[1] a federal list of demands,^[2] the administration’s antisemitism task force announced a freeze^[3] on $2.2 billion in multiyear grants to the university. The standoff invites a banker’s question: is Harvard too big to fail? Probably not. The evidence supports a narrower worry: Harvard is too rich for its applicants alone to hold it to account, and political pressure is a dangerous substitute. What fits is transparency under one clear public standard for private colleges above a fixed wealth line, starting with admissions.

Ben Bernanke, as Federal Reserve chairman, defined the banking version^[4] in 2010 testimony: a firm whose “size, complexity, interconnectedness, and critical functions” mean its unexpected liquidation would gravely harm the financial system and the economy. No university dominates research spending. The Carnegie Classification put 187 universities^[5] in its top research tier this year. In National Science Foundation data^[6] for fiscal 2023, the top 20 spent 31% of the $108.8 billion^[7] total, and Harvard, the richest university, ranked 15th with 1.3%. Spending figures cannot show interconnectedness or which labs others could replace, so they are grounds to doubt a banking-style cascade, not proof against one. Wealth is more concentrated at the top. In the fiscal 2024 endowment table^[8] from NACUBO, the college business officers’ association, 654 U.S. colleges, systems and foundations held $871 billion. The largest 20, 15 of them private universities, held 51% of it, and the smallest half 3.7%. Harvard, Yale, Stanford, Princeton, MIT and Penn held 24% of the money but accounted for 7% of academic R&D spending.

Concentration of U.S. college and university endowment assets, fiscal 2024

Students can vote with their feet, but Harvard’s Class of 2028 profile^[9] lists 54,008 applicants and 1,970 admitted, or 3.6%. Tuition is the smaller lever. Harvard’s fiscal 2024 financial report^[10] shows endowment distributions supplying 37% of $6.5 billion in operating revenue, and net student income, after aid, 21%. The report says 80% of endowment funds are restricted, which makes the cushion less flexible but no smaller. So the threat of leaving is a weak check on how a class is chosen. Raj Chetty, David Deming and John Friedman estimated^[11] in 2023 that the Ivy League, Stanford, MIT, Duke and Chicago admit 114 more applicants from top 1% families per class of 1,650 than they would at the admission rate of equally scoring applicants from families at the 70th to 80th income percentiles. Legacy preferences account for about 52 of them, and legacy status is not associated with better outcomes after college.

The administration’s April 11 letter^[2] put disclosure and audit in one sentence: all admissions data “shall be shared with the federal government” and audited, and “non-individualized, statistical information” made public. Another provision demanded an outside audit of students, faculty, staff and leadership for “viewpoint diversity.” The letter illustrates the strongest objection to my proposal: disclosure is regulation by another name, and a demand for counts becomes a demand for files. A campus that hands Washington its files may lose faculty and students with somewhere else to go. The letter also shows where the line belongs: between counts Congress defines in advance for every school above a fixed threshold and official access to individual files or audits of belief. A statute confined to counts would leave agencies their grant powers but narrow what an official could demand of one school in transparency’s name.

Disclosure should borrow a line Congress already draws. A 2017 law taxes^[12] private colleges’ net investment income at 1.4% if they have at least 500 tuition-paying students, a majority of them in the United States, and at least $500,000 per student in assets not used directly for their exempt purpose. A bill the Senate passed July 1^[13] would keep that asset test^[14] but raise the student floor to 3,000 and the top rate to 8%. By NACUBO’s endowment per full-time-equivalent student, a rough proxy rather than the tax’s legal test, 46 private schools with at least 500 FTE students clear $500,000 and hold 45% of the $871 billion. Each year, schools above the 2017 line should report, beside the admissions figures^[15] they already send the Education Department, how many applicants and admits were legacies, recruited athletes, children of faculty and staff, or on a dean’s interest list. Citing the 2023 Supreme Court ruling, Harvard announced no admit rate on decision day this year, The Harvard Crimson reported,^[16] and its admissions page^[9] promises Class of 2029 figures this fall. Harvard’s data in the Students for Fair Admissions case identified all four groups among domestic applicants for the classes of 2014 to 2019, Peter Arcidiacono, Josh Kinsler and Tyler Ransom wrote in a September 2019 NBER working paper.^[17] The cost is one more federal form, which a future Congress could widen. A school that admits fewer than four of every 100 applicants can afford to say how it chose them.