# Universities nothing more than a business?

1. May 13, 2008

### gravenewworld

If the price of milk went up as much as the cost of college tuitions have risen over the past 20 years, we'd all be paying $15 for a gallon of milk right now. Harvard has a$36 billion dollar endowment (which isn't taxed!) and even received a 23% return on its investments last year. Harvard, however, only spends 0.8% of its endowment helping its students. Harvard costs what, $40-50k per year? If you make$120,000 then you get no financial aid at Harvard. What person who makes $120K can afford$40-50K for tuition? In fact, a lot of universities spend almost 2x's as much on an investment manager than the amount of money they give to a student. Here I thought universities were supposed to be institutions of higher learning, not money making business machines.

2. May 13, 2008

### Moonbear

Staff Emeritus
Of course the PRIVATE universities are money-making business machines. They also promote higher learning and good research, mainly because places like Harvard also rake in the big bucks to fund so much research.

Or, you can consider the public universities, which, like the price of milk are subsidized by government. Tuition and fees here are just a bit over $5000 for the year for in-state students. And we can have just as big of scandals involving our university president as they did. :tongue: 3. May 13, 2008 ### Beeza What the heck... My state university costs me about 12.5k per year when they are gone tacking fees onto everything. I'm getting ripped off! 4. May 13, 2008 ### Moonbear Staff Emeritus You don't have Robert Byrd as a senator. Even out of state tuition here only costs about$15K a year. We get a lot of out of state students because tuition for them here is still cheaper than in-state tuition in their home states. I suspect some of it is also that cost of living is fairly inexpensive around here too, so costs are kept lower because salaries can be lower for staff and still provide them with the same cost of living as much higher paid staff in other states.

5. May 14, 2008

### Vosh

I can get the same education for next to nothing at the public library; so my opinion is that universities are over charging. Finding scholars to ask questions is work, but they're out there. Anyway, I learn best from those who have only just found out themselves... Most, though, prefer to put up walls around information and won't talk to you unless you're giving them hundreds of dollars. I probably don't have much to learn from that type, anyway. The only thing a degree proves to me is that you are a team player.

I think the problem may be not so much that they're a business as much as they are a jobs creation scheme.

6. May 14, 2008

### Barfolumu

So is Dillon's. So is AT&T. So is Ford.

Like most businesses, they have a bottom line to keep, but they also provide a benefit to society, like food, communication, or transportation. The university just provides education and support for research. They also have a bottom line to keep track of, just like everybody else.

I think, with the more expensive universities like Harvard, you're getting what you pay for: Not only an excellent education, but a reputation, and contacts. *shrug* People still attend even with what they charge. And there are other locals to get just as good an education, you just have to investigate beforehand.

I know I ain't rich and I ain't paying them crazy tuition costs. I like my liberal arts state school, thank you :D.

7. May 14, 2008

### mathwonk

my university is essentially free on the "hope scholarship" for in state students who maintain a B average.

still i think for most students a harvard education is worth the 40-50K a year it costs. and affording it all comes down to your priorities. when i was a young parent, my wife and i both worked, and i spent 100% of my professor's salary on private school tuition for our young children.

we paid private school tuition for both of them for a total of 18 years, before college, and then paid for both to go to private colleges. at church my friends thought i was a free spirit for not wearing a sports coat, but i could not afford one.

i often debated whether it was worth it, and we struggled every year with tuition payments, but looking back, i'm glad we did it.

true, a highly motivated person can learn a lot anywhere, but most of us benefit from contact with smarter people and with a diverse group assembled from all over the world, such as one finds at harvard.

and math courses taught by fields medalists do tend to be more authoritative. in research, places like harvard are several years ahead of most others. while a postdoc there i once gave a proof in answer to a professors question concerning an unpublished result of another professor, did not publish my proof, and then heard that same result presented at an international conference over 18 months later.

the point was that just by conversing with people at harvard, i felt i was ahead of what one learns anywhere else in the world even at specialized research conferences or specially focused years. it seemed a step down even to go to the institute for advanced study by comparison.

Last edited: May 14, 2008
8. May 14, 2008

### mathwonk

i would support however a renewed merit scholarship program like that in the 1960's, whereby talented students chosen competitively, would receive generous scholarships essentially to the college of their choice.

in the hope scholarship model, essentially all middle class parents receive a bye on the first year of public school tuition, if their children have a B average in high school, then most of the students lose it the second year when their unpreparedness for the university becomes apparent. this makes it to some extent a vote buying scheme, which does also benefit good students.

by the way when i went to harvard in 1960, on a merit scholarship, tuition was 1250 a year, total costs were 3 or 4K a year, and my family income was about 3K/year. the median harvard parent income then was roughly 40K as memory serves, and the average of all family incomes was more like 70K.

But I believe it is clearly stated harvard policy today that every admitted student is given enough aid to allow him/her to attend, by harvard's formula of course.

my contention however is that it is not harvard's responsibility to provide free education, but it is in the interest of the us government to do so for qualified students.

but if you think taxes are high now, what if we all paid school taxes to provide free access to public colleges and universities for everyone? are your parents willing to pay for such a program? are you?

given that today a college education is as needed as a high school one used to be 100 years ago, it makes some sense to consider such a plan. notice in ivan seeking's budget link the us govt spends less than half as much on education as on war i believe, so no war would free up a lot of money.

Last edited: May 14, 2008
9. May 14, 2008

### Barfolumu

However, I wonder if college education became as free and required as a HS education is now, would it then be hampered in the same manner as public education? Privatization has some definite advantages... the only downside is that sometimes those advantages are reserved for the wealthy.

I kind of like the way the program is set up now -- public funding can be acquired by individuals, some schools are partially funded by the state, but they still remain institutions separate from the state.

10. May 14, 2008

Are you guys insane? If I could make $120K, I'd retire immediately. My annual income is about half of your lower-limit tuition, and that's gross (no deductions). 11. May 15, 2008 ### gravenewworld http://www.cnn.com/2008/US/05/14/beck.collegeendowment/index.html 12. May 15, 2008 ### Moonbear Staff Emeritus Again, universities do more than just teach students. Harvard is better known for their research than teaching, really. Those endowments fund research programs, departments, faculty and staff salaries, new equipment, building renovations and maintenance, utility bills, etc. Often, the actual endowment money is not touched, but only the interest earned from investing it is used to cover operating expenses so there is a continued source of income to fund everything a university does rather than a one-time, one-year payment. Many endowments also come with strings attached by the donors...must be used for a particular research program, a particular department (often in the form of an endowed chair), a particular scholarship fund, a particular building with the donor's name on it, etc. When you aren't putting funding into all those extras, you don't get a school of Harvard's reputation, you have Podunk College that can only recruit faculty who can't get research positions anywhere else (or rarely, those who have ties to the area, such as a spouse or other family, so work there because they need to stay in that area, not because that's their first choice of place to work). 13. May 15, 2008 ### gravenewworld While I can see how it funds research programs, equipment, etc. does this really matter that much to an undergrad, especially for the 1000s of undergrad students who don't even study science but something like philosophy, history, or marketing? I bet most of the time all that high tech equipment is used primarily only by professors and graduate students. Harvard only needs to spend less than 1% of its endowment to make it a tuition free school. So why doesn't it do it? What good is money that just sits there for no purpose? Harvard could be a tuition free school off of the return it gets on its investments alone. It wouldn't even have to spend a dime of its initial investment money. 14. May 15, 2008 ### Moonbear Staff Emeritus Or to equip classrooms, or to lure in the top people in their field to teach those students. As I already pointed out, if you don't want to spend$45000 on annual tuition, and don't think there's any value to the rest of what such a school can offer, then attend a state school for a fraction of that cost. Obviously, people do think there is some value in that education, because they are willing to pay that tuition year after year.

How much money do you think it takes to run a university? Granted, many get along on far less than Harvard does, but they also don't have the reputation Harvard does. Why do you think that difference exists? And, once again, Harvard is a PRIVATE institution. They have no obligation to be non-profit.

15. May 15, 2008

### mgb_phys

I suspect the value to most (non-science) graduates isn't the quality of the teaching so much as the quality of the addresses and phone numbers in the year book.

16. May 15, 2008

### Moonbear

Staff Emeritus
Likely. Though, they also benefit quite a bit from the research indirect costs coming in that fund those departments where it's a lot harder to get outside funding.

Of course, the whole point of not going on a crazy spending spree with endowment funds is to have a buffer for lean years. Harvard has been around a long time and understands that any other source of funding could dry up rather rapidly. It would take little more than a whim of Congress to cut off all NIH funding, and a healthy endowment fund will get them through that.

Our university's operating budget runs around \$700 million annually, and we don't have students who expect every building to be perfectly maintained or state-of-the-art. I suspect that Harvard's students (and their parents and alumnae) have rather higher expectations for the facilities there, plus they offer much higher faculty salaries and compensation packages (partly to lure in the best of the best, and partly because it's Boston, and you need to offer more to live there).

And, quite frankly, they have plenty of students who would consider a cheaper school to be beneath them. If they can't brag about going to such an expensive school, how could they show off their parents' wealth?

17. May 15, 2008

### mgb_phys

Joke told about my place -
Bursar - Where should we invest the endowment?
Master - Well property has been a pretty good investment for the college in the last 1000years.
Elderly academic in the corner - Yes, but you must remember the last 1000years have been atypical!

Wish this applied to other 'world class' institutions.

That at least is more familiar!

18. May 15, 2008

### Barfolumu

Well... I don't know if they can't get research positions anywhere else... just perhaps not at Harvard.

I guess what I mean to say: While I understand the reputation and excellence that Harvard brings by charging what they do, those who are not at Harvard can still be excellent.