<p>Or how I learned to grow my endowment by borrowing in the tax exempt municiple bond market at 4% while lending to my students at 7.5%</p>
<p><a href=“http://economictimes.indiatimes.com/Markets/Stocks/Global_Markets/Harvard_taps_muni_market_and_a_Senator_asks_why/articleshow/1895047.cms[/url]”>http://economictimes.indiatimes.com/Markets/Stocks/Global_Markets/Harvard_taps_muni_market_and_a_Senator_asks_why/articleshow/1895047.cms</a></p>
<p>The link is to an article about tax free municiple bonds and how coleges use them to borrow on the cheap so they don’t have to tap their endowments to finance projects.</p>
<p>Of course schools don’t actually lend students money, that is done by third parties with very rare exceptions. Still money is about as fungible as you can get. Schools typically earn over 9% on their endowment monies. Harvard actually earned 16.7% last year on its $29 billion endowment - more than $4 billion. To put that number in some sort of perspective if Harvard had collected full tuition room and board from each of the 19,354 undergraduate, graduate, and professional students who attend the university it would amount to $800 million or 1/5 of what they made off of their investment banking business.</p>
<p>While Harvard was busy racking up the investment earning it was also doing a hefty fund raising business. The wealthy were busily forking over stock options and taking a nice charitable write-off on their taxes. On top of that there were hundreds of millions of dollars research grants from government agencies.</p>
<p>I think one of the questions taxpayer ought to be asking themselves is why is John Doe working in a factory in Iowa for $45,000 a year subsidizing Harvard?</p>