Recent controversies over affirmative action and speech at top universities are beside the point. Harvard and Yale have power because they operate like a cartel. And they should be treated like one.
Taxing endowments above a certain per-student scale is an amazing idea. It seems eminently rationalizable: the non-profit status of these institutions derives from their educational purpose.
If I ran a small animal shelter with an endowment of $20M, and spending on staff to match, something feels off.
Another possibility is to limit federal aid to students who attend over-endowed universities; the government should not be paying for a service that the non-profit is well-equipped to provide.
Another possibility is to consider endowments when covering “overhead” on research grants. Current overhead is around 50% -- for every $1 the researcher gets, another 50¢ goes to central administration. But this could be reduced when endowments reached a certain level.
This is why my daughter is in University in Germany. After having been in private schools in the USA through high school, it is good for her to be in a place where no one gets "A" grades all the time. In fact, because I have a lot of European friends in the US, who also attended grad school in the US at elite institutions like Harvard, they say that they experience the grade inflation. American students coming to Germany are told not to expect all A grades because that does not happen. On Thanksgiving my daughter had an exam, she told me that the whole class, most of whom are not Americans, said they would be thankful if they passed the test. In fact only one other student is from the US, and another German student who went to an elite American high school. There is a sorting system but it is really about academic merit. When her classmates were applying to colleges in the US, except for one who also applied in Germany, my daughter was freaked out by her advisor. Her advisor was aiming her for Ivies, because that is where she had gone. She told her that her grades were not enough, she should start a club and also a charity. She demoralized her. So, I asked whether she was planning on going in the US or Germany, and she said Germany but she might want to consider the US. So, I had my daughter attend a session on financing. She heard that Ivies don't give merit scholarships, and we had told her we would not pay for an Ivy League school because we think they are a racket. My daughter got that and went back to her original plan of going in Germany. So, then, when she freaked out about not having any clubs, I said, do you know how much Germany cares about clubs? Zero! In fact, she did not even have to write any personally revealing essays. She just submitted her grades and other paperwork. Then, she had to take an entrance exam in all of the places that invited her to take an entrance exam. She is exposed to a diverse group of people in her University in the capital city. We know that Ronald Reagan supported the change from government largely funding higher ed, to students funding it, and that is not a model that invests in the future of the country. Right now, the US would be wise to develop immigration policies that invite people whose educations have been paid for by their governments, because we all pay for the cost of a US education. Our medical bills are higher in part because the doctors earn so much to make up for and pay off the high costs of their educations. That is true of all other professions as well. Right now we pay for our daughter's living expenses, and she has a semester fee. It varies from German state to state. Hers was 319€ which includes a free transportation pass for the semester, and discounts in many places. This also covers the costs of class materials, which are provided by the university, except books, which are put in reserve for the class in the library. Germany has an older system and a different view of education that is not getting rid of the humanities, as we are in the US. While she is learning a lot, she is also not crushed by homework. So, does US News and World Report know how to evaluate an education like I do as a professional educator? I doubt it. If the US universities were free, by this I mean public, then there would not be this grade inflation and the students would probably be more rounded. Not the artificial kind that is getting you into universities, but the real kind that comes from having time to develop your own, outside of school interests.
Maybe this is the point you were making at the end, but wouldn't it make sense to provide direct public funding to public institutions and make their tuition cheap or free since grants seem to work similarly to vouchers in K-12 by incentivizing higher tuition? Competitive pricing along with reduced indirect subsidies would likely pressure Ivy Leagues to reduce tuition
There is a lot of confusion here surrounding affordability of Ivy league schools. The only people who pay tuition are rich. Everyone who can't afford it gets a full scholarship. Harvard does not care about tuition in the slightest. Just look at the numbers involved. Tuition is a fraction of a fraction of a percent of their endowment.
Harvard is actually the cheapest education many of it's students receive. Claudine Gay's high school costs 65k a year.
The only thing they care about is donations. Their student body is selected to be those that will donate the most, or have parents who have already donated the most. The 55k tuition is a rounding error. Public funding won't change anything in the Ivys.
Good point, and related to the talk of prestige inflation above. What I said likely applies more to all the smaller/less prestigious private college, Ivies are their own beast.
My casual impression is that the bureaucracy at the University of California has grown apace with that of the Ivies. Is there information on public university bureaucracy growth?
This is great. Only one quibble: these institutions absolutely do not charge monopoly rates. They could easily 10x the cost and people would still happily pay. Plus every student that doesn’t come from a rich family has most of their tuition covered.
Outside of the Ivy League there is a much better argument for that.
The Blair and Smetters paper you quoted seems to suggest that the reason why undergraduate spots in elite universities has remained tight isn't because of collusion between insitutitions but because the institutions are competing with each other in exclusivity. Unilaterally admitting more students without a competitor insitution admitting more would cause a school's prestige to drop.
They suggest that if elite schools were allow to collude on raising their admission levels together they could alleviate this issue. This is currently illegal on antitrust grounds, and intuitively seems a little funny to me, but was curious what your thoughts were on this idea
To clarify, the argument I’m making is that the supposed “unilateral” competition on exclusivity is actually structured by the upstream hub (US News’ rankings). It’s best to conceptualize this market as a hub-and-spoke cartel.
I quote the Blair and Smetters paper mostly to quantify the 2x or 3x increase in enrollment that would have happened if they weren’t competing on prestige (as structured by the rankings criteria). Indeed, before the rankings era the Ivy League schools grew enrollments massively as Blair and Smetters also quantify.
As for Blair and Smetters’ prescriptive conclusion that the schools should be allowed to collude more in the interests of students, I think that’s a deeply misguided idea. Most people in the academy have a blind spot for critically evaluating or understanding their own institutions and what the real incentives of those institutions are.
Taxing endowments above a certain per-student scale is an amazing idea. It seems eminently rationalizable: the non-profit status of these institutions derives from their educational purpose.
If I ran a small animal shelter with an endowment of $20M, and spending on staff to match, something feels off.
Another possibility is to limit federal aid to students who attend over-endowed universities; the government should not be paying for a service that the non-profit is well-equipped to provide.
Another possibility is to consider endowments when covering “overhead” on research grants. Current overhead is around 50% -- for every $1 the researcher gets, another 50¢ goes to central administration. But this could be reduced when endowments reached a certain level.
This is why my daughter is in University in Germany. After having been in private schools in the USA through high school, it is good for her to be in a place where no one gets "A" grades all the time. In fact, because I have a lot of European friends in the US, who also attended grad school in the US at elite institutions like Harvard, they say that they experience the grade inflation. American students coming to Germany are told not to expect all A grades because that does not happen. On Thanksgiving my daughter had an exam, she told me that the whole class, most of whom are not Americans, said they would be thankful if they passed the test. In fact only one other student is from the US, and another German student who went to an elite American high school. There is a sorting system but it is really about academic merit. When her classmates were applying to colleges in the US, except for one who also applied in Germany, my daughter was freaked out by her advisor. Her advisor was aiming her for Ivies, because that is where she had gone. She told her that her grades were not enough, she should start a club and also a charity. She demoralized her. So, I asked whether she was planning on going in the US or Germany, and she said Germany but she might want to consider the US. So, I had my daughter attend a session on financing. She heard that Ivies don't give merit scholarships, and we had told her we would not pay for an Ivy League school because we think they are a racket. My daughter got that and went back to her original plan of going in Germany. So, then, when she freaked out about not having any clubs, I said, do you know how much Germany cares about clubs? Zero! In fact, she did not even have to write any personally revealing essays. She just submitted her grades and other paperwork. Then, she had to take an entrance exam in all of the places that invited her to take an entrance exam. She is exposed to a diverse group of people in her University in the capital city. We know that Ronald Reagan supported the change from government largely funding higher ed, to students funding it, and that is not a model that invests in the future of the country. Right now, the US would be wise to develop immigration policies that invite people whose educations have been paid for by their governments, because we all pay for the cost of a US education. Our medical bills are higher in part because the doctors earn so much to make up for and pay off the high costs of their educations. That is true of all other professions as well. Right now we pay for our daughter's living expenses, and she has a semester fee. It varies from German state to state. Hers was 319€ which includes a free transportation pass for the semester, and discounts in many places. This also covers the costs of class materials, which are provided by the university, except books, which are put in reserve for the class in the library. Germany has an older system and a different view of education that is not getting rid of the humanities, as we are in the US. While she is learning a lot, she is also not crushed by homework. So, does US News and World Report know how to evaluate an education like I do as a professional educator? I doubt it. If the US universities were free, by this I mean public, then there would not be this grade inflation and the students would probably be more rounded. Not the artificial kind that is getting you into universities, but the real kind that comes from having time to develop your own, outside of school interests.
Maybe this is the point you were making at the end, but wouldn't it make sense to provide direct public funding to public institutions and make their tuition cheap or free since grants seem to work similarly to vouchers in K-12 by incentivizing higher tuition? Competitive pricing along with reduced indirect subsidies would likely pressure Ivy Leagues to reduce tuition
There is a lot of confusion here surrounding affordability of Ivy league schools. The only people who pay tuition are rich. Everyone who can't afford it gets a full scholarship. Harvard does not care about tuition in the slightest. Just look at the numbers involved. Tuition is a fraction of a fraction of a percent of their endowment.
Harvard is actually the cheapest education many of it's students receive. Claudine Gay's high school costs 65k a year.
The only thing they care about is donations. Their student body is selected to be those that will donate the most, or have parents who have already donated the most. The 55k tuition is a rounding error. Public funding won't change anything in the Ivys.
Good point, and related to the talk of prestige inflation above. What I said likely applies more to all the smaller/less prestigious private college, Ivies are their own beast.
My casual impression is that the bureaucracy at the University of California has grown apace with that of the Ivies. Is there information on public university bureaucracy growth?
This is great. Only one quibble: these institutions absolutely do not charge monopoly rates. They could easily 10x the cost and people would still happily pay. Plus every student that doesn’t come from a rich family has most of their tuition covered.
Outside of the Ivy League there is a much better argument for that.
There is a simple idea that would alleviate many of these problems: quadratic taxes.
The Blair and Smetters paper you quoted seems to suggest that the reason why undergraduate spots in elite universities has remained tight isn't because of collusion between insitutitions but because the institutions are competing with each other in exclusivity. Unilaterally admitting more students without a competitor insitution admitting more would cause a school's prestige to drop.
They suggest that if elite schools were allow to collude on raising their admission levels together they could alleviate this issue. This is currently illegal on antitrust grounds, and intuitively seems a little funny to me, but was curious what your thoughts were on this idea
To clarify, the argument I’m making is that the supposed “unilateral” competition on exclusivity is actually structured by the upstream hub (US News’ rankings). It’s best to conceptualize this market as a hub-and-spoke cartel.
I quote the Blair and Smetters paper mostly to quantify the 2x or 3x increase in enrollment that would have happened if they weren’t competing on prestige (as structured by the rankings criteria). Indeed, before the rankings era the Ivy League schools grew enrollments massively as Blair and Smetters also quantify.
As for Blair and Smetters’ prescriptive conclusion that the schools should be allowed to collude more in the interests of students, I think that’s a deeply misguided idea. Most people in the academy have a blind spot for critically evaluating or understanding their own institutions and what the real incentives of those institutions are.
Make sense. Thanks!
LFG!