<p>
</p>
<p>What you’re saying is that any university can be prestigious, right?</p>
<p>aisgzdavinci, my technique will apply to any decent state university and most private schools that are considered fairly decent. If a school has a real hard time attracting students, raising revenue could be killer for them for a while until they weather the financial shock.</p>
<p>With this proviso, yes, I think most universities can dramatically increase their prestige if they adopt my policy and become more efficient with their resources and treat their students as good customers. Two more steps that I didn’t mention are to provide good marketing and good customer service. This means developing good marketing materials and having a terrific web site as well as geting the word out at college fairs. In addition, students should be treated well. This means having decent food in dorms, having decent, well-maintained dorms and campuses, writing warm, fuzzy letters to parents and alumni notifying them of college news, and thoroughly contacting all alumni for contributions, even for only small contributions etc. It is amazing how many colleges aren’t even adopting the latter suggested steps correctly. For example, Cincinnati, where my daughter goes, had the first coop program in the US, and still has one of the best and largest coop programs in the country rivaling Northeastern, Drexal etc. However, few people outside of Ohio know about this because of their horrible marketing. Pratt Institute has horrible, old dorms and many buildings were in a big state of disrepair that was obvious to all taking a tour.</p>
<p>Sadly, need-based scholarships,which might be politically and morally right, is a big drain on resources. In addition, based on statistics that I have seen at several schools such as Cincinnati, lower income folks have a much higher attrition rate at most schools and lower test scores,which negatively impact ratings. This may not always be the case at top schools,but it does seem to be true for the lessor tiered schools.</p>
<p>Ignoring all the crazy economics talk going on in this thread, I would like to put forward two ideas:</p>
<ol>
<li><p>Many colleges are now run in the same way as businesses, with their chief goal being some kind of profit because they view a profit as enabling factor in drawing more students through a variety of means. For instance, Harvard pays MILLIONS to attract the top talents in a variety of fields in order to draw those interested in studying with the big names. The more that come because of a supposedly top tier education (sad thing is, most classes are taught by TA’s or graduate students and those big names spend all their time in research - true story) the more money the school gets, the more talent and ammenities they can afford, which in turns leads to MORE money, etc. What’s happening is the students are getting stuck with the cost of some of these measures while not directly benefiting from the increased cost.</p></li>
<li><p>Did anyone ever see that whole West Wing plot arc where they were saying that the government should give tax breaks to people who have kids in school? We should do THAT. I’d vote for someone who campaigned on that issue.</p></li>
</ol>
<p>Yes, tax breaks to families who have children in school make a lot of sense, up to a limit, of course (probably $10k per year). More importantly though, the EITC needs to be massively expanded.</p>
<p>sonofbhaal notes,"Harvard pays MILLIONS to attract the top talents in a variety of fields in order to draw those interested in studying with the big names. The more that come because of a supposedly top tier education (sad thing is, most classes are taught by TA’s or graduate students and those big names spend all their time in research - true story) the more money the school gets, the more talent and ammenities they can afford, which in turns leads to MORE money, etc. :</p>
<p>Response: This is exactly my point! As for tax breaks for college, I completely agree with that.</p>
<p>If you give tax breaks to students, the colleges will just raise their prices more. In the end, the tax breaks end up at the colleges.</p>
<p>That may be true for private universities, but it is not true for public universities or community colleges where people are struggling to pay tuition that is rising by 10%+ every year. A single class at a small state university/community college can now cost upwards of $1,000. That’s way too much for someone who is struggling to afford milk and cereal for breakfast. That’s why it would probably be limited to about $10K per year. Why is subsidizing education such a bad thing? If we continue to not educate our workforce, we are soon going to have an economy worse than Subsaharan Africa’s. If that’s what you want just admit it.</p>
<p>posterX,</p>
<p>There is financial aid, you know? I had almost my whole education paid for with grants and small loans.</p>
<p>There is a lot of money subsidising college already and I don’t see the costs of public schools decreasing. Those costs are rising too.</p>
<p>I’m glad Calif. has a strong community college system. That’s still relatively affordable.</p>
<p>The poor and the wealthy can go pretty much wherever they want to go, assuming they are admitted. The middle class students suffer from lack of choice due to personal financial constraints. The financial aid formulas also penalize “savers” who have more assets (for retirement) and reward the spendthrifts who make more, but spend every nickel they have. This inequity needs to be addressed. Unfortunately, the heavily endowed colleges cannot, by themselves, cure this problem.</p>
<p>Hopefully, the good, but not elite, colleges will recognize that Congress may do something if they don’t. I have absolutely no faith in a legislative “solution” that penalizes the heavily endowed colleges.</p>
<p>The problem with the supply and demand argument is that colleges act in concert, effectively exercising near monopoly pricing power within the tier they fall into. For example, look at the annual attendance costs of the top 25 universities and liberal arts colleges. Except for the handful of public schools (for in-staters), the annual list price of those colleges is remarkabley close.</p>
<p>Harvard has more money than it knows what to do with, but refuses to pay a living wage to its janitors and security guards. Do you know what the cost of living is in Cambridge & surrounding towns? Students had sit-ins to protest this a few years ago. I’m not sure the exclusive colleges always do the “right” thing with their money.</p>
<p>It may not be a living wage by somebody’s definition, but the elite colleges certainly pay a lot more than anyone else does. Read what I wrote above - a “living wage” is soon going to be defined any wage that lets you afford a bus token, bread and milk, not a wage that lets you buy a car, a house that’s larger than 100 square feet, orange juice, or tickets once per year to a Red Sox game. That’s just the reality of the world we are moving towards and the fact that our country is drowning in trillions and trillions of dollars in debt with people less and less able to afford any kind of decent education. </p>
<p>Hopefully, we’ll at least decide as a country to subsidize college tuition, so that our workforce has even a prayer in succeeding in the global economy 10 or 20 years from now. </p>
<p>If we’re lucky, we’ll also tax the ultra-rich (e.g., the equivalent of taking away one of their three $100 million yachts with helicopter landing pads) so that people aren’t starving to death on our streets and can perhaps afford some orange juice once in a while, and also reform our health care system, which as I detailed above, is mind-bogglingly inefficient, backwards and geared to kick-up maximum $$$ to the ultra-rich while penalizing the middle class, small businesses and poor to the max extent possible. For this to happen, people have to start calling and complaining to their elected officials, and organizing politically, even more than they are doing right now.</p>
<p>If you were to give a gift to a univeristy, you would want that gift to last for the longest amount of time possible. In order for this to be accomplished the university must spend the interest of your gift after making adjustments for inflation.</p>
<p>For example, lets say I give a 100 dollars to harvard. Lets also assume that the average safe return is about 10% and inflation is 3.5%. So over the year my gift grows to exactly 110 dollars. To have the same value as you did for the previous year, you would need to keep exactly 103.5$. Thus, the endowment could spend the difference which is 110-103.5, or 6.5 dollars. By handing out the money this way, any one person’s gift to a university could last a lifetime.</p>
<p>posterX,</p>
<p>You still haven’t answered my questions regarding my ability to go to an average college for undergrad and an average grad school on a pretty low income.</p>
<p>What are pell grants, if not some form of subsidy?</p>
<p>
Taxing ‘the rich’ seems to be the panacea championed by many these days. Let’s ‘tax the rich’ to pay for health care for everyone, for a savings account for everyone, for lower education costs at expensive private colleges for everyone, and about a hundred other items where the funds will be transferred from someone’s definition of ‘rich’ to everyone else. In reality there’s not enough money there to fund all the double-dipping and multi-dipping planned for it.</p>
<p>I just don’t understand the entitlement mentality and why people begrudge ‘the rich’. I don’t think someone richer than I am should pay any more dollars in taxes than I do. So what if they can afford more than me? It doesn’t bother me a bit and I don’t feel entitled to any of their money.</p>
<p>I love the, umm, discussion this has engendered. My kids got scholarships to their LACs and I tell them every time I visit to thank the parents in the Maseratis, Bentleys, and S-Class Mercedes for contributing to their tuition. And I mean it. It’s a kind of socialism nearly everyone can find acceptable. But disregarding the rhetoric, I’m more concerned with health costs than college costs, and everyone else should be, too. </p>
<p>That being said, some of the examples in the original article were chosen for the sensationalism. When I started college in 1971 gasoline cost about 30¢ (I remember 22¢ at one point) a gallon, Twinkies cost 12¢ for a two-pack, Tootsie-Roll pops were 2¢, I bought a new BMW motorcycle with my job earnings for $1,400, and my tuition (only) at WUSTL was $3,300/year (which I paid with proceeds from loans paid back decades ago). Now, multiply any of those x10 and you get a reasonable approximation of what they cost now, today. So every thing’s equal, right? The scary part is that even state university tuition where I live is currently increasing by over 7% each year these days and I don’t know any middle-class folk whose income is keeping up with that. Heck, we’re not even keeping up with the devaluation of the dollar! And my health-care costs seem to increase by 20% every year, as do my property taxes. Poster X isn’t far off when he implies that we’re all paying for the wealthy who profit from development, sprawl, urbanization of farmland, and cheap oil. The more they build, the more I seem to pay in taxes to support infrastructure in a state where impact fees are illegal. </p>
<p>Just wait until water costs what gasoline does now, and no wage-earner can afford health care. Only the rich can afford to get sick, pay for meds, or have cancer treatment. Then the revolution will take care of the rest. ;)</p>
<p>I wish I could say you were wrong, Proud Dad, but you’re probably not.</p>
<p>By “tax the rich” I mean simply asking that the rich pay a fraction as much into the system as the amount that they get out of it. To use a very simplified example, since I’ve already described the more detailed examples above, the CEO of Sikorsky who made $10,000,000 in salary should probably pay at least $5,000,000 back of that to the government, in recognition of the fact that 90% of her salary ($9,000,000) came directly from U.S. government contracts. Similarly, a store owner making $100,000 per year should pay back a portion of his salary because it is recognized that much of his relatively high salary was made possible by the government investing in safe streets, pavement, lighting, and fire services for the street that runs by his store, not to mention the government’s subsidy of his shiny new house in the suburbs, most of which will actually end up going to the millionaire banker who owns the mortgage interest, the guy who owns the oil company providing gas for his car to travel to and from work 20 miles per day, the rich contractors getting $100,000,000 per mile to build the highway, etc. </p>
<p>Meanwhile, the poor guy who lives in a rented, firetrap run down house with horrible public schools and works 60 hours per week is currently paying much more (in payroll tax) than what he gets out of the government. I guess that is done so that the CEO over at Sikorsky can get $9,000,000 from the government and only have to pay back $5,000,000 of it. What a brilliant system that is!</p>
<p>Seriously though, the above system just isn’t going to cut it when the everyday working guy can’t even afford to buy his kid baby formula, i.e., right now.</p>
<p>Yeah, let’s take your suggestion that everyone pays $10,000 per year no matter how much money they make, even if they make $9,000 per year. They can put the taxes on their credit card. Better yet we could just have a system like the Congo, where the rich pay nothing and the poor pay everything they own, which is also nothing, and the country is run by a military dictatorship that just takes whatever they want. Suuure…</p>
<p>You guys sound like a bunch of Japanese people-- the economy is going to melt down and we’ll all starve!</p>
<p>Except that real wages in the US have been pretty good for the most part. Better than many European countries and Japan, at least. </p>
<p>Still waiting for an answer, posterX. How did I afford college if things are so awful?</p>
<p>
</p>
<p>If only it were so easy.</p>
<p>The extra $35,000,000 would generate about $1,750,000 in interest revenue. If one used 2/3 of this to endow chairs, that would give about $1,150,000. This would not be enough to endow one chair. Where is the money for the other 49.5 chairs supposed to come from each year? </p>
<p>Now if one used the 35M total, not the revenue on it, to endow chairs, then one could probably get 17-20 chairs per year out of that. Nowhere close to 50. But see below.</p>
<p>On the other hand, increasing tuition means increasing financial aid (remember, some people are on scholarships). So would have to increase full price by more than $1,000 to net out $35M on the move. This will have its greatest effect on the margin, as it pushes some students out of the university completely (likely to cheaper colleges), and raises costs for everyone else.</p>
<p>Bringing in prestigious faculty requires more than endowing a chair for them. Many need huge amounts of start up money. Scientists need labs that can run into the millions. Everyone needs office space. Unless you have empty offices, this means construction, or leasing space if there is open commercial space nearby. Expensive either way. They will want top grad students, which means stipends for them. Less expensive than the faculty, but you don’t get any revenue from the grad students, and they do consume resources.</p>
<p>So increasing tuition and devoting the full amount to recruiting faculty would not generate nearly this many high profile faculty members. It could bring in some, but far, far fewer than envisioned here. This is why you do not see universities pursuing this strategy, it would not work.</p>
<p>posterX…
It’s hard to find any model that fits your preferred model better than the US university system.
Tax-payer money goes into direct support of the enterprise (so much so that people around the world are dying to get a piece of it). Then then there are education tax credits, tax deductions for college and university contributions, tax exemptions for endowment earnings, Pell and SEOG grants, education loan interest deductions, etc., etc.
Hey, it works for me. My son got Pell and SEOG grants (promptly replacing what his well-endowed college would have provided), and my daughter has a package without loans that is a small fraction of our income. I think it would be hard to find a leisure class (educators) better supported by public policy.</p>