In 1990s, many Russian government bodies founded universities of their own. A case study of the Russian State Tax Academy is used to examine the purposes of creating of such universities and outcomes of their functioning. The article uses materials of extensive interviews conducted in 2003–2009 with graduates of the Academy and tax authority employees who sent their children to the academy. It is shown that government body universities create a higher risk of low education quality. Discussed are ways to reform these institutions of higher learning.