Elite Colleges Have a Looming Money Problem (msn.com) 74
They gave it the old college try, but America's elite universities are facing money problems partly of their own creation. From a report: It might not seem that way compared with the broader world of U.S. higher education. Ivy League institutions and a handful in a similar orbit like Stanford, Duke and the University of Chicago aren't just blessed to have international cachet and their pick of excellent students and professors -- they also have the most money and the richest alumni. By contrast, public and especially smaller private colleges and universities are cutting staff and programs. Many are closing outright.
A school like Harvard, now well into its fourth century, will almost certainly survive for a fifth one. But there are financial problems below the surface that could emerge if the bull market stumbles and especially if some proposed Trump administration policies are enacted. Harvard's $53.2 billion endowment is so huge that the difference between a good and a so-so investment performance translates to sums that would dwarf most colleges' entire nest eggs.
Former Harvard President and former U.S. Treasury Secretary Larry Summers estimated this year that if Harvard had been able to just keep up with other Ivies and "large endowment schools" in the past several years, it would have $20 billion more. For perspective, he says that just $1 billion could fund 100 professorships or permanently cover tuition for 100 students. But even Harvard's peer group isn't doing as well as it could. Veteran investment consultant Richard Ennis wrote this month that high costs and "outdated perceptions of superiority" have stymied Ivy League endowment returns, which could have been worth 20% more since the 2008 financial crisis if invested in a classic stock and bond mix.
A school like Harvard, now well into its fourth century, will almost certainly survive for a fifth one. But there are financial problems below the surface that could emerge if the bull market stumbles and especially if some proposed Trump administration policies are enacted. Harvard's $53.2 billion endowment is so huge that the difference between a good and a so-so investment performance translates to sums that would dwarf most colleges' entire nest eggs.
Former Harvard President and former U.S. Treasury Secretary Larry Summers estimated this year that if Harvard had been able to just keep up with other Ivies and "large endowment schools" in the past several years, it would have $20 billion more. For perspective, he says that just $1 billion could fund 100 professorships or permanently cover tuition for 100 students. But even Harvard's peer group isn't doing as well as it could. Veteran investment consultant Richard Ennis wrote this month that high costs and "outdated perceptions of superiority" have stymied Ivy League endowment returns, which could have been worth 20% more since the 2008 financial crisis if invested in a classic stock and bond mix.
Re:There's a difference between news and opinion (Score:5, Insightful)
Reporting that if policy X is implemented it could have impact Y, and someone who backs policy X was just elected, doesn't seem like bias to me. It sounds like reporting the facts, as people so often claim they actually want.
Is it simply the appearance of the name of a politician that makes it biased? If so, how do you ever report on politicians or the impacts of policies they support?
Re: There's a difference between news and opinion (Score:2)
Fool me once, shame on me. Fool me twice, shame on you. Fool me three times, shame on the weatherman. Fool me four (or more) times, I will blame the opinion based, traditional media.
Re:There's a difference between news and opinion (Score:5, Insightful)
"...not orange man bad, if we enact bad man's policies, things go bad."
Nothing like that was said, that's you "finding words and phrases that aren't there".
"That's basically the translation."
No, it's not. That's your translation crafted to suit your narrative. What was said doesn't even need translation, except for people offering bad faith arguments.
"I'm very critical of many of Trump's policies"
No you're not, no one who says "orange man bad" is critical of Trump or his "policies" (as if he had any).
"They've picked a side and defend it at any cost, including being rational and objective."
Right, like suggesting that a bull market could turn means "orange man bad". MAGA projection.
"Worse, is the inability to even see this."
For you it's easy, just look in the mirror.
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But there are financial problems below the surface that could emerge if the bull market stumbles and especially if some proposed Trump administration policies are enacted.
I am not a Trump fan, but don't see any specific policies or explanation of how they might make their financial problems worse. If you rewrite that as: " But there are financial problems below the surface that could emerge if the bull market stumbles and especially if some proposed policies are enacted." you would wonder what the author was talking about.
Moreover there is zero explanation as to why "Trump administration policies" would make make their financial problems worse rather than helping relieve th
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It's just an attempt to inoculate all 'they' can in advance of the 2nd Trump Presidency. Failing, somewhat, so if you're seriously concerned that Trump will end everything good, stick to MSNBC for your information. If you're somewhat more hopeful, well, choose several sources, maybe even those of your acquaintance that got it right for the past almost 9 years. Yes, I'm poking you. Wake up.
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Listening to right-wing TV and radio makes me seriously concerned about el Bunko being president again. Hell, even selling off U.S. Gov. agencies to his billionaire friends scares me. They'll favor their own companies and then kickback money into el Bunko's "companies". He never does anything unless he can profit from it.
Re: There's a difference between news and opinion (Score:2)
Don't be. More FUD. Seriously, the standard Dem complaint against the Rep President. You can switch the labels, same stuff. Really, those sources are outside of credibility for me, they manufacture possibilities and turn them into certainties, dragging their audience into a pit of despair and speculation, all unfounded in the real world. But ignore me. Just watch.
Re: There's a difference between news and opinion (Score:3)
Re: There's a difference between news and opinio (Score:2)
This is your story, I'm just exploring what seems to me business as usual. What other Presidents have traded favors for, what, favors? Certainly never a Democrat, by some popular opinions. Set the sarcasm flag wherever you care to.
Re: There's a difference between news and opini (Score:2)
Re: There's a difference between news and opin (Score:1)
Perhaps I mistake Biden's story about 'sonfofabitch', the prosecutor got fired when a billion dollars of aid were at stake for something benign. No, I didn't, that's right. His son had a stake in that. Feh. We ought to expect this huh?
Re: There's a difference between news and opi (Score:2)
Re: There's a difference between news and op (Score:2)
No, I was referring to this one...
https://www.c-span.org/clip/ca... [c-span.org]
And yes, several good reasons to have the prosecutor fired. Choose one.
Re: There's a difference between news and o (Score:2)
Re: There's a difference between news and o (Score:2)
Reasons why the president of the USA is not supposed to participate in business while in office.
Where did that come from?
Not sure if you are aware of this, but hotels/resorts have dynamic pricing for all manner of reasons, without specifics it isn't much of an indictment.
Hunter Biden financed a world-record drug and hooker festival for years on the back of his father's name as Vice President and President. To argue Joe Biden was ignorant of this reality is to believe his son had a habit of calling his dad during client meetings to learn about Washington DC weather, nothing more.
Re:There's a difference between news and opinion (Score:5, Informative)
You should RTFA:
Two Trump administration policies could further weigh on Ivies’ finances. One is a 1.4% tax on income levied as part of the 2017 Tax Cuts and Jobs Act on endowments larger than $500,000 per student at schools with more than 500 students. A few dozen schools have had to pay it and there is talk of increasing the levy.
Far costlier would be rhetoric or visa rules that make it harder or less attractive for foreign students to attend U.S. universities. Foreign students on average receive much less assistance and therefore indirectly subsidize aid to domestic students. Their enrollment took a hit during Trump’s first term.
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Far costlier would be rhetoric or visa rules that make it harder or less attractive for foreign students to attend U.S. universities.
Also, Trump's announced policy plans will tank the US economy, and probably the global economy. Endowments depend on investment returns to generate income and growth.
Wall Street seems to believe that Trump won't do what he says he will do. Let's hope they're right.
Re:There's a difference between news and opinion (Score:4, Informative)
RTFA:
Two Trump administration policies could further weigh on Ivies’ finances. One is a 1.4% tax on income levied as part of the 2017 Tax Cuts and Jobs Act on endowments larger than $500,000 per student at schools with more than 500 students. A few dozen schools have had to pay it and there is talk of increasing the levy.
Far costlier would be rhetoric or visa rules that make it harder or less attractive for foreign students to attend U.S. universities. Foreign students on average receive much less assistance and therefore indirectly subsidize aid to domestic students. Their enrollment took a hit during Trump’s first term.
Re: There's a difference between news and opinion (Score:2)
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"especially if some proposed Trump administration policies are enacted"
Biased reporting like this is why nobody trusts the main stream media. People want news, not someone's political opinions.
It would have been nice to at least mention what these "proposed Trump Administration Policies" were.
Former Harvard President and former U.S. Treasury Secretary Larry Summers estimated this year that if Harvard had been able to just keep up with other Ivies and "large endowment schools" in the past several years, it would have $20 billion more.
Its hard to feel bad for, say, Harvard, because their (obscene) $52 Billion endowment could have been an (even more obscene) estimated $72 Billion if they had made better investment decisions.
he says that just $1 billion could fund 100 professorships or permanently cover tuition for 100 students.
And yet, with $52 Billion they choose to do neither?
Is the issue possible future Trump policies, or a track record of sub-optimal investment choices?
I seem to recall Harvard being in the news recently, odd that wasn't m
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"And yet, with $52 Billion they choose to do neither?"
I believe the whining is suggesting that with *only* $52B, a stock market downturn could take it all. You know, it's the "billionaires are entitled to it all" perspective.
'If the big brains at Harvard can't figure this out, "perhaps, dear Brutus, the fault lies not within proposed Trump Administration polices, but within yourself?"'
Is it even about the "big brains at Harvard"? And your takeaway from all this is that "proposed Trump Administration polic
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I suspect it is another attempt by these universities to get access to the principle. Many of these endowments have restrictions that prevent the schools from touching the principle.
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Re:There's a difference between news and opinion (Score:5, Insightful)
Orange Jesus is a touchy subject.
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>> Biased reporting like this
Ridiculous tariffs, mass deportations, and 'drill baby drill' are not a recipe for economic success. Even the Wall Street Journal knows that much.
Re:There's a difference between news and opinion (Score:5, Insightful)
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Fucking troll army spreading trump propaganda, chances are you're not even human
This crap is spread over every single online conversation these day, as if we are all brain dead fox news junkies
The Ukrainians have lived under soviet/russian propaganda for decades, and find Americans terribly naïve, imo trump will finally push it too far, disappoint the right wing followers and cause a cataclysm that will dump the right wing propagandists in the alley like moldy bread
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Biased reporting like this is why nobody trusts the main stream media.
Such as the Fox tabloid? Sure, their numbers are great, but people do like comedy.
Also, fuck off with the canard of nobody trusts main stream media. The only ones who don't "trust" them are people such as yourself who don't like being told the truth.
Too wealthy to fail (Score:5, Insightful)
Re:Too wealthy to fail (Score:4, Informative)
DOGE needs to start by eliminating carbon credits. The alleged richest man in the world would have nothing without those government handouts.
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DOGE needs to start by eliminating carbon credits. The alleged richest man in the world would have nothing without those government handouts.
Replace them with carbon taxes. That will generate revenue for the federal government, reduce the deficit, perhaps enable other tax cuts and reduce emissions more effectively with less market distortion.
Re:Too wealthy to fail (Score:4, Insightful)
Wake me when Tesla stops getting subsidies and tax credits.
Re: Too wealthy to fail (Score:2)
And should those subsidies be cut for the big three automakers, Rivian, etc? Because, of course, your issue is the subsidy, not the politics of the majority shareholder, right?
These are private universities. (Score:2)
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Re: Too wealthy to fail (Score:2)
You think they should be targeted by the government ... because the stock market outperformed the private equity, hedge fund and real estate mix they invested in?
Harvard has more than three-quarters of its endowment in private equity, hedge funds or real estate and just 14% in publicly traded stocks
Are you fscking tarded bro? Do you even have a brokerage account? This is how Trump got elected, the dumbest most ignorant fuckheads in the country said "I got this".
Eilte? (Score:2)
I always see these types of places called "elite"--they don't appear to be, they're just famous. There's nothing especially better about them than many other universities, from an educational perspective.
Re:Eilte? (Score:5, Informative)
From a networking perspective, though, they are clearly superior; you get to pal around with already-wealthy people and build a network of contacts so you can spend the rest of your lives trying to maintain an "old boy's network" and minimize the amount of wealth that leaks out of the group.
And given that your parents can buy you a pass ending in a degree, that's a kind of educational superiority, from the perspective of a poor performer from a rich family...
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Exactly, the problem here is the assumption of what education is for. "Better" would be defined by within what education is for, and to rich people that means further enrichment. Colleges like Harvard are far "better" in that respect. Harvard is the "rules of the game", rules that rich people get to set.
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I always see these types of places called "elite"--they don't appear to be, they're just famous.
I beg to differ. Being a MIT grad, I can attest that the education opportunities available there are superlative. From what I know of other elite schools (e.g. Stanford, Cal, Harvard, Yale), it's comparable. Yes, you can get a great education at other schools. All things being equal, you've got a better chance of getting a better one at the elite colleges.
Don't take that to mean the any degree from any elite school is necessarily a good investment. $250,000 for a history degree at Harvard is unlikely to hav
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Beyond the education given at "elite" schools are the relationships and contacts with technology and business innovators that will provide opportunities that attendees at "state" universities rarely get
Investing based on ideology (Score:3)
Universities make many investment decisions based more on ideology than on the likelihood of good returns on investment. https://www.nytimes.com/2024/0... [nytimes.com] While it may be important for them and their benefactors, to carefully watch what they invest in for various ideological reasons, there is a cast to this kind of investing, and not a small one.
For most people and institutions, the best way to invest is through a hands-off approach, such as mutual funds, especially index funds, which use a mathematical formula to make investment decisions (rather than relying on human judgment). As soon as you start picking and choosing based on factors *not* related to investment returns, your investment returns will suffer.
For some, the tradeoff is worth it, their ideals are more important than the highest returns. But it's a decision that has costs that must be considered.
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Right, and the real story here is "you didn't invest in me, so now comes the retribution". The problem isn't investment based on ideology, that not a problem but a mandate now, the problem is that the ideology is the wrong one from the perspective of those in power.
The idea that an institution would take a lower rate of return in exchange for ideology should not be condemned but applauded. Capitalism should not be worshipped. Question what that ideology is. Is the ideology anti-Trump? Anti-fascist? An
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I'm neither applauding nor criticizing universities for their investment choices. The article is noting that universities are having trouble with investment returns. If investment returns are a problem for them, they have to decide where their priorities are: good returns, or making a philosophical point.
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For most people and institutions, the best way to invest is through a hands-off approach, such as mutual funds, especially index funds, which use a mathematical formula to make investment decisions (rather than relying on human judgment).
I agree and would add dollar cost averaging. The idea is to get yourself into a *saving* mindset rather than an *investment* mindset, and to game that mindset to mitigate your risks.
Say you've got $100 per month of your income that you want to save. The idea is that you pick 3 - 5 mutual funds or exchange traded funds to buy into and you always buy $100 worth, split across the same funds every cycle. No matter what, it's the same amount every time.
When you do this, you are naturally going to buy more when p
doesn't sound like an "elite colleges" problem (Score:3)
"...high costs and "outdated perceptions of superiority" have stymied Ivy League endowment returns..."
It sure sounds like a money management problem, not an elite colleges problem. Money isnt constrained by its own "perception of superiority".
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The amount of money provided and the competitive value of the service provided certainly is affected by the "perception of superiority". "Money management" is done on top of income and expenses, not as a replacement.
Not from most Ivies ... (Score:5, Insightful)
Given a choice, Ivy (and similar) graduates are usually not my first hiring choice. These schools seem to preferentially instill arrogance and a sense of entitlement, paired with a surprising dollop of ignorance.
They produce some good students, of course, but overall the intellectual climate at these schools does not appear healthy (anymore?). They put out good students not so much because of but despite their efforts.
I would not call their inability to maximize their endowments a "money problem" (thanks for the chuckle, slashdot), but a symptom of their effort to deftly move from meritocracy to mediocrity. Apparently they succeed increasingly well. Not sure I am sad about this ....
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The outstanding students at these schools have VCs waiting to give them money to start their own businesses, which then invariable hire from those same schools
They don't give a fuck what you think about them
Optimal investments? (Score:3)
Investments are not known ahead of time if they will be optimal or not.
Universities have certain obligations that prevent them from going with the simple 80:20 TotalStockMarket:TotalBondMarket ratio that is reasonable for individual investors. Some of these obligations include money earmarked for certain funds, expenditures (known and unknown), and long term health of their endowment.
For a university which has been around for 400+ years, long term investing is different than for an individual who is looking for a 30 year retirement. The university will be looking further out on long tail black swan events that individuals wouldn't be concerned about. Reminds me of the story about how Oxford grew oaks to make sure they had the wood to replace the beams in their dining hall. https://www.atlasobscura.com/p... [atlasobscura.com]
But, yeah. F--- the major U.S. elite universities that don't grow their student body to keep up with population growth. Only one that grew appropriately was the University of California system, which has a mandate to take a certain percentage of students who apply from their state.
when the student loan tap is cut off lots of unive (Score:2)
when the student loan tap is cut off lots of university's will be tapped out
Harvard did it to itself (Score:1)
The focus on political activism based majors, and the frequently of fraudulent publications including from their last president, along with the "reverse racism" conviction by the Supreme Court and the "calling for the death of all Jew does not violate our school policy" testimony to Congress have disenchanted students, and the donation providing alumni, with Harvard and other Ivy League college's morals and behavior. If so many of their professors lie in their papers as a matter of course, why would anyone
Faculty-staff ratios (Score:5, Insightful)
One big problem is the faculty-staff ratio. Faculty are the engine of any university. Staff are, perhaps, the lubrication: enabling the faculty to do their jobs effectively.
At my institution, over the past two decades, the ratio has gone from 60-40 to 40-60. Those numbers look almost harmless, but consider: previously for 60 faculty we had 40 admins - now we have 90! More than double the overhead! Of course, the top-level administration Aldo needs tools to do their work. Do we have a massive SharePoint site, and apparently whole teams churning out complicated Excel sheets. Which we - the faculty - have to fill in to feed the bureaucracy.
Want to improve our school's finances? Fire more than half of the staff and terminate most of the Microsoft contracts.
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At my institution, over the past two decades, the ratio has gone from 60-40 to 40-60. Those numbers look almost harmless, but consider: previously for 60 faculty we had 40 admins - now we have 90! More than double the overhead!
Serious question: what does your institution include in staff versus faculty? Are non-tenure-track lecturers staff or faculty? How about non-teaching postdocs? How about the lab technicians?
I've heard these positions can be considered either. Depending on which way your organization classifies positions could dramatically change the reported ratios. If you have more insight, please share.
Re: Faculty-staff ratios (Score:2)
At my university (probably not the same as GP), we have similar ratios of faculty and staff and changes from 60-40 to 40-60. (Haven't looked at these number in the last two years).
We only count in these discussion permanent employees. So full professors, lecturer, and it directors count. But TAs, adjuncts, and student IT help do not count.
So for us, postdocs don't count. Lab staffing counts or doesn't count depending on how they are paid. If they are on a state permanent line, they count otherwise not. So t
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And it's not just at the college level, public schools are at least just as over-administrated.
As for the fancy colleges with all that money - they are supposed to have some smart people maybe they can figure it out.
I learned math from Harvard (Score:2)
"just $1 billion could fund 100 professorships or permanently cover tuition for 100 students."
WHOA, I had no idea that tuition at Harvard was $10,000,000!!!!
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I assume they mean the return on a billion would cover the tuition for 100 students.
If we're conservative and use 3% of nestegg that's a mere $300,000/student (inflation protected).
Could have followed Warren Buffett's advice (Score:4, Informative)
And put their endowment into an S&P 500 index fund...
Contrast that to MIT's recent announcement (Score:2)
I find an odd juxtaposition between this article is talking about how elite institutions are facing money issues and MIT's announced it was dramatically reducing the tuition it is going to collect [mit.edu].
If you're having money issues, cutting revenue doesn't seem the obvious call.
Re: Contrast that to MIT's recent announcement (Score:3)
MIT makes most of its money from endowment, grants, and contracts. Tuition is not much of their total budget. So it may not be surprising that they can do that.
All colleges have a money problem (Score:2)
Because they have bloated staffs of non-instructional staff. They are going to have to run like cost focused businesses and trim fat like it's never been trimmed before, or close.
https://www.forbes.com/sites/p... [forbes.com]
"Looming" implies time to adapt or shut down. (Score:2)
How much time depends on their level of financial incompetence that put them in danger in the first place.
A college is a business in a highly competitive market.
If a so-called elite school failed to get then remain wealthy that is their choice since they should have ample intelligence to do better.
There is no excuse for failure where others thrive.
How the F*** much does it cost to go to school the (Score:2)
"$1 billion could fund 100 professorships or permanently cover tuition for 100 students."
How the F*** much does it cost to go to school these days?