The Ivy League Doesn’t Need Taxpayers’ Help | Hacker News Reader

The Ivy League Doesn’t Need Taxpayers’ Help

wsj.com

88 pointsdanielam116 comments

> The 94 schools with endowments over a billion dollars averaged 7.2% growth from 2005-15

I'm not sure what point the authors are trying to make here. The S&P 500 (with reinvested dividends) returned ~7.4% annually over the same period [0].

> That works out to roughly $2 million per student.

Clearly this is a deceptive comparison. The institutions do not have $2mm to spend on each student every year. The endowment is intended to provide for each student the institution educates in perpetuity. Spending unsustainably destroys endowments, and subsequently their beneficiaries [1].

> Yet between 2010 and 2014, according to the same study, these schools received some $30 billion of taxpayer contracts, grants, direct payments, student assistance and tax exemption. In other words, federal cash and subsidies over that time averaged nearly $102,000 per student each year.

Excluding the student assistance funding, the other aid provided to the schools is not necessarily relevant in a discussion about 'skyrocketing tuition'. The universities mentioned fulfill other essential roles, such as basic research, which immensely benefit society. The money allocated to these schools through the mechanisms mentioned, like grants, directly fund this work. Pretending it is being spent on undergraduate tuition is dishonest.

[0] https://dqydj.com/sp-500-return-calculator/

[1] http://www.nytimes.com/2013/10/12/business/ransacking-the-en...

I agree - using grants and contracts as part of their total number is incredibly deceptive. Much of that has nothing to do with undergraduate students, and research grants have very, very little to do with the cost of tuition.

Deceptive comparison is the thing to do for msm these days.

Perhaps that could be used to justify the claim that the institutions aren't reinvesting the endowments back into their organizations.

2 million * .04 = 80k/year.

First and foremost, that rule of thumb is meant for retirees, not institutions looking to sustain themselves in perpetuity. Secondly, a 4% withdrawal rate offers a decently high chance that the principal can be drawn upon for 30 years. Withdrawing 80k per student per year would be exceptionally irresponsible on the part of the school administrators.

I doubt they would actually need 80k/year per student preserving their capital.

More broadly though, what's the point of a foundation if you never extract anything. Further they will receive donations and tuition, but they clearly don't need 'help'. In fact not having a long term plan to use their foundation is more irresponsible as they really could just lose all that money in 200 years without using it for anything.

> what's the point of a foundation if you never extract anything

These institutions do utilize their endowments. As nonprofit entities they are only allowed, by law, to retain a portion of their gains.

> Further they will receive donations and tuition, but they clearly don't need 'help'.

At least some are currently operating at a deficit.

> In fact not having a long term plan to use their foundation is more irresponsible as they really could just lose all that money in 200 years without using it

I hope you see that there's a contradiction in that statement. You're encouraging rampant short term spending while simultaneously claiming centuries old institutions have no long term plan.

do utilize their endowments

Not really, if they receive donations of X and take less than X out of their foundation every year they are not utilizing their endowment while complying with the law.

> At least some are currently operating at a deficit.

Good, if none of them every operate at a deficit they are not pulling enough money out. On average you should draw down an endowment so it's growth over 20 years is just below inflation letting new donations top it off.

PS: Your model of indefinite investment fails the societal instability test. There are no fortunes from even just 3,000 years ago because institutions are not stable. Further, people may not exist in even 100 years so investing for the ultra long term is a mistake.

> Good, if none of them every operate at a deficit they are not pulling enough money out.

It is a death sentence for an organization to draw down its endowment. Please refer to the source I provided previously about the NYC Opera for an example.

> On average you should draw down an endowment so it's growth over 20 years is just below inflation letting new donations top it off.

It would be great if you could substantiate your claims. MIT provides a description of its endowment objectives [0] and provides the following formula for its distribution:

Distribution = 80% x (Distribution in Prior Year, Increased by Inflation) + 20% x (5.1% x Market Value of Endowment)

Nowhere in their endowment spending policy do I see any reference to factoring donations into their decisions about drawing from the endowment.

> Your model of indefinite investment fails the societal instability test

I searched for "societal instability test" Google returned 'No results found for "societal instability test"'. Although it's convenient to fabricate evidence for claims, doing so does not actually make the claims true.

> There are no fortunes from even just 3,000 years ago because institutions are not stable.

Again, a cursory search [1] seems to contradict your claims that institutions are inherently unstable. While The Kongo Gumi Company is not quite 3000 years old, clearly institutional longevity is possible.

> Further, people may not exist in even 100 years so investing for the ultra long term is a mistake.

By that line of reason, people may not exist in even 100 hours, so investing for any period of time is a mistake. However, I assume you're not spending any money you have as soon as you acquire it.

[0] http://web.mit.edu/fnl/volume/205/alexander_herring.html

[1] https://www.quora.com/What-is-the-oldest-institution-organiz...

Societal instability is a common issue with any form of long term planning. It is a very basic idea, and ignoring it will 100% guarantee failure.

EX: "It risks a host of problems, including the possibility of reprocessing, social instability, leaks and accidents, or destruction of waste storage containers by natural disasters or terrorism." http://ieer.org/resource/commentary/yucca-mountain/

PS: Using google is no substitute for basic competence.

I looked at that source. There's no definition of 'social instability' and no references defining it. You really can't cite this as evidence that 'societal instability' is the most pressing concern when managing endowment spending.

If you're attempting to feign competence in this matter, you should stop. I recall that you've claimed in the past that currency fluctuations have no bearing on real estate prices. Your initial comment here demonstrated that you have no appreciation for the concept of financial suitability. While you are probably very capable at whatever you do, reading a personal finance blog does not immediately qualify you to advise institutions on managing billions of dollars.

I have directly worked with very large endowments before. They are all different, but it is understood that not spending money represents a risk. The French Revolution is probably the most well known case, but endowments are not safe. If you really want a source here: https://www.jstor.org/stable/368736?seq=1#page_scan_tab_cont...

But, I am done talking as you are both rude an ignorant.

Taking money away from top universities. This is an idea who's time has come?

The positive externality provided by MIT, Caltech and Stanford alone in startups generated by people attracted from all over the world is G8 level wealth.

Take the funding away because it's not doing anything useful. Research. Understanding. Cures.

The WSJ has always had blow-hard editorials, but it's hard to imagine them writing this utter pile of excrement pre-Murdoch. We need to call it the Fox-WSJ just so we can be clear about its former reputation's place in the modern world.

Like one of the starred comments on the article points out, the government should get out of the business of education loans. Industry can easily pay for students they think are valuable.

the govt should enable companies to have some sort of contract that enables a bright student to avail free education (sponsored by the company) in exchange of some duration of work with that sponsor (at market level wages).

This certainly will steer education towards what the market needs. Anything that is not in clear demand could still be funded by the endowments.

I disagree that industry is far-sighted enough to know what to invest in. Curriculum decided by market needs sounds like a nightmare.

Really? Curriculum decided by government committees sounds so much worse. University computer science curricula lags behind industry by at least five years, a sizable portion of coding bootcamp students are actually CS grads because they complete their degrees without competitive and employable skills.

There are important functions of colleges and universities outside of vocational training. If vocational training is all your after you should skip schools for a market solution like bootcamps.

Around here most universities advertise themselves as vocational training with slogans like " an education for the real world".

Because CS isn't necessarily about coding?

That's more of a problem with too many students passing classes they shouldn't IMO.

Curriculum decided based on lopsided incentives (like govt education loans for degrees worth less than a toilet paper) are bigger nightmares.

These money sucking degree programs with no job prospects exist because tax payer money is taken for granted!

I'm not saying no to degrees in Language, History, Arts, or any other degree. If someone wants to pursue their field of interest that has no guaranteed jobs, let that be done on their own money, or by them sourcing funding on their own (ideally from a prospective employer), not with tax payer money.

Assume that we both agree that industry is not farsighted enough. At least, the education loan debt is borne by the industry, and if it was indeed short sighted, the student loses only the time spent. Not own or tax payer money.

The schools are extremely valuable to americans as research centers and hubs of networks of power. There is ultimately no reason why Stanford or Harvard couldn't move to India or China if there were higher quality students willing to pay vastly more than American families can. The universities have the prestige, we don't. We are beneficiaries of their prestige, not the other way around.

So no, I don't agree with that article. Invest in success MORE not less.

A university is more than a name. Harvard or Stanford aren't going anywhere.

But if Americans take the perspective that their premier universities should contribute tax dollars, whilst other countries fund their universities, American universities will have marginally less resources. This will compound, because international moguls who can donate to a good school in country A (and have 20℅ taxed off the top) or in country B (and have none taxed) might well prefer country B.

The end result is a plummet in the Ivy League's international standing. Academics are remarkably focused on their research; prestige and nation matter little to many of thr top ones. What attracts academics are resources and colleagues. Without resources, the colleagues become worse, so both wither. Suddenly you'll have American politicians wondering why their schools aren't the best anymore.

That's a nice work of speculative fiction.

The Harvard and Stanford names would quickly lose their prestige if they abandoned the US. Most of the prestige is derived from the citizens of the US to begin with.

Tax-exempt endowments seems like the absolute most logical loophole to close (perhaps a minimum size, but the point stands). They're some of the largest institutional investors in the country, yet they're taxed like a non-profit. Even if donations aren't taxed, just treat the endowments like any other institutional investor.

NOTE: This should not in any way rule out additional tax reform, whatever your preferred mechanism. The point is to treat multibillion dollar institutional investors like multibillion dollar institutional investors, however we wind up choosing.

> They're some of the largest institutional investors in the country, yet they're taxed like a non-profit.

Is there a reason we shouldn't treat major educational institutions as non-profits, assuming we accept the concept of non-profits in the first place? (Note that the rules for non-profits already require spending a certain amount of the endowment every year.)

I think the argument is that they are much less accessible to students with less privileged backgrounds.

If one views the subsidy associated with the non-profit status as a form of education spending, it's fair to ask whether that is the best use of that money.

> I think the argument is that they are much less accessible to students with less privileged backgrounds.

That's exactly backward though. The Ivy League schools all have need-blind admissions and meet 100% of demonstrated financial need (for U.S. students)

And yet the median income of the students parents at ivy league is something like $125k while the median income in America is more like $50k right?

It would be shocking to me if the profile of students applying to Ivy League schools didn't skew substantially high on median family income, highest degree attained by parents, and SAT scores.

Successful parents breed (read: raise) successful children. Surely not in every case, but in aggregate. As a successful graduate of a small tech school in Cambridge, I was aided by my parents' educational bent, bias, and investments of time and money. They were aided by their parents, just as my wife and I will aid our children.

Even if your tuition to Harvard or Yale was $0/semester, you still need to live nearby to attend. And if you're going to succeed, you're not going to want to have to take a minwage job in order to eat/stay warm/have clothes. Having the money to set up a student in a completely separate apartment (or whatever) means you're more likely to be in that $125k range than not.

This is "not even wrong."

Residential life is part of the package of top-tier universities - you live in the dorms first year by default, and are usually required to. When students migrate to nearby apartments depends, and is sometimes never.

Financial aid offices "meet demonstrated need" and don't typically differentiate between tuition, fees, and room and board.

If a student with a full ride moves off, financial aid cuts them a check for living expenses. Sometimes this amount is calculated based on the expectation that the student will work a campus job (with govt-subsidized wages - Work Study) and sometimes not.

sjburt said they are less accessible to poor students, which I was defending as true.

Is accessibility best measured by:

P ( student_is_poor | student_attends_ivy )

P ( applicant_is_admitted_to_ivy | applicant_is_poor )

I take the view that the latter is the better measure, but I can see people arguing that the former has some relevance.

The point is that both are low, I would accept the second metric and I don't think it shows what you seen to claim it does. If you take all the applications submitted, income would be positively correlated with acceptance even though it is "needs blind". Some of that is implicit, but some of it is likely explicit (admit kids who played polo over kids who worked at McDonald's if everything else is equal)

I agree that both are low. MIT's acceptance rate is a little under 1 in 12, and several Ivy League colleges have an even lower acceptance rate.

I further agree that there is a positive correlation between income and acceptance. I further agree that there is a positive correlation between income and application. What I don't see is any productive way to 100% eradicate those correlations.

I'm only familiar with the admissions policies as practiced by MIT in the late 80s and early 90s. There was explicit bias for diversity (which is good; no one wants an utterly homogenous population), but I also think it's perfectly reasonable to deny admission to a very selective university to a student who is utterly undistinguished in all aspects of their high-school career. Admissions to selective schools ought not become a totally random lottery.

I think that removing financial gates for those students who are accepted (need blind admissions) is mandatory and effective. Going beyond that is fraught with peril I think.

Do you know what the median parent income is like for students at Stuyvesant High School?

Non profit charities MUST spend 5% of their endowments on charitable projects. Some argue universities should do this too.

Many endowments at least aim for this. Harvard's target every year is to spend 5-5.5%. Actual spending over the last decades has been 4.2%-6.1%.

Building the future doesn't count as charitable?

No, because you could use that same vague statement to describe Google since they are building self driving cars.

Just their endowments. Their endowments are not even taxed on gains. As I mentioned, a good first step would just to be treating the endowments like the institutional funds the behave like. Keep donations to the school (which fund the endowment) tax-free, if you want.

> Is there a reason we shouldn't treat major educational institutions as non-profits,

Because universities are increasingly operating like businesses, using technology transfer offices to bring in revenue and using graduate students to cut labor costs.

Related: I wish more schools could/would adopt the Ivy League's financial aid model. Free (with room and board) if your family makes under ~$65k, and you only pay a small percentage if your family makes up to $150k - depending on the school.

Stanford is free (excluding room and board) for families making under $125k - http://money.cnn.com/2015/04/01/pf/college/stanford-financia...

I went to an Ivy League college, and my parents are by no means rich, or even upper middle class. What happened was the college tried to use any excuse they could possibly find to deny "financial aid". One time I was denied because of a rounding error in my parents' tax returns. Literally a rounding error. The only reason I managed to graduate was because a lawyer I happened to know threatened to sue the school.

If the Ivies want to say, "we're a school for the rich, tuition is $XXXK, put up the cash or don't come here", that is 100% their right as private institutions. But if they promise that aid will be provided to anyone who needs it, and they then revoke that promise on a whim when someone is already partway through their degree, they are lying bastards and need to be called out on it.

I just wanted to corroborate this as an attendee of a school you'd recognize.

I received a large financial aid package structured as an institutional scholarship. My dad's business failed my freshman year. He liquidated its assets, as those had served as his modest "retirement" fund. This windfall left me ineligible for financial aid, which means I lost that scholarship. Forever. It was not eligible for renewal the following years--no matter how little my parents earned.

Prior to accepting the offer, I called the financial aid office asking questions I thought would help me determine the money would be there. They gave every assurance it would. Nothing was in writing. There's no contract to read and sign. How's a 17 year-old first gen student supposed to navigate that?

I did not graduate.

You speak of the Ivies as a group which has wronged you, but I don't necessarily think your experience is representative of the group as a whole.

Certainly my experience at another Ivy has been that this one goes out of their way to make sure students are funded, and will usually accept even egregiously late paperwork with no reduction in financial aid.

I would further posit that, in addition to differences among the various schools, you are often times at the whim of individual financial aid officers, who have full authority to accept or reject the applications they are processing.

:-/ sorry your experience sucked, mine was very different.

Every semester they cut _me_ a check; I graduated without loans; and they didn't include my intern salaries in my earnings (so even though I was making more in a summer than my parent did in a year, it didn't affect my financial aid).

The schools have to look out for themselves.

What I saw was that since the schools give a lot of grants / reduced tuition to students that come from families that make less than $X, a lot of parents tend to rig their returns to make less than $X.

If you own your own business, it's easy to game your income.

There's a big difference between looking out for yourself and denying financial aid because of a discrepancy of less than a dollar. Intent matters, and it's hard to argue that someone is trying to fleece you for $1 at a time.

Intent matters to... software? It's literally just a formula and someone plugs in numbers and gets a green screen or a red screen. The people doing financial aid probably aren't enabled to change the screen colors once a response comes back. Bureaucrats are bureaucrats -- you have to bypass them to get anything done.

I'm sure it's much easier to make those policies when your endowment is $22.2 billion.

Lots of policies are easier to make when you have cash. The flip side of being forced to spend down the endowment is an increasing focus on the short term. For an institution that's supposed to have some insulation from whichever way the wind is blowing today, that's not such a good thing.

$20B is much more than "some insulation."

Also helps that they only accept a small proportion of such students.

It's clearly a token effort at disguising their elitist admissions procress. If they let in too many poor people the rich wouldn't send their chilren there. The whole point of these Ivy League schools is to prove membership in the club of the elite.

Admission to all the Ivy League schools is need blind, so I don't think letting in too many poor people is a big concern for them.

When I was in grad school at an Ivy League university in the early 80s, it was reported in the school paper that about 50% of undergraduates were legacies.

Has that changed?

Yes. It was far easier to get into college in the '80s, in part because far fewer bothered to attend; this resulted in more legacies then than now (I believe the percentage of legacies at Harvard is in the single digits).

According to this article, 16% of the Harvard class of 2019 are legacies: http://features.thecrimson.com/2015/freshman-survey/makeup-n... (The survey was voluntary, and there is no mention of the percentage response. Apparently Harvard does not publish the actual number of legacies.)

So yes, things are better than in my day. I would say that the number of people who would not have bothered to attend Harvard in the 80's was very small indeed.

You don't need to come up with a conspiracy here. Ivy League schools simply don't care about providing as many people as possible with a good education.

The goal is rather to be the best in research, education and in the experience of studying for the people that do attend. They achieve that goal by significantly limiting how many people are allowed to attend, especially poor students that take money away from the school.

If you really want to help poor people, ignore what the rich are doing, ignore inequality and identify who those poor people are, what problems they have and fix them. That will be far more beneficial than attacking the "elites".

Source?

The Revisionist History podcast has two great episodes on the subject.

http://revisionisthistory.com/episodes/05-food-fight

http://revisionisthistory.com/episodes/06-my-little-hundred-...

Revisionist History is Malcolm Gladwell's podcast, not a reliable source for anything.

https://www.boston.com/news/education/2016/07/15/bowdoin-col...

Every podcast is someones podcast, that doesn't mean anything nor does it make podcasts in general or this podcast specifically unreliable.

Additionally this critique is laughable and if anything proves Gladwell's point. It's not about the food, it's about spending money on things that aren't relevant to education. Gladwell could have made the very same podcast and talked about expensive sports programs instead of food.

Maybe Bowdoin isn't wasting money on food and that was a bad example to make. They're still spending a lot of money and not on financial assistance. If they felt confident about what they're spending it on, they would have brought that up and mentioned that they're not spending as much on financial assistance but instead have some large education or research project going on but they're not doing that either. Bowdoin is wasting money and they clearly know it or they would have responded differently.

My daughter is at Yale. They basically say: "How much do you make? Give us 20%". While painful, I do think it is the most fair approach.

Only for this year? Or for your net assets? Because I'm totally willing to go on a four year sabbatical to get free tuition for my kid :)

Probably cheaper to marry then off. Students with spouses don't have their parent's income considered.

Of course my wife won't let me try this at home.

A friend and I considered getting married for a similar reason. We actually both were receiving Pell Grants, but married students are allowed to live off campus and drop the meal plan, which would have saved us another ~$7,000 each (mostly in loans).

As far as bad plans go, it wasn't exceptionally terrible, because we actually had an exit plan. Wisconsin allows you to annul a marriage if you haven't consummated it after a year. (I might not be 100% correct on that point, but the law was something like that.)

Pretty glad I didn't go through with that plan.

I'm from Bangladesh -- arranged marriages are still an option!

(not really)

Believe you me - I am VERY tempted. I suggested that to my wife more than once.

So thanks for sending me down this rabbit hole :)

Assuming Yale uses the IM calculation for financial aid, the problem isn't current income: it is savings and home equity. The financial aid formula actively penalizes savings in any form, as well as home ownership. If you have a meaningful nest egg in, say, the 1M+ range, you are guaranteed to have to pay full sticker price.

Therefore, in addition to being unemployed when my kids make it to college in 2035-36, I'll either have to blow our retirement funds before we turn 50, or persuade my kids that the Ivies just aren't worth it. Given my slacker tendencies, they'll pick up on the latter course of action via osmosis; never before have I rooted so much for nurture over nature!

I've always wondered why they don't use this to price discriminate even more. They always say the "actual value" of the education is way more than $55k per year or whatever, because the endowment contributes significantly to the operating budget as well.

So why not make the list price $100k? If your example is correct, this would only affect those who make between $250k and $500k (where 20% of their income is between $50k and $100k).

The list price is darn close to $100K.

I don't think your analysis is quite correct. Assuming is $100K and they ask for 20%. If I make more than $500K, then I pay $100K. If I make $50K then I pay $10K.

But please note that I'm GREATLY simplifying things here. It's not simple "Give us 20%". If it was, it would be like PA income tax - one page - give us 4%. It's more like NY income tax - dozens of pages with lots of special cases and loopholes.

For the same reason I like PA taxes, I like Yale financial aid. It's closer to the PA model than to the NY model. I don't approve of thresholds like "Income less than $100K - you pay nothing". I could even argue that an Ivy is such a privilege that the "give us 20%" should have no upper bounds ;)

The need to make the price low enough that graduates who do well feel an inclination to make $10m contributions back.

The additional income isn't worth the Sanders activists screaming about college tuition costing X years of minimum wage.

o.o why is it the parent's responsibilities to pay for the child's tertiary education?

Whose else should it be? Going to an ultra-elite country club university whose operating expenses are on the order of 50-100k per student per year is a luxury, not a necessity or some sort of human right.

Very few other countries in the world have schools this prestigious, by the way, so it's not necessarily valid to compare them.

Edit: by the way, I highly doubt that there is any country in the world with universities that operate completely independently, with virtually no State oversight over budget, admissions decisions, curriculum, or degrees granted, and which can charge students however much they want, such that the State also pays the education bill for students.

Usually the student takes out a loan for themselves.

Ah okay, I assumed you were implying it should be the responsibility of the State.

IMO the state should pay (up to) a fixed amount per student (say, $5k a year). Anything above that needs to come out of the student's own money/loans/strings to pull.

My concern is with bringing in parental income to the situation.

You don't pay - but you do contribute.

This is America

Having multiple children sure is expensive.

Typically in a need-blind financial aid model, the family's expected contribution is all-in. Your kid's twin sibling would hence be 'free'. At least in theory.

You mean sending multiple children to Yale is expensive.

The entitlement in this thread to ultra-elite luxury goods is insane.

It actually cost significantly less (almost half) for me to attend an Ivy League than both nearby state universities, given the Ivys' excellent financial aid.

Penn State wouldn't even give me a merit scholarship, regardless of my (rather stellar) high school academic credentials, community service and social work, and extracurriculars (worthy of Ivy League admissions), so I was looking at the full 25k/year sticker price. IIRC, their honors college had even more tuition fees than the regular college.

UPitt also gave me a meager financial aid package and initially refused to honor their own UPitt Science Fair merit scholarship that they awarded me while I was still in high school for winning first place (they insisted it was already included in the "federal grant money"-only financial aid package that they gave me, though it seemed suspect, it felt like they "forgot" about it entirely until I called the right people; THEN I got my scholarship included as additional financial aid).

Especially in the latter case, I'm not sure where the entitlement was; I won a merit scholarship awarded by the state school, and then the state school "forgot" about it and then tried to substitute it with federal grant money.

I went to the Ivy.

EDIT: Staying on topic, on the note of the expense of having multiple children: My sister went to the state school, and it effectively tripled the amount of money my parents and I were paying per year to go to school (and it put all four of us in debt; I helped my sister out because I graduated before she did and managed to land a great software engineering job right out of school with a starting salary significantly higher than my parents' income -- I'm still paying off student loans four years later now).

It should be exponentially more expensive per child. Not specifically in relation to college, but in relation to taxation in general.

We want to encourage the population to grow in sustainable ways, not only in some families that make having lots of kids a priority.

You posture that an effective policy to put downward pressure on fertility is to deny access to education. A policy whose effects specifically target individuals who didn't make the decisions you want to disincentivize. I think you might want to re-think your policy positions :) In general, I don't think inhibiting access to quality education is ever an appropriate response to any situation.

I meant precisely what I stated. A child doesn't have a choice about where it is brought in to being. Unstated: all children should have a good education/etc.

Now, the /parents/. They do have a choice. The general system outlined in Larry Nivin's science fiction universe where exponentially higher costs were associated with children past the first free one (there were also lotteries to fairly distribute most of the rest of the population sustenance quota, as well as the option of emigrating off of earth to unrestricted colonies).

Mostly, however, is the issue that today there are many who do not /have/ children because the imbalances in today's society make them feel unworthy or simply unable to do so.

Perhaps the worst part is how few students who could truly use that financial aid simply don't apply to Ivy League schools since they think they'd never be able to pay for them.

I didn't know this until long after starting college.

It doesn't help that there's a long line of very angry people telling anybody who will listen "you'll never get in, only rich snobs go there".

Are you trying to say that the real issue here is bias against the rich and powerful?

Telling lower middle class students that they shouldn't attend or even apply to elite schools seems like a poor strategy to reduce the power of the elites.

I mean, this kind of only works for Ivy League because they're pairing up the unbelievably privileged with the extraordinarily talented. When you're just mixing a bunch of middle class people together, not only will you not have enough money to actually keep the <$65k kids funded, but those extra-talented kids are still all at more prestigious schools.

Perhaps a pedantic point, but regardless of income, there is no financial aid for families with assets over a certain amount.

It would mean for one thing, that universities would have to change the way they fundraise and accept donations. A lot of endowment funds are earmarked for particular purposes. Which could be anything from an endowed professorship to a large donation for a new building. Not too long ago, Harvard got $400 million for a new engineering school. Would that same donor have been happy to give the same amount for a scholarship fund? Probably not. I work in university publishing. We have a fund that helps defray the production costs of some books. It was endowed to us for that purpose, and the funds can only be used for that. College endowments are made up of hundreds of such funds. While it would be great if we had bigger scholarship funds, people who think universities should spend down their endowments have no idea how these things actually work.

And at least some portion of the government spending is going to pay tuition, at least for graduate students getting RA stipends. That money comes out of research funds.

I received most of my financial aid for my Ivy League education from federal grants (my family made < $60k). I wouldn't have had the opportunity to attend an Ivy League college without federal aid.

A while ago, the Stanford dean wrote an open letter about the decreasing amount of funding for the UC system. In this letter, the dean mentioned the value the UC system provides to Stanford, the research community in general, and the state of California.

However, the Stanford Dean also said something interesting, he said that Stanford can't provide an education on the scale that the UC system does. While I agree Stanford can't match the entire UC system on scale, I have to ask, why not on a scale similar to a UC Campus?

UC Berkeley, for example, has over 27,000 undergraduates, with a vastly higher percentage of low income students than Stanford or any Ivy. At Stanford and Harvard, total undergrad enrollment is below 8,000. As a result, Berkeley educates more low income students than the entire ivy leave combined. This is true of a number of UC campuses.

It's clear that the elite privates have decided to keep their undergraduate populations very small. Even if they do improve the percentage of low income students, the scale is so minuscule that they can't really be large scale agents of social mobility.

So, why aren't Stanford and Harvard enrolling 25,000 undergraduates? If UCB and UCLA can do this, why can't they? These institutions do enroll comparable numbers of graduate students, the big gap is in undergrads.

http://blogs.berkeley.edu/2014/10/13/why-elite-private-unive...

Because these universities get a huge amount of money from the government, and a massive tax exemption, they end up being far more heavily subsidized per student than even the elite public universities, with far less restrictions on how they are allowed to operate.

I'm not absolutely against the exemption in theory, but really, why should Harvard and Stanford get to keep this massively valuable tax exemption if they're going to refuse to scale, offloading the massively important task of educating large numbers of students to state supported universities. Really, if you look at the public funding (including the favored tax status) Harvard and Stanford are essentially state supported institutions.

I'd say, privates need to either scale like UCB and UCLA, or lose the exemption.

Who are these authors? The feds aren't "paying universities not to sped their endowments" they are paying them to take more students. All that will happen is that universities will cut funding for financial aid. Rule number one for any university endowment is that you never ever ever touch the endowment to fund ops [0]. Ever. Because the second you do the internal politics of the university go completely insane with everyone trying to get a slice of it for their pet projects. You especially don't use it to fund students tuitions. There are many people who can pay full ride for all their children. Do we really want to go back to living in a world where the vast majority of students who go to elite universities are there because their family has money? Because that is the world that this would create.

0. In fact I'd say that this is rule number one for trying to build ANY kind of lasting institution.

Ban all this crap, eliminate parent income calculations, and put a flat price on things. Let students get their financial aid externally. It's a conflict of interest on the part of the school to pick and choose who they're giving it to. While you're at it, get rid of student loan subsidies (i.e. Government guarantees) and allow student loans to be be washed away by bankruptcy.

After the initial shock of the bubble bursting when he band-aid is ripped off, you'll have a sustainable education cost structure with the added benefit that the altruism is externalized and insulated from the institutions.

I would argue that schools don't do this because it's in their best interest to admit a certain percentage of kids who can't afford it, and bend over backwards to make sure the kids attend.

If the schools fill up with ONLY rich kids with excellent academics, they're going to miss out on the poor (or middle class) kids who will clearly go on to do great things. The output will get bland, and they're leaving a huge market gap open for another educational institution to come in and sweep up these poor geniuses and build a reputation on that.

You need to strike a delicate balance between the Malia Obamas, the Rothschilds, and the Ramanujans out there in order to build and maintain the reputation of the institution. Even if they're losing money, and dealing with a paperwork nightmare in the short term, it's a long term gain for them.

So the schools don't want to eliminate these loans and subsidy programs, the consumers certainly don't want to eliminate them, and because of this, the government doesn't want to eliminate them -- adding more subsidies, scholarships, and increasing access to loans is an extremely popular political move.

I would also argue that these subsidies provide a net economic benefit to society, by allocating educational resources to those who will get the most out of it, but that's a little more controversial.

And just say 'too bad' to the kids who can't afford it or get a loan because they have no co-signer with good enough credit?

No they can get free money from charities or loans from non profits. I'm saying it's not the governments job to do it. Nor is it a good idea for the schools to do it either. If they want to have a fund that provides money for a specific school, have it external to school and provide it to the students that attend that school. Otherwise you're hiding the costs.

Anyone have link to full article?

Click the "web" link under the article title, then click on the first result.

ooo thanks!

I haven't read the article (can't get past the paywall), but based solely on the headline, if we do have to tax exempt somebody, I would rather it be the Ivy League colleges, than the university attached to the Alabama football team, or the UNC effort to exploit a loophole to get unpaid labor for its football operations.

(I want to reiterate I am only commenting on the headline, since this is a pet peeve of mine, and the article may completely refute or be unrelated to my comment).

I think the folks here prefer discussion of the articles rather than the headlines, but I'll hold off on downvoting your comment.

I don't even know what the pet peeve is that you mention: it's unclear from how you structured that bit of your writing.

Well then they should post articles that don't have paywalls.

That's what the web link is for. Click it and then click the top search result.

In this case, you can thank a Google policy for forcing access to paywalled articles in order to be indexed.

Thanks. I wasn't aware of the web links.

That's good to know.

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