Agree - and I think it’s pretty easy to point to they “why”. Then debate can ensue how/if any of those things add to the college experience. I would argue they do - but to what economic trade-off.
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Which brings us back to my original point: According to the Amherst Annual Report, they spend nearly as much on “Student Life and Facilities” as they do on FA. Only one-third of its endowment income supports “Instruction/Academics”.
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So they COULD divert more endowment income to reducing net student fees, indeed in theory could zero them out and make Amherst free for everyone. But that would radically slash their operating revenues, and presumably that is why they do not.
Many endowments are restricted, which means they could NOT use that income to reduce student fees. Endowment money is given for endowed chairs, music facilities, gardens, basically whatever the donor specifies. The colleges cannot use that money any way they want. Which is why they are constantly raising money from alumni and parents and other donors. Those are unrestricted funds, and can go towards financial aid, or sports teams or major building projects - whatever the school’s priority is at the moment.
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That’s a very good point. Ultimately the people making decisions about how these colleges spend gifts are not just the administration, they include at least some of the donors too. And these colleges did not get to be among the wealthiest few by not being good about giving donors what they want.
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How Amherst spends its endowment funds is one piece of the puzzle, but focusing solely on that makes it difficult to compare apples to apples unless we assume that the approximately $45 million Amherst spent last year on “Instruction/Academic”, using endowment funds, is the entirety of its academic commitment.
That’s unlikely.
Amherst’s NESCAC competitor, Wesleyan University, has an endowment - a mere billion and a half dollars (and likewise its throw weight of $56 million in 2023 income)- that is about half Amherst’s. Nevertheless, it spent nearly $141 million on “Academics” (I added the sums for “Instruction” and “Research”.) We have to assume most of that is funded from tuition and fees. 2022-2023.pdf (wesleyan.edu)
ETA: I found Amherst’s actual Annual Report/ Financial Statement for FY23 and their total expenditures for “Instruction and Academic Programs” were $74 million. Throw in another $7 million for “Research and Public Programs” and you come up with $81 million, about what you would expect for a college two thirds Wesleyan’s size. The Trustees of Amherst College FY23 Financial Statements.pdf
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Not sure I understand the value in understand where the money comes from. At its core a college has an operating budget. They’re going to fund that budget through different bank accounts (endowments, government grants, tuition & fees, etc). That operating budget divided by the number of students shows their ~ average cost per student to educate. Their average tuition charged times the number of students attending shows their ~ total revenue from tuition and fees. Any shortfall gets made up from drawing down on endowment/savings/gov’t subsidies. Any excess gets put into the endowment as unrestricted funds.
Of course that’s an over-simplification.
As a customer of the college system if my child gets into 2 schools, both at $50K/year, do/should I really care that one college makes a little money on that and the other college needs to subsidize from the endowment to get them to it? I’d argue no - what should matter to me is for the $50K which college ultimately has greater value to my kid and his wants, needs and prospective outcomes.
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I could not agree more. I think no matter how far we go off-off-topic, in the end we are not actually going to revolutionize college choice. People (here at least) already know how to do that well, and can help others do that well, without every looking at a financial statement.
That said, there are a lot of things I look into just because I am curious, without any sort of practical agenda. And sometimes background knowledge can help you understand other things that actually do matter.
So the direct pragmatic value of all this is negligible. But it is interesting to me, and I like to learn things even if I have no idea if it will ever be useful.
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When a school says it spends money on FA, what does that mean? That those funds then get plowed back into instruction and student life? It’s not like they give it to student for shopping sprees. That characterizations seems pretty right hand left hand to me!
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You’re right. It’s a little like the proverbial dog that doesn’t bark; you only become aware of it by its absence (as revenue.)
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