Snapshot · The Prof G Pod with Scott Galloway
Dartmouth has an $8 billion endowment but admits only about 1,100 students, when it could let in 5,000 without sacrificing quality or straining finances.
Where this was said
At 13:56 · chapter starts 8:55
Jeff has been told by university administrators that endowment funds are legally untouchable — and he wants to know if that's true. Galloway starts with the data: $944 billion across 657 institutions, Harvard's $53 billion growing at $2 billion a year, $7 million per undergrad. [1] — Scott Galloway "US universities sit on $944 billion in endowments while keeping class sizes artificially flat. Harvard's endowment grows $2 billion a year …" 08:55 He acknowledges that donor-restricted funds are legally constrained — a divinity professorship endowed in 1721 still dictates how those dollars are spent — but stresses that restricted funds don't describe the entire endowment; Stanford's is only 75% restricted. The real governor is UPMIFA, which encourages restrained spending but mandates nothing. The 5% annual spend rate is an informal norm, not a legal ceiling — and private foundations, unlike universities, are legally required to hit that floor. The 2017 excise tax and the 2025 One Big Beautiful Bill raised the tax pressure modestly, but Galloway doubts the numbers move behavior. His core argument: universities like Dartmouth — $8 billion endowment, ~1,100 students admitted — have voluntarily become luxury brands, restricting supply to protect prestige in a Businessweek-ranking death spiral. [1] — Scott Galloway "US universities sit on $944 billion in endowments while keeping class sizes artificially flat. Harvard's endowment grows $2 billion a year …" 08:55 That's a business decision, and businesses pay taxes. If you're a hedge fund with classes, you should pay hedge fund taxes.
US universities sit on $944 billion in endowments while keeping class sizes artificially flat. Harvard's endowment grows $2 billion a year yet tuition keeps rising — behavior Galloway equates to hoarding, not stewardship.
US universities collectively hold nearly $1 trillion in endowed assets across 657 institutions.
Harvard's $53 billion endowment works out to more than $7 million per undergraduate student, yet class sizes stayed flat and tuition kept rising.
Harvard's endowment has grown roughly $2 billion a year since 2018 while freshman class sizes remained flat.
The 2017 Tax Cuts and Jobs Act imposed a 1.4% excise tax on net investment income for colleges with endowments exceeding $500,000 per student, affecting about 56 schools.
The One Big Beautiful Bill signed July 2025 raised the endowment tax to 8% for institutions with endowments over $2 million per student, hitting Harvard, Yale, Princeton, Stanford, and MIT.
If a university chooses to be a luxury brand rather than a public servant, it should pay the same taxes as a private company. The One Big Beautiful Bill raised the endowment tax to 8% — but Galloway says this still won't change behavior.
University rankings reward selectivity, which incentivizes schools to restrict admissions, which drives up rankings, which attracts more applicants, which lets them be even more selective. It's a death spiral that treats education as a luxury good.
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