<p>This is a question that I have been wondering. </p>
<p>Here is research that discusses the Academic Arms race:</p>
<p><a href=“http://www.educause.edu/ir/library/pdf/ffp0103s.pdf[/url]”>Error;
<p>The top universities don’t give up on efforts to find top students, that’s for sure. </p>
<p><a href=“Businessweek - Bloomberg”>Businessweek - Bloomberg; </p>
<p><a href=“http://www.thecrimson.com/article.aspx?ref=519210[/url]”>http://www.thecrimson.com/article.aspx?ref=519210</a></p>
<p>The real arms race is in research facilities and funding. Constructing the best facilities, bringing in the best people, etc is way more costly and has a bigger potential return.</p>
<p>So we agree, Arms Race in terms of facilities, endowment, faculty, students, research, etc…</p>
<p>Where does it end? and how much is enough?</p>
<p>Have you ever taken an economics course?</p>
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</p>
<p>Good heavens, for a moment there I thought my economics professor husband had hacked into cc. That is his favorite line.</p>
<p>I presume he goes on to discuss “scarcity” in the sense that economists use that term.</p>
<p>Arguments of “scarcity” enter a different level with HYP.
As of June 30, 2007, Princeton’s endowment was $15.8 billion.
Divide by 7175 total students (Newsweek/Kaplan 2008 issue), and that’s $2,200,000 per student. A $100,000 per student/per year payout at 4.5%, or $110,000 at 5%. While rich little Swarthmore spends not much more than $80,000 per student per year IN TOTAL!
This before accounting for payments by parents and students, the annual fund drive, etc., etc.
HYP show no signs of “standing down” in this arms race. They view each other as their prime competition, from what I can tell. But they are accepting larger and larger percentages of their undergraduates from an international pool. I think they are gearing up to be the regarded as the best in the world, going forward.</p>
<p>A couple of comments.<br>
HYP are not just gearing up to be regarded as the best in the world, they–and a few other US institutions-- ARE best in the world. But remaining at that level requires constant vigilance and infusion of funds.
2.Research universities cannot be compared to LACs. While well endowed LACs offer their students great research opportunities, they do not maintain facilities on scales comparable to research universities. Nor do their endowments cover graduate schools and graduate students.
3. Research is extremely costly. Only 25 years ago, there was no or little research involving stem cells; the human genome had not been mapped. Research into a host of diseases was non-existent. Much of that research is done at research universities. The same holds true for technological innovations that have had a major impact on the way we live.
Universities, in other words, cannot rest on their past reputation. The frontiers of knowledge are constantly expanding and research universities have a crucial role to play in that expansion.</p>
<p>The endowment fund I listed was divided by undergraduate AND graduate students. Research dollars are another HUGE source of funding at HYP I didn’t even list by name. Just an item among my "etc"s.
Look, I’m not even arguing that they won’t need these war chests as the century wears on. Just that they are unprecedented.</p>
<p>Undergraduates do not cost as much as graduate students. It’s the graduate students and their profs who drive the research, and not all research is covered by outside funding. Grants yes, but not the buildings in which the research is conducted.
Unprecedented war chests: so is the pace of technological change, thanks in large part to the research universities.</p>
<p>If I were more computer savvy, I would neatly reference all this.
But the Princeton website says they receive $220 million per annum in research funding, 86.6% from government, or something like 20% of the annual budget from outside research funding (for the entire University budget) in total. I have to believe that they recover a portion of capital costs in each grant, and are helped by their competitive position in obtaining the grants. I also suspect (working at a research university) that they add to their equipment base (which can be used again) via such grants. I don’t see research as a financial drain at all, but rather as a boost to funding.
I admit I am not an expert at this, but I have a background in finance and work in the ins-and-outs of university life.
I will also say that you and I, marite, through our own kids’ accomplishments, have no interest in denigrating HYP.
I’m just saying that this amount of wealth is unprecedented. The people who control this will determine if, 50 years from now, it was used well or ill.</p>
<p>Yes, this amount of wealth is unprecedented. But what is the baseline? I don’t get the utility of raising the unprecedented wealth of universities. The number of millionaires and billionaires, the number of students enrolled at universities, all these are unprecedented, too. So is the number of retired faculty and staff whose pensions and benefits universities still need to carry. </p>
<p>AS far as I know, universities are able to charge overheads to their grants, but I do not think they are able to charge the cost of brick and mortar buildings. And much of the overheads are the costs of running offices in charge of administering the grants.
Is there waste? Undoubtedly. But I do not think it accounts for the size of endowments and the need to do further fund-raising. MIT’s Stata Center cost well over $300 millions. Granted, much of it had to do with the Gehry design and much of it was cost overruns. But the $220 million that Princeton received would not have covered the cost of Stata, which is hardly the only building that MIT has been building. Harvard, too, has been building right and left. Some of the more visible buildings are the two Centers for Global and International Studies, but the rest are all science related (and this is separate from the Allston expansion). </p>
<p>Universities cannot afford to stand still.</p>
<p>marite, I think you and I agree more than not. I’m not ready to change public policy against such wealth.
You seem to feel “or course they need it”, and I tend to wonder how well they will use it, or whether they even need all of it.
Time will tell.</p>
<p>danas:</p>
<p>I agree. I’m just wondering about the concept of “arms race” in the original post. It has a pejorative sound, as in “do HYP really need to engage in an arms race?” First is the idea of competition. I’m not convinced that they are competing against each other in terms of fund-raising or spending. They are competing against each other (and against other institutions) in terms of attracting top faculty and top students. But they have their own institutional agendas which are not in competition with each other. For example, they are not all engaged in developing their engineering programs; Harvard is. They are not all committed to stem cell research; Harvard is, together with MIT. And so on. They are not committed to building more luxurious dorms (I almost wish Harvard were so that S would not spend 3 years in bunk beds!).
Right now, the emphasis is on engineering and science and these necessitate costly buildings and equipment. It is possible that 50 years from now, attention will shift to other disciplines. Will those buildings be considered unnecessary expenditures, a waste of funds? How should we judge? Since personal computers were introduced, I must have purchased quite a few, both desk tops and laptops. Despite the fact that I have discarded several, I do not consider those purchases wasteful. So I wonder how we will be able to judge several decades hence whether spending decisions made today were wise.</p>
<p>That’s why I responded to the original post as I did. Each top university seeks certain resources, because why should it have less than all it can of something desirable? Whether it’s top students, top faculty members, more research grants, more endowment funds, or whatever, the desire for all those worthwhile things is insatiable. That’s what economists mean about scarcity: the desire for good things ALWAYS exceeds supply. It looks like competition, or an “arms race,” but no university trying to be the best it can be will ever stop looking for any of those things.</p>
<p>In terms of endowments, the how much is enough question is a valid one to ask. If an alum chooses to donate $25million to Harvard it will have little impact on the college because of its already massive endowment. If improving higher education is the goal, it would be far better to direct the donation to an underfunded public or private college.</p>
<p>However attachments to alma mater are very strong for many people and that attachment will almost always outweigh other considerations.</p>
<p>I think one solution could be implemented through tax laws and it would go something like this. A donation would be tax deductible only if some minimum percentage of the endowment was utilized for the academic mission of the college. Perhaps the minimum %age would be somewhere in the range of 1-2%, significantly below the %age normally considered to be self-perpetuating far into the future. And maybe the likes of HYP already meet that standard in which case my response would be, “Never mind”.</p>
<p>$25 millions donated to an underfunded public or private college will help educate more students, to be sure. But $25 millions donated to HYPSM will still have a major impact. Perhaps not on the education of undergraduates, but on the ability of these institutions to conduct path-breaking research. Currently, it seems to me, this is where the fund-raising emphasis lies.</p>
<p>The one thing the top US schools certainly do well is support high level research. Except for OxBridge/LSE, even second-tier US schools are vastly better than most universities abroad. Moreover, even lower tier schools often have a star research program and star professors – something basically unheard of outside of the US, where the hierarchies of elite schools are more rigid. This leads to a bidding war between schools for the superstars in a market that’s increasingly international. There’s real competition in American academia for faculty, so HYP and the other elites have to pay big bucks to keep their top people. And they don’t always succeed. Look up where the Nobel laureates are located in the US. </p>
<p>In the future my guess is that more international schools will try to play this game – both going after the superstars and some of the mid-level academic players. This will increase the winner take all effects in the professorial market with the “hottest” profs earning anywhere from 2X to 5X what the normal professor in the same department earns and an even bigger gap between disciplines and across schools.</p>
<p>Indeed, the US has succeeded so well at this game, that mistakes it makes in other areas – such as undergraduate training and admissions are simply swept under the rug.</p>
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<p>Most endowments, by rule, spend on the order of 4-5% each year. Four percent is considered conservative, 5% aggressive. Most face legal and tax requirements that prohibit them from simply growing the endowment without spending it on their charitable purposes. Sometimes institutions can get agreements from the authorities to build, or recover, financial resources. But over the long run, the tax exemption they enjoy comes with a condition that the funds be used for the stated purposes. I’m no tax lawyer, so I don’t know the details.</p>
<p>These wealthy universities spend all their money on their missions of scholarship, broadly defined to include research, creation of new knowledge in fields where this is not usually described as research (like the humanities), and education.</p>