University endowments represent a direct link between higher education and finance capital: three-fourths of the $630 billion in US university endowment funds is invested in stocks and other financial instruments. Especially at big universities, endowments have grown enormously in recent decades. Between 2005 and 2020, Harvard’s endowment expanded from $5 billion to $40 billion. In 2019, CCNY unveiled new private foundation funds which increased its endowment to over $265 million. The recent financial crisis, however, has destroyed tens of billions of dollars of value formerly held in endowments. As a result, funds available to universities nationwide have been slashed. However, the way universities have distributed what money they still have at their disposal is telling.
In spite of a recent infusion of $247 million in federal aid—and before budget cuts from the state have even been officially announced—CUNY is laying off thousands of adjunct teachers and employees, most of whom rely on their jobs for healthcare. With almost one in four Americans out of work, many students have also lost their income and healthcare. But instead of cutting or at least maintaining tuition rates, CUNY is going forward with the $300 tuition hike approved last fall. Steep course reductions are projected as well—since many of the adjuncts who teach the majority of CUNY classes are now laid off, as many as 500 students may be crammed into a single online class. This same pattern is being repeated at colleges across the country. Universities are content to shift the burden of the economic crisis onto their adjuncts, workers, and students, while hoping that symbolic concessions such as minor administrative pay cuts, insufficient student relief funds, and occasionally partial housing refunds will shut them up.
While students and workers are plunged into uncertainty, payments on the American university system’s collective $240 billion in debt continues without interruption. This debt represents yet another link between higher education and finance capital. In the face of a declining rate of profit, which we covered in a previous article, capitalists have slashed wages and cut funding for public services. As a result, institutions like universities have become increasingly reliant on debt to fund their operations. This explosion of debt in turn encourages further financial speculation in all aspects of life in a vicious cycle which subsumes all things to the interests of monopoly capital.
In order to maintain their credit ratings, universities will continue to make payments on their debts no matter the human cost—otherwise, they will have difficulty taking on future debt to bankroll their operations and risk financial ruin. When it comes to the bottom line, universities are thus willing to compromise for their creditors, but not for their students or employees.
We cannot simply attribute these trends to the greed or cruelty of individual college administrators. Neither do they represent an abandonment of “civic values” on the part of universities. Rather, they reflect the increasingly precarious position of US higher education. Since the 1980s, public universities have become increasingly privatized while public funding has declined. Just like businesses, universities must now prioritize delivering returns for their private investors or risk total collapse.
The integration of universities with finance capital has important implications for those of us who aim to build a militant student movement in the US. Our interests are fundamentally opposed to the interests of college administrators, who are aligned with and subordinated to the will of the capitalist class. At the beginning of the pandemic, petitions for tuition refunds circulated at over 200 campuses in the US—but not a single university met this demand. The reason for this is simple: students will never win meaningful victories through moral appeals to the goodwill of administrators.
From the May Day Student Organization’s Program:
“The third period from 1980 until the present: This period has seen a four-decade long process of privatization of public universities, corresponding to a prolonged crisis of profitability for the ruling class. Privatization has decimated the country’s system of public education, and restricted college degrees to those who can afford them. State funding for public higher education began to decline around 1980. Student debt exploded as tuition became the main source of revenue for most universities by 2017. The process of privatization was accelerated and intensified by the economic crisis of 2007-09. At CUNY, the victories won by students in the areas of open admission and remedial education have been systematically wiped out. Higher education has increasingly become a commodity, and the bourgeoisie’s ideal student is the individualist consumer, driven exclusively by careerism and self-interest.”