Study: Nonprofit Colleges Get Profit From Undergrads

June 15, 2011

The Cato Institute, a libertarian think tank, is today releasing a report that is harshly critical of nonprofit colleges, charging that common practices (such as running programs at the same tuition levels, when some have much larger enrollments than others) create "profits" at nonprofit colleges. "Undergraduate education is a highly profitable business for nonprofit colleges and universities. They do not show profits on their books, but instead take their profits in the form of spending on some combination of research, graduate education, low-demand majors, low faculty teaching loads, excess compensation, and featherbedding. The industry’s high profits come at the expense of students and taxpayers," says the report, written by Vance H. Fried, the Riata Professor of Entrepreneurship at Oklahoma State University.

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