We Must Stop Pretending That Colleges Are Nonprofit Institutions!

Stephen Moore on Jan 13, 2026

Here's a recent story from the Chicago Tribune that jumped off the page when I read it. Northwestern University is finishing up the construction of a new $800 million football stadium. This is supposedly a nonprofit "educational" entity. Uh-huh.

Northwestern -- an "institution of higher learning" located outside of Chicago -- is flush with cash. It has an endowment of nearly $15 billion, and the tax-free donations keep flowing in.

Almost all the $800 million -- which rivals the cost of professional sports arenas with luxury skyboxes and opulent decor -- for the lavish Taj Mahal football stadium on the shores of Lake Michigan was donated to the school with tax-deductible dollars. About half the money came from multibillionaire Pat Ryan. No word yet as to whether the Northwestern stadium will come with hot tubs in the end zones.

Meanwhile, universities are now paying star football players millions of dollars thanks to the new "portal" rules. Many basketball and football athletes are now selling their passing, tackling and dunking skills each year to the highest bidder. They can often make more money playing for the old U than if they played in professional leagues like the NFL or NBA.

This is pay-to-play athletics. It won't be long before women on college volleyball teams are pay-to-play. Star athletes have been exploited by colleges for years, and now they are getting their just dues.

Don't get me wrong. I love college sports and will be riveted to the Indiana-Miami college football national championship. This is a great product, and we are seeing the best teams money can buy.

But when will Congress stop buying into this mythology that colleges are nonprofit organizations? Why should donations from millionaires and billionaires be IRS tax write-offs? It's farcical.

It also costs taxpayers a small fortune. Northwestern's donors will get tax deductions worth almost $200 million.

This makes as much sense as allowing the Chicago Bears to sign the best quarterback and free safety tax-free.

Don't forget that universities have other absurd tax advantages. They generally are exempt from property taxes -- which means the rest of us pay more.

Universities are supposed to be educational institutions, not semipro leagues. To treat them in the tax code as if they were the equivalent of homeless shelters, food banks and the Salvation Army is a fantasy.

Universities are big business. The "amateur student athletes" are de facto professionals. Many rarely if ever attend a class. Some of them are 25 and 26 years old.

The cost to the Treasury of the tax loophole for colleges is enormous. Colleges have a combined endowment today of nearly $1 trillion. Almost none of this money was ever taxed. These government subsidies to universities are on top of the trillion dollars of student loan subsidies -- debts many of which will never be paid back by the former students.

If this giant loophole were plugged, tax rates for families and legitimate businesses could fall by 10% to 15%.

When I attended the University of Illinois, we used to joke that our school motto was: We never let academics stand in the way of a winning football team and basketball team.

Now the universities don't let money stand in the way of a great team either. And the federal tax code encourages the "best team money can buy" mentality.

Let's face it. If an institution can spend $800 million on a football stadium, it can afford to pay its fair share of taxes.

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Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.