College campuses are opening, and positive COVID-19 cases are skyrocketing. Already, administrators have responded to these spikes by projecting a sense of calm and control and a hope that, despite everything, their schools can still be temples of learning, engines of research, and incubators of the leaders of tomorrow. For many schools, shutting down is simply not an option; a study released in May 2020 found that, because of financial hardships brought on by the pandemic, 37 percent of American private 4-year colleges face risk of permanent closure within the next six years.

The pandemic does not constitute an existential threat to the handful of private colleges and universities that double as financial juggernauts. A 2013 study found that “75% of all postsecondary endowment wealth” is concentrated in only 3.6 percent of schools, or those with an endowment — a complex fund of donations, investments and other assets — of $500 million or greater. In 2019,Harvard earmarked $193 million for undergraduate financial aid while shelling out hundreds of millions in management fees to hedge funds, which oversee one-third of the university’s $41 billion endowment. Two years earlier, Harvard had lost around $200 million on a bad investment in a Brazilian farm.

These sorts of eye-popping statistics have fueled the refrain, echoed in recent years by The Nation, The Wall Street Journal, and Elon Musk parody Twitter accounts, that wealthy schools are little more than hedge funds with classrooms attached. Unlike hedge funds, private colleges and universities are 501(3)(c) nonprofit organizations, which implies the presence of public utility. With enormous financial and intellectual resources, deep-pocketed alumni, liberal ideals, and status as nonprofits under the law, the wealthiest of these schools ought to be not only academic and scientific leaders, but also keystones in the larger battle to combat racism, poverty, sexual violence and other societal ills.

The financial landscape of higher education began to shift dramatically in the 1970s and the 1980s, when a burgeoning student loan program fueled rising tuition sticker prices. Institutional investors, particularly at wealthy private colleges and universities, began to favor a diversified capital investment strategy combining stocks with private equity, venture capital, hedge funds and real estate. As endowments shot up, the college wealth gap widened; a 2007 study showed that the Ivy League schools, Stanford, MIT, Duke and CalTech averaged 82 percent more endowment growth than the median American college or university between 1991 and 2005.

Private schools’ nonprofit status entitles them to receive extraordinary tax exemptions and benefits, which have helped facilitate the growth of their endowments. Richard Vedder, a retired Ohio University economics professor specializing in higher ed, estimated that Princeton receives six to eight times more federal aid per student annually than The College of New Jersey, a public university located a few miles away. The disparity might be even greater. Vedder also told me that, broadly speaking, “for every dollar more in aid that a student receives from the federal government, their tuition fees are likely to go up by about 50 cents to 55 cents… The majority of that dollar is really confiscated by the college indirectly in the form of higher fees.”

Given these tax breaks and subsidies, it is fair to ask: whom do wealthy private colleges and universities really serve? This question has come into sharper focus over the course of the last few months, as the COVID-19 pandemic has put the country’s education institutions under intense financial duress. Harvard’s recent announcement that it plans to implement all remote learning this year without slashing tuition is a tacit admission that the prestige (and alumni network access) conferred by a Harvard diploma is worth more than a Harvard education, and that the school operates more faithfully in the interest of its bottom line than that of its students and community.

At the same time, the surging Black Lives Matter movement has illuminated the constraints that limit wealthy private colleges and universities from using their endowments to make philanthropic gestures beyond their own campuses. In June, several Penn student groups learned that the university’s 501(3)(c) status meant they could not use official funds to match individual donations to racial justice groups. According to Vedder, private schools all have nonearmarked, discretionary funds, but they risk forfeiting their tax privileges and alienating donors if they dip into them to pay for anything unrelated to their stated mission.

In June, Amherst College participated in a match campaign that raised $183,000 for charities like the NAACP Legal Defense Fund, and my alma mater Williams College made a suite of promises that included a pledge to donate at least $500,000 to racial justice causes over five years. Around this same time, at the height of the George Floyd protests, Williams — whose endowment nearly doubled from around $1.5 billion to $2.9 billion in the last decade — actively solicited alumni donations, providing the option to give to the school or the pandemic- and racial equity-related causes. Williams President Maud Mandel argued in a statement that “the most effective and long-lasting manner in which Williams can work toward this goal [of fighting inequality and injustice] is by providing students with ways to hone their analytical and argumentative skills, which they can channel toward such ends.” These overtures suggest that the school would rather offload social justice accountability onto students and alumni than let its own wealth do the work.

In 2017, Congress passed a 1.4 percent capital gains tax on schools with an endowment per student of $500,000 or more. No public university meets this threshold — according to a 2019 NACUBO study, the University of Vermont’s $44,000 endowment per student is the highest figure of any public university system in the country. The endowment tax only affects the richest 35 or 40 private schools in the nation.

Higher ed has become its own kind of industrial complex that primarily benefits administrators, tenured professors, and the corporations, investors, consultants and lobbyists with whom schools consort. Endowments are the engine of this industrial complex, the instruments that work to preserve institutional prestige and power. Financial aid isn’t the purpose of endowment growth — it’s a byproduct.

Colleges and universities — especially the wealthy ones that can afford to do so — ought to decouple themselves from the sheer market logic that governs their endowment investment strategies, which cheapens their educational mission and ability to affect social change. They should use this broader political moment, which demands transformative collective action, to examine and redefine their endowment’s essential spirit and function; to divest from hedge funds and their ilk and commit entirely to impact investing. (One idea: team up with the Dominican nuns who created their own climate solutions fund.) And while private schools’ 501(3)(c) designation limits their ability to commit resources externally, they can achieve greater public good by radically reallocating their spending internally. By drastically broadening their definition of and commitment to financial aid, they can address systems of inequality in more direct, meaningful ways.

The world of education is entering a pivotal semester and academic year. At wealthy private colleges and universities, it is incumbent on students, alumni, faculty and staff to hold their administrations to account, and to partner with them so that they can fundamentally reconsider their values, which have been compromised in recent decades by massive endowment growth. Whom do wealthy private colleges and universities serve? Let the autumn of our discontent begin.