Large alumni donations can and often do increase the cost of education of all the other students. They frequently lead to large capital investments that then have uncovered operational costs. I used to work for one of the wealthiest universities with 100s of millions in capital improvements annually that couldn't provide functional HVAC and a fresh coat of paint to the buildings it had.

> They frequently lead to large capital investments that then have uncovered operational costs

The problem is not the high amounts, but most donations can only be used for a specific purpose, so even though the endowments are high, the actual working capital will be a lot lower.

Plausible. OTOH, a institution can Just Say No to somebody who insists that their donation be used for something which is un-needed. Or will be an ongoing maintenance money pit. Or that sounds plausible...but the complexity of the strings attached to the cash is not worth having to keep track of in perpetuity.

That’s because the money goes to everything except education. The “admin” is a curse to everything it gets involved with. I went to a public university and I remember our CS classes over subscribed because the UnI wouldn’t fund two additional TAs, meanwhile our Chancellor got a 300k fence to prevent protesters from getting close to his university funded house protesting “his mismanagement of funds and corruption”.

Go bears!

What about smaller, recurring donations? Does that increase the cost?

Probably not, because they don’t come with the string attached that “you must build a new building and name it after me to receive this donation”.

"..and the building (a dorm) must not have any windows"[1]

1. https://www.newyorker.com/magazine/2021/11/22/nightmare-of-t...

Yeah. Even if a modest donation is earmarked to, say, the athletic department, the school has a lot of flexibility to move unrestricted money from one pocket to the other. For significant even if not huge donations though, schools really would like unrestricted gifts in general.

Seems simple enough to get someone that vain to cough up an annuity to pay for maintenance and some admins for that building, “we’d hate for your building to wind up like poor Jefferson Hall, we can’t even afford to pressure wash it every 5 years.”

Yeah. Stadiums and landmark buildings don't work this way, so why universities diverge is beyond me.

Whoever pays for upkeep should get the naming rights.

This is a little bit ridiculous. There is no connection between alumni donations and capital investments except decisions that university leadership chooses to make. The issue isn't the donations, its the university leadership thats choosing to make large capital expenditures. The donations could go to other things and do go to other things. Any blame you're putting on the donations actually belongs to the people running the university. Blaming unwise spending on donations without mentioning who is making those decisions as the root of the issue is ridiculous.

How often does anyone donate millions of dollars with no strings attached, especially to a university?

If someone offers you $5m and in return you have to spend $25m, you can choose not to go -$20m by just not accepting the $5m under the terms proposed. Thats fiscal leadership.

Another option in this case is to find other donors to make up the rest. Maybe one can have the largest lecture theatre named after them, or the street renamed, or choose the art, etc.

I think you're referring to small incremental donations while their person you're replying to is referring to the giant "you must name a building after me" ones.

Naming a building after someone doesn't have a financial aspect.

If a gift requires further spending later and the overall benefit is net negative, its up to the university to negotiate terms or turn it down.

It's all university leadership failing to steward their university.

It means a new building. And are you saying that if admitting a legacy kid or taking a restricted donation is net negative they shouldn’t do it? They just need to know in advance if the future donations from the family will be worth it? How simple!

Again if a gift will create a big long term financial obligation that will end up making it a net negative, it is obviously the role of leadership to choose whether to implement it or not.

Taking into account fictional future donations and communicating with donator and explaining the issue is called negotiation. Being convinced to make bad financial decisions in fear of losing a donator is again, a failure of leadership.

If someone offers you $10 if you spend $100 later you're better off not taking it, even if you could have bought something with that $10. That basic financial stewardship is the role of university leadership to deal with. They failed.

> There is no connection between alumni donations and capital investments except decisions that university leadership chooses to make.

Not (always) true. Direct example with Carnegie Mellon - David Tepper was upset the business school (his alma mater) was appearing to fall behind in recruiting, so he donated ~100m but tied it to the business school getting a new building/quad. Total cost to the university was well north of 200mil; and their hands were functionally tied in how it was spent.

Yes, I know this is an outlier and yes, university leadership could have said no - but you're risking pissing off a doner who's given 100m+ over the years and will likely continue giving (and you know Tepper will continue guiding further capital expenditures as he sees the need).

Those are all decisions the university leadership made. David Tepper (?) doesn't run the school - the university leadership decided to make those decisions to get the money. They could have said "this isn't sustainable", and their hands weren't tied.

"Your $100m gift will cost us $200m, we can't accept it as currently stipulated".

All university leadership decisions that they failed on.

yeah way easier to blame the donor for his pesky asks

What risk in there in pissing off the donor if the donor's gifts all cost you at least that much? If someone offers me $100 million but conditions it on me spending $101 million, it doesn't really matter how upset they get with me because I was never going to come out ahead in that deal anyway.

Now also called the Tepper School of Business!

> university leadership that's choosing to make large capital expenditures

SUNY Binghamton recently received a private donation of $60 million, with a rule from the person donating it had to be spent on a new baseball stadium. Do you think the university leadership should have declined the offer?

If it costs more than $60 million to build the stadium, sure.

What good is a $60 million donation if it costs you $100 million on something you weren't going to buy in the first place?

Because now you have a $100M stadium that you only paid $40M for. That stadium generates revenue. You just need to make sure the numbers work

This is lower tier D1 baseball in the Northeast, so revenue is going to be minimal.

> You just need to make sure the numbers work

The entire point of this thread is that universities aren't doing that, because they're accepting $100 million donations with quarter-billion dollar lifetime price tags tied with them.

Most universities have really messy financials. A lot of money gets spent on projects and programs that don't directly benefit the education students receive, or the research output of the university. Things like sports investments, ballooning administration staff, or flashy construction projects. At the same time, TAs, grad students, adjunct professors, and other staff are frequently underpaid and overworked.

There's a lot of room to debate on what colleges should spend their money on, and what they should be providing. But American universities are not strapped for cash, and should be spending more of it on things that directly benefit students and researchers.

The US federal government should do the same thing to public universities (US definition) that they did to insurance companies via the ACA -- cap administrative overhead.

For every dollar in tuition, >Y% must be spent on qualifying direct educational expenses. E.g. teaching faculty salary, etc.

If a college fails to meet that threshold, and spends too much on non-qualifying costs, they are required to rebate the difference to students.

If a college refuses to do this, they're no longer eligible for federal educational money (Pell grants or loans, etc).

Then let colleges optimize themselves to get under the limit.

It caused a lot of scrambling and long-overdue efficiency improvements in another legacy, slow-to-change industry (health insurance).

The colleges will just respond in the same way that the insurance companies did, by jacking up prices. Raising the amount they're charging for premiums / tuition allows them to still maintain or grow their total overhead amount, even at a lower rate.

One would hope consumer choice would come into play and students would start shopping around for the best deal.

This didn't work in the same way it doesn't work with insurance: students are limited by more than just price alone. Location matters a lot (a student may be staying with their parents). And also if all univiersities raise their prices in this way, there's nothing the students can do.

Doubtful.

The only reason the cost of college is high is because 18 year olds that know nothing about finance don't have to pay for it now because they can get loans.

You take away the loans, and you take away the ability of the college to charge whatever it wants and kids keep paying.

Are 18 year olds today significantly less smart than 18 year olds 50 years ago? No. So why is tuition so much more expensive? In 1970 tuition at University of California schools was about $1000, inflation adjusted. You could easily make that at a summer job.

So what has changed? States have stopped funding for schools. A lot of tuition used to be covered by tax money, which spreads out the cost to everyone and over many years. Now, it is a very abrupt cost to a small group of people.

The prior funding model also had the benefit of a progressive tax system. Wealthier people paid into it more than poor people. Now, students have to rely on unpredictable financial assistance like grants and scholarships, and take on predatory loans to cover the difference.

> So what has changed? States have stopped funding for schools.

Yes - but more importantly, schools got more expensive, because people had more access to debt.

That's not an issue particular to university funding, though. Access to - and use of - debt has gone up across the board, for any and all big-ticket items, both for private and public purchases. There's a problem far larger than expansion of credit access, and it has to do with attitudes at the uppermost reaches of the planning of our economy as to how to distribute wealth - not just by geography or interest, but even by temporally. Decisions made 40-50 years ago to put the cost burden on future generations are literally paying interest today.

I'd question whether insurance companies jacking up prices for purposes of growing headcount was a major trend.

In the ACA aftermath, I believe you saw more insurance companies exit markets because they couldn't be competitive and profitable on prices with standardized plans.

Which is its own problem and led to a lot of limited-insurer markets, but a different one.

I stopped reading after the first sentence.

Our current health insurance laws should NOT be a model for anything, ever!

What would you have done differently, in an attempt to evolve a complex, layered, and ossified industry that absolutely cannot stop providing service for even a day?

I'd start by removing the subsidies and special rules around student loans. That makes colleges compete on price again which puts downward pressure on tuition.

Repealed the McCarran-Ferguson Act at the time instead of waiting until 2021 to do it?

You made it past "The US federal government should"?

I only know a little dirt about the one I worked in and it was pretty bad. The redirection of funds, the word games, and so on ... I would have a better chance of making improvements I desired by making little paper airplanes out of hundred dollar bills and trying to hit areas I though needed help.

> I would have a better chance of making improvements I desired by making little paper airplanes out of hundred dollar bills and trying to hit areas I though needed help.

It was certainly an amusing visualisation lmao

> sports investments, ballooning administration staff, or flashy construction projects

Construction projects are typically the result of specific earmarked donations and sports investments often create lots of income. NCAA Division I programs should be thought of as a side business that generates revenue for the university.

Administrative staff is the major problem here. It’s also where most organizations tend to dump their excess revenue, and since the US has been aggressively subsidizing demand for universities for decades, they’ve had a ton of excess revenue to dump into administrative staff.

> TAs, grad students, adjunct professors

Most academic fields produce significantly more Ph.D.’s than there are tenure track positions or other full time professional careers. As a result, the grad student or Ph.D. exists in a competitive-verging-on-exploitative labor market. The typical grad student or adjunct is in the same position as the aspiring actor who has a day job in LA waiting tables. People always claim that this is because there aren’t enough tenure track positions, but I think that’s backwards. Why would you open up a tenure track position when you have a plethora of Ph.D’s who are apparently willing to work as adjuncts? If the universities didn’t produce as many Ph.D’s in the first place, the labor market would be more competitive and they would need to offer tenure track positions.

Universities shouldn't have side businesses, don't they have some non-profit status that's specific to education? They should be heavily restricted to education and research alone.

I’m not a huge fan of the NCAA system myself. A lot of universities don’t have major sports programs, and that’s a respectable choice on their part. But NCAA sports are tremendously profitable for the universities that invest in them. No Division I school would actually save money, in the long run, by defunding their football and basketball teams.

And when it comes to side businesses, sports pale in comparison to endowments.

Yea same I’m a big hoop nerd but the mainstream collegiate sports especially basketball make my eyes bleed. Literally infuriating to watch idk how people do.

But something like Duke Basketball has been tremendously beneficial to Duke–in terms of brand awareness. Same with UT Austin and their football brand ($7mm on new locker room is insanity tho).

>No Division I school would actually save money, in the long run, by defunding their football and basketball teams.

Tulane might be a counterexample to this especially since the 80s (although not lately)

Who cares about making money or not, plenty of ways to make money, but that's not the purpose of a non-profit organization dedicated to education.

Less revenue for the school means higher tuition costs for everyone and less scholarships.

No, more revenue means that revenue goes to paying for non educational stuff, admin bloat, etc.

The waste is unreal. When I was in Uni, I used to sit outside and work in a little side-of-a-building park area where, every spring, I'd watch the grounds crew pull up perfectly good looking flowers and plant slightly better looking ones in the days before a "parents weekend" or a big admissions event.

They would just toss the "old" flowers in the dumpster

Corporations do the exact same thing before shareholder’s meetings.

> or flashy construction projects

My experience discussing this with some Deans of (large, top 10ish) institutions is that space and (qualified, tenure track) faculty are basically the hardest things to find, and space is probably harder. Lots of things require space (including, for example: student services), but space is limited, and classrooms and research and administrative space often take priority. And creating space is difficult, it takes years to build a building.

People don't want to donate to fixing something old, they want to donate to making something new, even when fixing something old is way more effective.

Nothing like how private companies like Google operate. /s

Isn’t that more of an indictment of the administration than of alumni donors?

This might be partially true but I think the bigger implication is that the donations do lead to overall more investment overall which leads to better universities. This is true with literally donations to anything…

I battle our elected officials with similar arguments. We want some safety improvements to our neighborhood roads. We ask them to work on a fix. They say there isn’t money for them. We show them there are federal grants to pay for them. They say they need staff to “manage” the grant money. End of the day, now nothing happens and we still have unsafe roads.

You can’t argue no money is better than some money. It takes a little more to see change but you go much further

This is the way many public universities without legacy admissions actually function as well. They have a high published tuition, but if you are a half decent student, there are many discounts and scholarships that can reduce it significantly. Only less qualified students pay full price.

They love to tell this story. It's absolutely laughable how limited scholarships are for actual academic performance.

Just trying to gauge opinions. Is roughly half off tuition for 3.5+ GPA acceptable? That’s been the most generous I’ve seen

I think that depends on the school - Georgia Tech is free for high academic performers from Georgia, for example.

For non-Georgian's reference, the HOPE scholarship essentially funds Georgia public college tuition with lottery receipts, subject to merit only. https://en.m.wikipedia.org/wiki/HOPE_Scholarship

It's changed a bit over the years (+/- qualifications and coverage), but generally does what it says on the tin -- keep a high GPA and graduate in a reasonable amount of time, and most of your tuition is paid for.

God forbid you come from a competitive high school, though. Some kids can't get into Georgia Tech simply because of the quota system. A kid with a 3.8GPA will surely get in from Tri-Cities HS, but not from Milton HS.

If that's the case, your options are somewhat limited for a comparable tech/engineering school.

It doesn't even have to be large sums, but the existence of legacy admissions creates goodwill between the university and its alums that broadly motivates consistent, modest donations.

Legacy admissions are also a way to increase yield (percentage of students enrolled versus accepted) which is one of the many ranking-driven stat games.

AFAIK, legacy admission and donations are two separate "tracks", if you will.

Donations are when the "donation office" giving a list to the admissions office.

Legacy admission is when the student ticks a box on the application.

The former is to recognize past contributions, where the latter is more for future contribution (if your whole family went to Harvard, presumably you will be more likely to give money to Harvard)

> The former is to recognize past contributions, where the latter is more for future contribution (if your whole family went to Harvard, presumably you will be more likely to give money to Harvard)

So it's just a checkbox to say you're already on the sect

>I do wonder if this will have any impact on alumni donations.

Wonder not. "[T]here is no statistically significant evidence that legacy preferences impact total alumni giving."

https://production-tcf.imgix.net/app/uploads/2016/03/0820191...

That doesn't answer the question though, does it?

https://astralcodexten.substack.com/p/the-phrase-no-evidence...

I believe it does. There's a difference between considering i.e. disease transmission in your example, in which case any modicum of evidence that you don't find could be very important, and legacy alumni giving, in which case there should be noticeable evidence in support of it otherwise the conclusion is that it's insignificant. Therefore, it does answer the question in this example: legacy status does not appear to have a significant impact on alumni giving as there is no (or difficult to find) evidence in support of that claim. The fact that there might be a small amount of evidence in support of it if you look hard enough does not mean that suddenly legacy giving is a significant factor in that consideration.

The article clearly says there's no evidence of a "casual relationship between legacy preference policies and total alumni giving."

Can you explain your point further? Maybe you are aware of better data than what was used in the cited study?

Maybe the individual legacy preferences don’t influence it but the knowledge they exist does. For instance, there is no statistical likelihood of winning the jackpot from buying a lottery ticket and people keep buying tickets when they don’t win - but if the jackpot just got removed, do you think that would affect people’s choice to buy a ticket?

Wouldn't that still cause a correlation between schools that have legacy scholarships and alumni giving? In your lotto ticket example, there is a correlation between the jackpot and the number of tickets sold.

Yes, that was what I was saying.

The "no evidence" comment is not made by the paper itself - it was made about a much weaker 2008 study. The linked paper actually claims that legacy admissions do increase alumni giving by implicitly favoring wealthier families. I think both papers have flaws.

The linked study literally says “our primary finding…is that there is no statistical evidence of a casual relationship.” It also controls for wealth: “after inclusion of appropriate controls, including wealth…”

Maybe we’re referencing different studies. Which are you specifically referencing?

No, we're not. It controls for wealth, and then says that the policy itself affects the wealth of alumni, which makes it entirely inappropriate to remove that as a variable. In essence they are arguing that legacy preference systems are not what motivates higher donations, but they are a causal factor in the outcome of higher donations.

"the policy allows elite schools to over-select from their own wealthy alumni. In other words, the preference policy effectively allows elite schools essentially to discriminate based on socioeconomic status by accepting their own wealthy alumni families rather than basing admissions on merit alone."

" we show that prior to controlling for wealth, there is a strong correlation between alumni giving and legacy preferences. This suggests that greater alumni giving at elite schools with legacy preferences is driven by the school’s ability to over-select from their own wealthy alumni populations—not a result of the preference policies themselves inducing additional giving."

I think you are pointing out a related but slightly different problem. The question being asked is not "Does admitting wealthy students lead to higher alumni donations?" but rather "Does admitting legacy students lead to higher alumni donations?".

The latter one is what is being measured when they control for wealth and conclude that the practice of admitting based on legacy status does not result, in itself, with higher alumni donations. But like you said, when it becomes a means to admitting wealthier students, it can result in the former. But the two questions shouldn't be conflated and measuring them as distinct questions is why it's important to control for wealth in the methodology.

They cannot be measured distinctly when one is a proxy for the other.

It seems like they are correlated, but I don't know that one is necessarily a good proxy for the other.

Would you apply that to, say, wealth and SAT scores?

> better data

I am personally aware of a very large donation to MIT with the express purpose of admitting the high schooler, and I am less acquainted with a similar situation at Harvard. I have personally seen another alumni development quid pro quo, not a monetary donation, at MIT. Honestly it seems like common sense that the two are related. The mistake from a scientific point of view is how to define legacy preferences and how to measure such impacts. It is certainly there, it’s an interesting question as to how to measure it.

At the risk of sounding glib, I was asking for data and not anecdotes.

>The mistake from a scientific point of view is how to define legacy preferences and how to measure such impacts.

The paper looked to define legacy preferences using multiple datasets where the school measured the importance of alumni relations in admissions. The datasets had to agree for (e.g., both say that alumni relations are "very important" regarding admissions). The measure used in the studies that showed no evidence was the level of alumni donations. It's pretty easily quantifiable. Other studies cited show that when legacy admissions were abolished there was not a statistically significant change in alumni donations.

>I have personally seen another alumni development quid pro quo, not a monetary donation, at MIT. Honestly it seems like common sense that the two are related.

You're comparing apples to oranges. The question is whether consideration of legacy status in admissions is causally linked to greater alumni giving. What you're asking is whether wealthy parents are willing to pay bribes to get their dull children into particular institutions. The two aren't comparable, because rich parents don't need to be alumni to pay bribes.

Lack of evidence is hardly evidence of lacking.

You are confused; evidence of absence is not absence of evidence. Unless you can point to a problem with the methodology, failure to discover a relationship between A and B is indeed evidence that A and B are not related. You're suggesting they would have to prove a negative for there to be evidence.

"Using annual panel data covering 1998 to 2008 for the top one hundred universities, we show that, after controlling for year, institution size, public/private status, income, and a proxy for alumni wealth, more than 70 percent of the variation in alumni giving across institutions and time can be explained. The coefficients all have the expected signs and there is no statistically significant evidence that legacy preferences impact total alumni giving."

    "Prior to controlling for wealth, however, the results indicate that schools with legacy preference policies indeed have much higher alumni giving. These combined results suggest that higher alumni giving at top institutions that employ legacy preferences is not a result of the preference policy exerting influence on alumni giving behavior, but rather that the policy allows elite schools to over-select from their own wealthy alumni. In other words, the preference policy effectively allows elite schools essentially to discriminate based on socioeconomic status by accepting their own wealthy alumni families rather than basing admissions on merit alone."

So it's likely that if fewer people from wealthy families become alumni then alumni giving will go down.

They actually investigate this starting on p. 115 and find no significant short-term decrease based on observations from institutions that ceased consideration of legacy status.

I think the more important point this comment misses is that the family's wealth isn't going anywhere and their kids will still go to college, so it stands to reason that the alumni will still give, they'll just be giving to e.g. Arizona State instead of Harvard, which seems like a net positive to me. If people are being honest about their concern that donations from wealthy alumni are good because they subsidize education, those fears are totally allayed.

"Moreover, any loss in alumni giving at the elite institutions would presumably be at least partially, if not fully, offset by additional giving to alternative institutions where parents of wealthy students might donate as an alternative, and the wealthy students themselves would become alumni. "

I think that paper over-indexes on exactly that argument - that having a relative attend the school is just a proxy for wealth, so they would give just as much anyway if they went to a different school. It doesn't stand to reason at all that the donations will be transferred to whatever other school their kid attends, donations like this are not fungible and do not scale linearly - if everyone in your family for five generations has gone to Harvard, and your kid goes to Arizona State, you aren't suddenly going to build a family tradition of loving Arizona State. You're more likely to simply dilute the strength of the family-college connection and not donate at all, or donate a perfunctory amount and put the rest into the opera you attend these days. I didn't look up the authors of this study, but they certainly didn't bother to mention any familiarity with the field of fundraising, which isn't as straightforward as they make it sound. Even if the strength of connection was the same, do public schools have the same skills and desire to request donations as Harvard does?

To test that hypothesis: they should check the Arizona State alumni to see if the number of relatives who attended Harvard is just as good a predictor of donations to Arizona State, because it's equally as strong a proxy for wealth when you attend Arizona State as when you attend Harvard. My bet is that it's a very weak predictor!

Yes, but as it’s a finite resource, it’s also taking a spot of someone deserving on merit. Schools will have learn to operate without free money.

What's the point of the donations to maintain an institution, if the institution's effect is to further entrench the advantages held by the already well-off and well-connected legacy admissions?

Please do tell- which institutions effect is as you describe?

Honestly, relying on donations doesn't seem tenable without discrimination. The only way out is to treat it as a public good and fund it as one.

Carnegie Mellon is a private university, and obviously there's already a strong public commitment to college education through subsidizing the student directly.

It's a private university founded with the intent to be a public good. It exists ostensibly to be a counterweight to the ills brought about by the concentration of wealth and power under its founders, in recognition of their outsize influence on society.

I think the question is whether the donations create more resources than what is used up by a legacy admission.

For example, imagine I donate $1B to the university, with two stipulations. First, they admit my child to the CS program. Second, they use the money to perpetually expand the size of every incoming CS class by 10 students.

In that respect, the legacy admission is a net good. Yes, for four years there's a spot that's used up by my kid, but even during those four years there are 10 additional people got into the program who wouldn't have otherwise.

I realize it's not that easy, it doesn't work like that, and the size of classes at places like Harvard are not limited by the how much money Harvard has. But it seems like there could be ways to keep some kind of legacy admission program which also create a net good.

Maybe every legacy admission should be required to fund a perpetual scholarship for one financially disadvantaged student? That's both expensive enough to be rare and beneficial enough to be hard to argue with.

Why tie it to legacy though?

The university could just offer a secondary admissions pool with a higher tuiting cost.

They could, but they make more money by keeping the clearing price unknown.

Then your $1B is provably not a donation, and hence subject to taxes.

It’s already not a donation if it is tied to a benefit to a specific person in your family.

The “provably” in my comment is meant to indicate that people would actually be afraid of falsely claiming donations which are really payments to increase m chances of their kids’ admission, since they could be proven guilty of tax evasion.

So... get rid of private universities entirely?

I'm sympathetic to your position, but that doesn't quite seem like the wisest course of action to me.

Well they've gotten enough money now to appear virtuous onwards.

In the article: > “The pros are certainly fundraising development. I think people like to think that if they give a lot of money to a university, their children will get special preference,” he said. “I can sort of understand the other side saying it’s unfair to other applicants.”

The quoted person doesn't deny it helps, but people like to think it helps.

Also, please don't donate to your university. You paid them for an education, food and housing. You don't owe them anything else. Compound interest on their takings is your contribution.

They do not have an outsized impact to admissions. What has an outsized impact is the connections a person has with the university. And those connections can come from significant contributions.

They’re more contributing towards enormous endowments than subsidizing others education.

Princeton can and does do this because of their donors:

https://admission.princeton.edu/how-princetons-aid-program-w...

I'd actually love to see more data on this. My cynical take is that now people donate to schools they didn't even go to - and are concentrated anyways in a few big donations a year. So banning legacies could still just allow wealthier people to buy their in, even if not their own former college.

Most of these universities are already rich as hell, with their small class sizes they can easily support the current structure just off the interest on their endowments. Really, i think the current structure actually benefits rich legacies more than it does their much more talented poorer counter parts since the poorer counter parts can get VC funding much easier in todays climate if they demonstrate they have a great idea but this won't happen because most of the systems in America are rigged to make money flow upward.

Its a valid point, but its one the government does not care about.

If you are a public funded institution, you charge the same for admission to all students.

The moment the university stop taking public funds, you can have your wealthy students subsidize the less well off classmates.

That's a separate category of admissions advantage - "dean's list" or "donor" is usually what it's called. "Legacy" is just children of alumni regardless of whether they've donated, and "staff" or "faculty" is relatives of workers.

Exactly, this will likely increase donations.