I doubt students at public universities get “public” help of this magnitude.
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https://www.yahoo.com/finance/news/ivy-league-colleges-collecting-more-213700697.html
Here is the full report.
The money goes to research.
https://www.openthebooks.com/assets/1/7/Oversight_IvyLeagueInc_FINAL.pdf
Not very surprising at all. The upper class has always enjoyed more benefits than the lower class. It should be expected that the money would flow to elite private schools that cater to the upper class.
Oh, please, the money the private universities “Cost” the public have nothing to do with student aid, by saying this is costing us 120,000 per student is an outright lie (or alt fact, take your pick). This money is used for research grants, which are how the overwhelming amount of basic research is done in this country and always has been. So no, elite students are not being “given more than anyone else”. Not to mention that public universities get this kind of money, too, some of the great research universities are public institutions, schools like Berkeley, some of the Cal State schools, Georgia Tech is public, there are any number of public universities doing research on Uncle Sam’s dime.
While students going to ‘elite private universities’ do receive some financial aid, they receive it based on their family income, and that doesn’t matter whether they go to a public or private university, that is based on family income and need, pure and simple. Most of the elite private universities also have fairly substantial endowments and they give financial aid as well, but it is unlikely that they would be giving all the much to ‘the upper classes’ ie the very well off, when the scions of the rich go to one of those schools, they pay full freight.
Most of the financial aid at private universities, apart from piddling little Pell grants comes from donations by alumni. Scientific research is expensive.
@mathmom:
Yep, financial aid at private colleges generally comes from part of their endowment, which at Harvard is like 36 billion dollars. Theh amount of aid most kids get from pell grants is pathetic, even among the least well off people they tend too be pretty tiny (kids like that tend to get the bulk of their aid from the school and states, work study and so forth).
Well, that full report is certainly a study in anti-intellectuality. 
Basically: “We’re sendin’ money to all these intelleckchewls so they c’n waste time on stuff I don’t unnerstand.”
Yeah, health and science research. And other frivolous things. What a transparently politically motivated article, which has nothing real to do with money to educate students.
A bit over half of the $41.59 billion figure cited for the 8 Ivy League schools goes to support research. The rest is mostly various kinds of advantaged tax treatment.
There’s no question that federal research spending helps colleges and universities. It pays for faculty and researcher salaries, labs, support for grad students, and general university overhead. Every research university, public and private, competes for these dollars, and the more of this money a school can garner, the stronger its overall financial position—and the greater its research output, and its ability to attract and retain top faculty and grad students, and indirectly undergrads as well due to the strength of the institution’s academic reputation. I certainly don’t fault the Ivies for being in on that competition and doing well at it. But by the same token, it’s a denial of reality to pretend that this isn’t a huge taxpayer subsidy.
Same goes for the various tax breaks. They’re immensely important to the finances of both public and private universities, but generally speaking, the wealthier the institution, the more valuable the tax breaks become. I wouldn’t deny them the tax breaks, but I do think we need to acknowledge that this amounts to a huge taxpayer subsidy. In return, I’d expect these institutions to be cognizant that they’re in effect hybrid public-private creations, not just purely private, and some responsibilities to the public should arise in exchange for the extremely valuable (and costly) subsidies they’re getting.
@bclintonk:
What kind of tax breaks are you talking about? Almost all private universities are non profit, they aren’t businesses, so what are these huge tax breaks you are talking about, non profits across the board enjoy huge tax breaks (we aren’t talking the University of Phoenix and other for profit colleges). When you say the more wealthy the institution the larger the breaks, what are you talking about? The endowments these schools have, the many billions of dollars, are not profit making and federal law is pretty strict with them, for example, they can’t just sit on their endowment, a certain percentage of the endowment has to be in play, and when endowments grow without the money being used, they get pretty stern looks from the IRS and other government agencies. Are you saying “well, if Harvard had to pay tax dollars on the income on their endowment, it would be millions of dollars to Uncle Sam”, guess what, that is true of all non profits, the Catholic Church would have to pay taxes on money they have invested or in the money they get collecting rents on church owned properties, Alabama and Michigan and Penn State and the like would have to pay taxes on the revenue from their sports programs, but because the university is non profit, they don’t, because they are non profit organizations…so any non profit enjoys tax breaks, and ironically it is because non profits are there to serve the public, not make money, and that is what the ivy league does, it is proving education for its students and also in the research it does…
and someday do look up what university research does, besides what hoi polloi would consider ‘wasted research’ into things like evolution and the secrets of the universe, a lot of university research turns into things that benefit the public, for example the end of Jim Crow happened when research showed that ‘seperate but equal’ was patently untrue,. that segregation never leads to equal outcomes. Research into genetics and basic biology supports the development of new drugs, solid state physics and chemistry research created the modern world.So what is this responsibility to the public the elite schools owe? Doing research into creation science and proving evolution didn’t happen? Moving their universities to small town, USA? If you mean looking at their admission policies and looking at things along side race that hinder people (like for example, that rural areas education systems are often as bad as inner city schools and poverty doesn’t just affect racial minorities) and taking that into account in admissions, I would agree heartily (so do they, last I read the elite schools are making an effort to try and get kids from rural areas and the like that are underrepresented). I can also tell you that the Ivies are not just full of the scion of the rich and well to do, they actually make it a lot more affordable to go to then a lot of less stellar schools do, and they have a lot of kids from middle/working class backgrounds go there. Is responsibility to the public mean having the federal government clamp down on what some claim is the ‘liberal bias’ of academia ? Is it legisltators and the president telling them what to teach? What is this public duty they have?
My, such a hostile tone, @musicprnt #8.—and so quick to attribute to me views that are just about 100% antithetical to the views I actually hold.
Look, I know perfectly well what kinds of research universities do, and I’m all for it–and not just because I’m on the faculty of a major research university myself. I think there’s a huge societal benefit to that research, and if anything I think we ought to invest more taxpayer dollars in it. Nor, as I said in my post #7, do I have any problem whatsoever with the Ivies and other elite privates being in on the competition for the available research funding, or for doing well in that competition. More power to 'em; if they win a lot of research grants, it’s only because they’re doing good research, and that’s to everyone’s benefit. My only point was only that we should also recognize this as a very substantial taxpayer subsidy to colleges and universities, public and private. It’s a huge part of what allows them to keep the lights on, and run that labs, and hire and retain the best faculty, and attract the best graduate students–all the things that make them great as research institutions. (And by the way, the Ivies aren’t the biggest beneficiaries of those research subsidies. A number of major public universities, including Michigan, Wisconsin, and the University of Washington, to name a few, have annual research budgets much bigger than any Ivy.)
As for tax subsidies, I’m perfectly well aware that the kinds of tax benefits public and private colleges and universities get arise because they’re non-profits and our tax system is extremely generous to non-profits. And on the whole, I think that’s a good thing. But I also think we need to recognize them for what they are, which is subsidies. And yes, a tax policy that gives donors to an institution tax deductions for contributing to its endowment, then allows that endowment to grow free of taxes on earnings from its investments, then allows the institution to withdraw and spend funds from its endowment tax-free, is a very generous set of subsidies—and obviously more valuable to an institution that has a $20 or $30 billion endowment than to one that has no endowment, or a trivial one. Again, to be clear, I’m not against that system. But I think we’re just being foolish if we fail to recognize that taxpayers have a lot of skin in this game. Our great universities, public and private, would be a shadow of their current selves without the research subsidies and the generous tax treatment that has allowed their endowments to grow to what they are today.
What I do object to is the view you sometimes see expressed on CC that because private colleges and universities are private, they can do whatever they want with their money. In my view they’re so heavily subsidized that they ought to be seen, and ought to see themselves, as quasi-public institutions, with certain obligations to the public, and to the common good. I think for the most part they do see themselves that way, and they do a reasonably good job of discharging those public responsibilities. But there’s always room for improvement.
I agree with musicprnt on the whole. I dislike the representation of non-profit status as representing a “subsidy,” as if dollars are flowing into the non-profit from the government specifically connected with the fact that the non-profit does not have to pay taxes. I understand the economic argument–but (deleted), Jim, I’m a scientist, not an economist. Direct payments from the government might or might not be a subsidy.
If tuition charges are higher at the private universities, so federal financial aid is higher, do you view that as a subsidy?
As far as what the research money pays for: The direct costs go to fund the salaries of the graduate students, post-doctoral fellows, and occasionally undergraduates in the group. They also cover equipment, supplies, travel to conferences to present the research (these are not junkets and they are not “fun,” they are work), computer charges, tuition for the grad students, and other items of that type. They may cover part of the non-academic year salary of the faculty member who wrote the grant proposal. (My academic-year appointment is for 9 months. The maximum summer salary that I can get from the National Science Foundation is 1 month. I work for free for two months. Who is subsidizing whom?)
There is overhead to the institution. The rate of overhead is set by contract with the federal government or other granting agency. The overhead dollars pay for the extra costs of doing the research. They do not cover costs that the university would incur otherwise, e.g., keeping the lights on.
The effect on the universities of having a strong reputation due to having researchers at the forefront of the field is an interesting and rather complicated one. If a researcher left Harvard for the University of [Fill in State], would all of the federal funding to that researcher follow? This happens so rarely that I do not actually know the answer. But I view this as research support for the faculty member’s research, with the side benefit to the university’s reputation.
With regard to actual subsidies, it would be interesting to know why the overhead rates at private universities tend to be so much higher for the same work than the overhead rates at public universities.
@quantmech:
What makes you think the overhead rates at private universities are higher? Having known people who work at public universities who do research and get grants and at private universities doing the same thing, the cost of doing things is going to be the same, getting computer equipment, lab equipment, paying salaries and so forth are going to be just as costly (obviously, compare apples to apples, comparing costs at let’s say Harvard to let’s say Indiana Univerity Bloomington is not the same thing, cost of things like salaries and so forth is going to be less at Indiana, because the cost of living is much less). The fact that private universities cost more than publics is because public universities are state subsidized (for in state students, out of state tuition is often comparable to private tuitions). In almost all cases, the cost of tuition does not pay for running the school, and they are expensive to run, maintaining buildings, the staff that run the schools, insurance, pensions, all the things that go into running the school add up. Public universities cost as much, if a private school or a public school in the same area put up a new building, it is gonna cost pretty much the same thing.
Private schools might spend more in some ways, a public university may not have all the programs a private does, for example, public universities themselves vary, Berkeley probably has a lot more programs then a typical Cal school would have…so there is variance there.
I don’t think the overhead rates at private universities are any higher, I think when people make those comparisons they may not be comparing apples to apples.
“What I do object to is the view you sometimes see expressed on CC that because private colleges and universities are private, they can do whatever they want with their money. In my view they’re so heavily subsidized that they ought to be seen, and ought to see themselves, as quasi-public institutions, with certain obligations to the public, and to the common good. I think for the most part they do see themselves that way, and they do a reasonably good job of discharging those public responsibilities. But there’s always room for improvement.”
Not sure what you are getting at here, about obligations to the public because of the tax breaks they get, universities are no different than any other non profit. The Carnegie Foundation and the Ford Foundation have large endowments that are tax benefitted because they are non profits,. the Catholic Church in the US has a lot of property they get revenue from and have an endowment, think tanks have pretty big endowments in some cases and they are tax benefitted…and yet they are private, they have no public obligation either, so why is a university different? Does that mean the public, whose views differ from that of the leaders of the church, have the right to tell the church since they enjoy tax benefits of being non profit, what they can do? (and I am not talking about things like political activism and the like with non profits or other rules around that). If we are going to put that on universities, then we would need to do so with other non profits, basically get involved in what they do and how they do it, too.
More importantly, if these are quasi public institutions, what constitutes these obiligations to the public? What is it they are or aren’t doing? The reason I came off strongly is because this ‘obligation to the public’ often turns out to be non so veiled threats against things like academic freedom, or trying to shape what a private institution does in the areas of discrimination and such. Those opposed to GLBT rights for example could argue that a private university since it gets a tax subsidy should not be ‘encouraging’ deviants because that hurts the public good (and believe me, there are people like this). There are those who in terms of the ‘public good’ would require universities to hire faculty who promote a particular agenda in the name of ‘fairness’, even though the agenda has no basis in research or methodology (for example, an extreme one, hiring someone who is a holocaust denier), or it could be hiring someone for the biology faculty who promotes creationism, despite the fact that creationism has been found to be religion, not science…
I don’t like broad statements, so what is this ‘promoting the public good’ or ‘obligation to the public’ private universities should have? Like I said, these terms are nebulous and I have heard them bandied about, usually with something speciifc in mind. It often is a term that is kind of problematic in that no one can really define it, broadcasters have a free license to operate (the only fee is the administrative fee, which is a couple of hundred bucks last I checked) in the public airwaves in return for ‘serving the public good’, yet in reality it has been a long time since broadcasters have been held to any kind of standard for that, and even back in the day there was serious questions about what that meant, hence my asking.
By “overhead” I mean the F&A charges to research grants, which cover the administrative and other costs associated with the research. The overhead is charged as a fraction of the direct costs, so if the salaries are higher for the faculty member, the grad students, post-docs, technicians supported by the grant . . . the overhead $ are automatically higher, without an increase in the overhead rate, as a percentage.
There is a report on overhead costs that appeared in Nature here:
http://www.nature.com/news/indirect-costs-keeping-the-lights-on-1.16376
It has interactive graphics of various types. The overhead from research grants is not supposed to go to educational programs, so the number of programs that a university has in that category should not affect the overhead rate.
Nature reports that negotiated university rates range from 20% to 85%. I will run a sample of a few universities to see how public/private compare among research-intensive universities.
Here are some data on the overhead rates, which are charged as percentages of direct costs. (There may be some exclusions from direct costs, e.g., tuition generally carries no overhead, sub-contracts may not have overhead depending on the amount, etc.)
University of Wyoming 41.5%
University of Oregon 45%
Texas A&M 46%
University of Kansas 49%
Kansas State University 50%
University of Wisconsin 50.5%
University of North Carolina, Chapel Hill 52%
Ohio State University 52.5%
University of Massachusetts, Boston 52.5%
Rutgers 54%
UCLA 54%
University of Texas, Austin 54%
Northwestern 54.5%
Northeastern 55.5%
UC Berkeley 55.5%
University of Michigan 55.5%
MIT 56%
UCSF 56.5%
Duke 57%
Stanford 57%
University of Cincinnati 57%
University of Chicago 58%
University of Illinois 58.6%
University of Massachusetts, Amherst 59%
Princeton 61%
Brandeis 61%
Boston University 63.77%
USC 64%
Tufts 65%
Caltech 65%
Yale 66%
Harvard 69%
Pomona 72%
Wellesley 75.3%
If you argue that it costs more to pay an accountant in Boston, MA than in Lawrence, KS, that is probably true. On the other hand, the salaries for the faculty, grad students and post-docs are also generally higher in Boston. What the higher overhead rate tends to show, in my view, is that the ratio of the salary of a university accountant (non-faculty, working in grant administration) in Boston to the salary of a university accountant in Lawrence is higher than the corresponding ratio of faculty salaries.
The rates are all negotiated, so there is substantiation behind them. The days when flowers for the President’s house and the cost of sailboats/yachts could be charged to overhead accounts (cough, Stanford) are over. Still, it seems to me that the excess in the overhead percentages for the private schools vs. the public schools is a form of subsidy, in fact.
The location argument holds some weight (though see the first paragraph), but if you compare UCLA and USC, or Duke and UNC, Chapel Hill, or Princeton and Rutgers, or Boston University and U Mass, Boston, that cannot be the whole story.
Yet fpr example U Mass Amherst has a higher percentage than MIT, when they are located in the same area. Some are based in regional differences, the university of Montana is going to be cheaper because salaries across the board are cheaper (and not being an accountant, I don’t know how F and A charges work, does that include not just administrative costs of the grant, but does that include things like chargebacks on the lab space in lieu of rent, does it cover electricity, does it cover if the research involves toxic or bio hazards, the cost of disposal?). Many of the private schools at the head end of the list are presitgious schools and in general they tend to pay more for administrators and such then a public university might (my sister worked both at a private university and a public one, and the private one paid much better as an administrator) and that could factor into it,and why is wellesley so much more expensive than Yale or Caltech? It would be interesting to see what it is at U Cal Berkeley and compare that against the other cal state schools.
Hi musicprnt: To explain the normal overhead charges: These are computed as a flat fraction of the direct costs of the research, with a few exclusions. Direct costs include faculty salary (summer only, in many places), grad student salary, post-doc salary, technician salary (if the grant has one) plus items like equipment (usually no overhead), supplies, travel, computer costs, etc.–the things the faculty member has to arrange to pay for to conduct the research. Personnel costs tend to be the bulk of the direct costs of many grants, and definitely the bulk of the overhead-generating direct costs. The overhead is a fixed percent of the direct costs.
So suppose at the University of Utopia the faculty make three times what I make, the post-docs make three times what my post-doc makes, and the grad students make three times what my grad students make. At the same overhead percent rate (say 55%, just for illustration), the amount generated in overhead at the University of Utopia will already be three times the amount generated by the same personnel expenditures at my university. By the “same personnel expenditures,” I mean the same person-hours, by researchers working at the same level. The only reason that the University of Utopia would need a higher overhead rate as a percentage, to cover higher local costs, is if they pay their accountants more than three times the salary that we pay our accountants.
Some universities have different rates for research that involves laboratory animals, because the costs to the institution are higher. The costs of disposal of toxic wastes and biohazards are included in the general overhead rate (I am pretty sure), which is a flat per cent charge to all grants–so it applies to researchers in quantum mechanics (for example) who generate zero toxic waste in the course of their research.
So basically (which I should have picked up on), it is the non direct costs that are higher…kind of like with charities how much of the money you give goes toward fundraising and administration, rather than the real work of the charity (where the analogy is the researchers, equipment, etc, are the ‘real work’.). I suspect the rest is what the school bills to the researchers, kind of like in a company they bill services like IT to various departments, gets charged against their budget. I wouldn’t be surprised if schools bill a percent of administrative costs (like admins in the chemistry department for a chemist doing research), the cost of paper clips and stamps the department uses, the dean in charge of faculty, the internal mail flow, etc.