I agree that there has been a major increase in middle-management and administration in most colleges and university, and as a professor I generally grumble about this as you do. But to be frank I also see that society and the government has imposed a much greater administrative and regulatory burden on higher educational institutions, and that at least some of this increase in management reflects the needs to supervise this regulation. This has happened in many private businesses too. I suspect the rate of increase of management eclipses the need, but I have no hard data.
Massive endowments? Certainly not the state universities/colleges; almost all of them are suffering from years of the state cutting back their funding. They are in deficits. For private universities such as Harvard: they are typically spending their endowments and gifts as the donors wished. They usually have to do so as a condition of the gift. Generally the endowments/gifts are not directed by the donors to lower undergraduate tuition; most are to strengthen work and visibility in specific areas of research or broad scholarship, such as a disease (most private donations are in medicine), an aspect of engineering, or art.
Sure there are broader, long-term endowments/subsequent interest income that rich private universities do control without donor restrictions. Although I am a socialist don't the administrations of these institutions have the right to manage these funds as they think most appropriate for the health of their institution? Certainly Harvard has stayed at the top of its reputation and success by these decisions. Ill give you some insider information: the reputation of a university/college is not based on the quality of its undergraduate education so much as the quality of its research and graduate/professional education. That's why Harvard, etc. are so visible and (ironically) even undergraduate degrees from Harvard are considered so desirable, whereas the University of San Francisco (an excellent undergraduate experience) is less well known and less intensely sought after.
There are already many internships by which an undergraduate (or graduate student) can work in parallel to receiving a degree and these function very well for people seeking degrees in business, health care, law, etc. areas. More would be even better. But I hope the implication isn't that universities and colleges exist primarily to serve businesses and other monied interests. They exist to serve knowledge: the acquisition of new knowledge and teaching of/sharing with/passing on of knowledge to others. The fact that some areas of knowledge also have worth in cold hard cash is great and can help fund these institutions. But it is not the purpose or only value of higher education.
