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Comment by time-domain0 | Hacker News Reader

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I worked in both research and profit-center sides at a so-called non-profit private university everyone knows by name with a ten figure endowment management company. They wasted $150 million on a campus-wide accounting system that consultants failed to deploy something usable. And, an 8 year old $30 million donated building was torn down to make way for a $120 million complex with underground parking. They have money to burn, even in economic downturns... they do the feigning poverty routine with so-called budget cutbacks that are ostensibly to cut spending but are in fact false signals to game donors into donating more.

Nearly all US universities are so flush with cash that they're constantly rebuilding to attract customers (ie students). The scamming ones must have owners and executives taking the money and running, because there's no way they can go bankrupt unless they're trying hard to do so and/or completely incompetent at managing business survival.

PS: The associate vice provost of a dept I worked for was reimbursed $80-100 from the university for dinner nearly every night, had a free suite just off campus (worth $3000/month) and seriously requested helicopter rides to work. They were in-charge of the biggest cash-cow besides undergraduate tuition, netting around $200 million annually.

I admit to being an outsider to that industry, but I do have friends who are not, and they tell a different story. Yes, some universities in the US are as you describe. But not "nearly all". Small universities without large endowments are in the process of consolidating into large schools, or shutting down. Small colleges with reasonable endowments are up and running, but nervous, because they can see that they do have a runway to worry about.

In short, there is a spectrum of wealth in the education system just as there is with individuals and families. Anecdata from one of the wealthiest doesn't give a full picture of the entire system.

> Small colleges with reasonable endowments are up and running, but nervous, because they can see that they do have a runway to worry about.

But how did they get to a cost structure where they have to be so nervous? If they could keep costs to where they were in real terms 25 years ago they could charge less tuition (thereby making it easier to fill classes) and break even without dipping into the endowment.

Harvard can hire hundreds of overpaid administrators, build ugly buildings, and invest foolishly and it’s “only” a colossal waste of money. When Union College copies Harvard’s poor decision making there’s a lot less margin for error.

Just like in health care, insane cost growth is the whole ballgame.

> But how did they get to a cost structure where they have to be so nervous?

It's not necessarily the university's fault in every case and instead is due to the changing face of higher education in America. Many colleges and universities were able to rest on their laurels for decades as the American economy transitioned from a labor force to a variety of specialized jobs across many new and exciting fields (as well as specialized training in old fields too).

The jobs market is again shifting and has been for many years. College has become increasingly unaffordable due to institutional hubris and from the fact that many colleges have been focusing on the wrong priorities to attract new students (luxury dorms! exotic food! useless majors!). Alternatives to expensive college degrees have sprung up everywhere, and while many universities scoffed at the thought that these new types of education would be embraced by the public, the alarm bells are beginning to ring louder and louder as traditional institutions begin to see declines, not only in general enrollments but also in specific programs that have been popular for decades.

Some places can weather the storm as they have prestigious names or large endowments or illustrious alumni networks or great sports teams. Others have to pivot to embrace the idea that college has become too unaffordable and orient their institutions towards new ideas and programming that will bring in students. The problems higher ed faces does not 100% come down to institutional cost structure, but instead a reimagining of how one can achieve a college-level education without resorting to massive amounts of debt.

>* Anecdata from one of the wealthiest doesn't give a full picture of the entire system....*

And in fairness, anecdata from those most poor doesn't give a full picture either. I'd argue that so called "non-profit" universities are indeed better off at the mean than is generally known.

Also, any university with a reasonable endowment, especially if it is small to boot, is not nervous in the least. The "nervous" set of universities would include, in this order, for-profit universities, small privates with small endowments, and large privates with small endowments. (The last category, large private-small endowment, should be all but dead. So if any are still out there they have something else going on. Maybe a good football or basketball team or something?)

I'd also add to this list small publics which have small endowments and are located in states with upcoming, or current, fiscal shortfalls. (Especially states with both, like Kansas, Wisconsin, etc). Though these universities are not so much "nervous" about going away, as they are "nervous" about what will happen when their states merge them together to streamline costs. I doubt most states would get rid of their small universities, even in lean economic times. (I could be wrong about that though? I just doubt it.)

Unfortunately, basketball fans will probably keep Kansas from being moved to Manhattan and merged with Kansas State.

What is the old quip?

A university is a giant hedge fund with a small education arm attached for tax benefits.

I hadn't heard that one -- it says it perfectly!

I'd only heard a similar one, that General Motors is (was) a massive health care and pension bureaucracy with a car-making division.

I did the math on a local state university and figured their annual revenue is about $1B based on tuition and enrollment. While I think the school is managed well, it certainly doesn't feel or look like it is run as a billion dollar business.

How’s that work? Do they publish income because they are a state institution? (Every student pays something different so I would be hard to judge from just the # of students.) thx.

They probably do have to publish numbers, although I didn't look that up. It's just a very rough estimate based on the 'sticker' price and I figure that any tuition discounts for students are offset by research funding and alumni donations which I left out of my estimate.

UK: Local universities have developed new building syndrome. In some cases a definite enhancement (Birmingham University's new sports centre adds an olympic sized swimming pool and offers community engagement, BCU is moving everything onto one campus as much as possible and financing building by selling land, Aston is upgrading teaching rooms and lab space).

But also some projects not so much clear reason - demolishing functional libraries and replacing them with buildings that have fewer seats &c (although disabled access could have been an issue in one case).

The biggie is large scale speculative development of student residences. That bubble is going to have to burst soon...

> Nearly all US universities are so flush with cash that they're constantly rebuilding to attract customers (ie students).

Isn't it the really old historic buildings that attract people? After all nobody can build an old building. Being able to say your uni is 800 years old is something, no?

If you look at Oxbridge, all the new buildings are the ugly ones.

It's good to have a handful of really old buildings, but in the US what attracts undergrads is modern new dorms, gyms, and dining halls. Students might like walking by the scenic old buildings on campus, but they spend most of their time in what are basically luxury apartment buildings.

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