ITT Tech is closing

Endowments aren't just "sitting there." They are being invested with the university using the investment income. Schools with large endowments don't spend their endowments because they are, essentially, living off the interest.

I'd like to believe that when 501(c)3 was first envisioned it wasn't thought of as a way for a school to literally stash billions of dollars away, hire their own hedge fund professionals to serve on staff to invest those billions, and then use it to generate many millions of dollars per year tax free.

 

Harvard's endowment has grown, but it has grown because it hasn't been spent. You can't collect interest on spent money. Harvard is not using the money to pay all its professors a half a million dollars, which is something they could afford. The money is not going to the equivalent of shareholders. The controversy comes from the fact that they could spend even more than they already do on financial aid, but choose to let the money sit for decades.

 

Again though, the money is only "sitting" if we view money as something that you either spend or do not spend. It is being invested. It isn't just sitting idle. It's being invested and used to generate millions of dollars per year in operating funds. That's what an endowment is. If you take the money and spend it then it isn't an endowment it's just spending current use funds. That runs contrary to the idea of an endowment. If I leave $1M to a church with the idea that it will last forever then them running out and spending that $1M is not what I want. I want my money to sit there being invested wisely to generate a regular income stream into perpetuity. If you spend it then it is gone.

 

An organization can spend part of the principle of the endowment unless there is a stipulation not to. Harvard could cover everyone's tuition by only spending a small percentage of its endowment. Regardless, I don't see how making sure donations last means that an institution is operating for profit.

 

An institution can't profit but people can. From the chancellor to the third assistant safe space coordinator, university people profit.

 

An institution can profit, but it can also not operate for profit.

 

An institution can profit in an abstract sense but it cannot eat or frolic. Follow the money and you find people.

 

Okay. So, you're another person who believes non-profits should only have unpaid volunteers. Moving on...

 

I believe they shouldn't pay exorbitant salaries or increase staff out of proportion to student numbers.

 

I never said that was the case. I was simply making a statement about how endowments work.

I don't feel that money being invested is just "sitting there." And spending it would have lasting financial consequences for the institution. That is about as far as I went. I'm not sure why you feel the need to conflate things I said with things Bruce said.

 

Well, you aren't calling out any of Bruce's inaccuracies, which is your right. It's your right to only make the effort to disagree with me. I made a response with a certain intent to Bruce. That intent is important in understanding the context of my post, which is why I reiterated it.

 

Have you ever considered, for probably the first time in your life, that maybe you don't know everything?

 

I respect Bruce's opinion that non-profits are a scam. I, personally, disagree with that assertion. I think that there are certainly many non-profits that are simply evading taxes while profiting and doing so because they follow the letter, but certainly not the intent, of the law. But I also feel that there are a number of good non-profits. I feel that the non-profit my wife works for is a good non-profit. She isn't wildly overcompensated. And the organization is a living wage employer (they aren't certified because that costs money that they would rather spend on programs). But they are also upfront about all of these things. If you donate to them you recognize that they are not paying secretaries the absolute bottom of the market salary.

Ultimately I feel that the key difference is in transparency. If Wounded Warrior Project said "Hey, we regularly spend $40k on soda and snacks and here are our reasons..." I think that some people would be angry still but others would accept it. I have no problem with my donation going to make it a nice place to work. But I also don't want it to go to extravagance. Sure, buy some sodas if you can afford them. But private jets, six figure speakers at your staff retreat and partying in Aspen? Not with my money, thank you.

The greatest offenders, of course, are not very transparent. Add in the fact that many religious non-profits not only avoid taxes but also the requirement to file a 990 and you have a recipe for creating a scam haven.

My church had an endowment. If we spent the endowment we could have paid for some amazing stuff. Then we would have had to sell the building the following year. We relied on endowment income (literally the interest from investing our endowment) to pay the majority of our ongoing expenses. Some criticized the church for letting the money "sit there." So, when you commented that the money just "sits there" I felt compelled to point out that it isn't just sitting there. It is being invested. That investment income is used to pay expenses. If you spend the endowment, even if just a portion, then the income goes down. That's less money to spend on other things.

Could Harvard spend part of its endowment? Sure. But then the departments which rely on that endowment income would lose operating funds. Worse than robbing Peter to pay Paul you would be taking instant gratification today at the expense of tomorrow.

At the same time I think there is a valid argument that endowments and their income should be taxable.

Perhaps you knew all of this and merely simplified how an endowment works for the purposes of this conversation, which is your right. I merely wanted to expand that notion for others participating here and who will read it in the future. I've not seen anything, and perhaps I just missed it, said by Bruce that I would describe as an inaccuracy. He has an opinion. He's expressing it. Agree or disagree.

 

I know I don't know everything, but I know when I know more than you.

And, aside from the endowment conversation, you've spent pages disagreeing with my opinion of for-profit colleges. It is also your right to only go out of your way to disagree with me even when you disagree with others.

 

Tuition was way too high and as always, accreditation standards changed under Bozo Obama so lots of schools are either closing their doors or reverting to career colleges that can only offer state accredited diplomas.
When I went to a tour at ITT Tech a lifetime ago they pitched me a $45,000 bill to get my electronic engineering degree with around a 50 minute drive 1 way. My response, especially after seeing the school was in the basement of a factory, was that I could get the same accredited degree from a community college 35 minutes away for about half that.

I don't think these are bad schools but they have just as many problems as our major universities and colleges.
I'm a CIE guy that did 2 terms before they let their accreditation expire. I've also attended a major, high ranking state university and career college.
I think the mainstream, traditional system is a huge waste of time, money and causes undue stress. ITT Tech seemed to be trying to fill the gap between technical college and traditional school which wasn't the least bit appealing to me.

Personally the CIE system which is based on old school, tried and true military college education while in basic training and active duty should become our national standard. Running people through the mill in an advanced system of high school as our higher education system is a nightmare and a disaster. After high school the subjects and classes should no longer be compartmentalized.
Ball it all together and dabble in various areas as necessary to create a slow buildup so after the first year the focused studies in cornered areas of the field are easy to follow as opposed to jagged and disconnected from everything else you've covered in the current traditional standards.

It has really disappointed me over the last 2 years for CIE not to regain national accreditation as they've assured me the are still working to achieve. At 38 I'm not wired to run through high school level classes I took when I was 15 but don't recall well enough to just outright do where as with CIE the system was a slow crawl with light introduction back into algebra before hitting me with the focused courses in Algebra, trig and calc.

Our education system is just a huge disaster and disappointment from where I'm standing particularly considering every time I have been in school I maintained a near 4.0 until I ultimately withdrew...outside my CIE experience which was a good one.

 

I supposed that everyone knows the basic story by this time but I just ran across the story on Gizmodo and thought I'd throw it out here. Clearly they have their own perspective.

How ITT Tech Screwed Students and Made Millions

 

This is just wicked. It looks ITT preyed on The people who can less afford this debt. I hope this sort of thing is not allow to happen in the USA again.

 

There are plenty of non-profit schools which encourage kids from lower middle class families to rack up six figure debt for degrees in sociology, women's studies and other subjects with little economic return.

"Study what you feel passionate for you'll figure out a career later" and "we won't turn away any student due to inability to pay" are very common phrases at public and non-profit schools.

The result is a legion of Americans, and more every year, with degrees that qualify them for nothing and a student loan debt that they won't ever pay off using an income based repayment plan.

Yet I don't see many people pointing out the wickedness of that.

 

At some point you call it fraud. If it's ITT or an Ivy or a state school, fraud is what it is.

Of course it's hard to say what it is. When some engineering discipline is hot is when the advice is to get a degree in that discipline. Which leads to a glut of engineers in that discipline. Or the same leads to legions of law school graduates asking if you want fries with your order.

 

If you provide me with the articles on NFPs providing useless degrees to, the uneducated, the poor, minorities, inner cities students then I will call it wicked. If the model is saddling the people who can least afford it with more loan for a useless piece of paper then it should be called out. We can't depend on the rationalilty of these students to make a decisions in their best interest, because institutions like ITT were targeting students who were less capable of making those rational decisions. Most of the students of ITT were victims.