While we're on the topic, can someone really explain to me what endowments are for? There's many universities that claim hardship but have multi-billion dollar endowments. I mean Harvard (the largest endowment) has over $2m per student. The "business" is clearly profitable without ever accepting a dime from students. I'm just unsure what this money is actually doing.

I mean I get that (not that a bank isn't a financial instrument...) but to what ends? The example I gave is should be clear, because of the large wealth of money that is. $54bn is no laughing matter. Stanford has $30bn. These are sums that completely pay for the operating costs of the universities and students. On interest. If the point is to be like dividend investors, it does not appear (at least from what I'm seeing) that they are actually acting like someone with a goal to live off of dividends. There's more growth than that. Or there's something missing that I don't understand (more likely).

So yes, Harvard could cover just about all of their budget with the endowment returns, though they probably need some extra income to cover the holes formed by the restricted funds and avoid inflation pressure.

Is their current usage of the returns too conservative? Probably. Do they have an absurdly large pile of cash that they have no business holding on to? Not really; the investment returns roughly correspond with their current operating costs.

[^1] https://finance.harvard.edu/financial-overview

I was only using the more aggressive number as a thought experiment to the original poster about what it would take the cover the entire operating budget.

This comparison makes no sense.

1. GDP is a per-year measure, but an endowment is accumulated over multiple years. Therefore durectly comparing them doesn't really make much sense.

2. "some nation" includes some pretty small/poor countries. Should it be a surprise that an organization in the US is bigger than a country like Liechtenstein?

It’s not sitting there - it’s invested and working. Investment returns pay for operating expenses.

Would it make sense for hospitals to do the same? Why not theaters next? In the end, if keeping the balance in check is the main thing an istitution is bound to do, why not stop doing education (= expenses) and just focus on investments?

I literally don't understand what you mean. The purpose of the institution is to educate people (and other stuff.) They do that by investing money that they were given for this exact purpose.

What on earth could the problem with that be?

No only are they providing education to people, often for free, they're also lending people money to build and develop businesses along the way.

I think you've got some idea they have their billions in a Duck McScrooge style vault? They don't - being invested means they lend it to people to build things. It's all being actively used.

> Would it make sense for hospitals to do the same?

Many hospitals and health organisations have endowments. For example the Wellcome Trust has an endowment of $37 billion. I think they funded my wife's PhD in cancer.

> Why not theaters next?

Many art institutions have endowments. For example the Getty uses a $7 billion endowment to fund the arts so they're preserved for and accessible to people like you.

What is the issue you see here? If they kept it as cash in the bank it'd depreciate rapidly and they'd end up with none left.

In 1992 in Italy hospitals became "hospital companies", meaning what was once a public service with the sole aim of providing the best possible treatments to citizens for no cost, became at all effects a business (although still state owned) with incomes, expenses and a budget. You may think this makes sense, but since then our healthcare quality has tanked.

One notable side effect is that all hospital companies cut on the intensive treatment beds to save on costs, which backfired heavily during covid since we didn't have enough beds and many patients died without proper treatment as a consequence.

But it comes from Europe.

https://en.wikipedia.org/wiki/Financial_endowment#History

https://en.wikipedia.org/wiki/Financial_endowment#Modern_col...

> incomes, expenses and a budget

Government-provided healthcare also has an income, expenses, and a budget. They don't just spent whatever they want with no planning and no income.

The article itself notes that it's common practice only in North america, and when it is used outside of USA it's in a different way:

>In the United States, the endowment is often integral to the financial health of educational institutions. Alumni or friends of institutions sometimes contribute capital to the endowment. The use of endowment funding is strong in the United States and Canada but less commonly found outside of North America, with the exceptions of Cambridge and Oxford universities

> Government-provided healthcare also has an income, expenses, and a budget. They don't just spent whatever they want with no planning and no income.

Of course, but there is a big difference in having a regular accountability and starting to think in terms of business. Suddenly intensive treatment beds become "centers of cost", not vital but expensive tools required to save lives.

Isn’t that a crazy number? How much of it goes to a bloated bureaucracy?

Tenure means a guaranteed job for life, and the university needs the money to guarantee it. The position exists even if there aren’t sufficient student or research grants to fund it.

Harvard is a bad example to use here because they are so massive. Other schools aren’t situated as well. And yea the endowments have taken a life of their own but tenure is a part of why they exist.

There has been an almost unprecedented ten year period of growth in the equity markets. And the big endowment which I keep my eye on at least has done significantly better than the market. It's prudent not to count on that continuing--not that the school could turn on a dime with respect to their revenue mix anyway.

They want to make as much money off their endowments (savings) as they can, and spend as little of it as possible on things that they don't need to pay for. Note that while the endowment is huge, actually a large part of it is restricted in what it can be used for, by "generous" donors who put conditions on their money, funnily enough. Turns out that they don't want the money spent on just sending kids to school, they rather want to see their name on art in museums, on professorships, and on department buildings.

Harvard to take an example, has an endowment of $53B, roughly (https://finance.harvard.edu/files/fad/files/fy21_harvard_fin...). Approx. 80% of that has donor restrictions on it and only $9B is useable freely for anything desired.

Last year, Harvard's operating costs were $5B (roughly). To pay for that (roughly):

-- $1B came from student tuition

-- $1B came from funded research grants

-- $2B was released from the endowment

-- $1B in gifts, royalties, licenses, other income

In a sense, $2B spent from such an endowment is not too different from what you would plan for your own retirement. Admittedly, Harvard Management Company (investment arm) earns much better than average though.

It's a choice by these universities, how big they want to be, the ambition of their educational goals, and to some extent, yes their power and influence. They are no different than many corporations.

If you want altruistic behavior and free tuition, well, you want a slightly different system.

Harvard is significantly different than most corporations because Harvard doesn’t pay taxes.

Yet Harvard is not a typical not for profit either, as you won’t find many non-profits with a $53B treasure chest.

> If you want altruistic behavior and free tuition, well, you want a slightly different system.

Yes, the majority want a different system, your average person doesn’t really like the fact institutions like Harvard/Yale have a combined ~$100B tax free war chest and supply 8 of the 9 lifetime appointments to the Supreme Court.

Public universities generally have little/much smaller endowments by comparison because they rely on government for their steady stream of revenue. And because of that they can, and have pressure to, fulfill policy-based goals of educating students at little to no cost, or heavily subsidizing it.

Some public universities are acting according to the incentives they've been given, and accumulating their own endowments to insulate against political unreliability, and you can also see why college sports are such an important revenue stream for them as a result.

But it's the best time of your life!

Harvard is free for people not in the donor class, so I'm not sure what your are asking.

Also, universities do research and teaching, and the research costs money separate from teaching/tuition concerns.

My first day of law school. Big intro lecture from the Dean. "Quit your part-time jobs now. The amount of money you can earn waiting tables is a pittance compared to your tuition and scholarships." He had a good point. A student's job is to study and learn. People fail out of law school all the time. Every minute doing anything else other that studying increases the risk of that failure.

That's why, I think, in some European countries, instead of giving debt to students, we give them a stipend. The society should be able to support students enough to study, so they wouldn't have to work.

I'm not differing on the point that free tuition might be a good thing. The (unspoken) point of this story was to suggest that student labor might be enough to make a college solvent.

This is even referred to in loquation's post, by describing it as an ideological problem. I agree, and would pose the ideological question as follows: Should education be treated as an individual investment or a societal investment? If it is an individual investment, then it should be paid for by the student either up front or through debt, and that investment is recouped directly through higher income. If it is a societal investment, then it should be paid for by society as a whole (i.e. publicly funded through taxes), and that investment is recouped indirectly through opportunities that require a more educated society.

He's not.

Its like writing to tell people they are illiterate

> loquation

> Living in a country, where there basically is no college tuition in the US sense and scale, this sounds all so alien to me. There's nothing "utopian" about it. From my perspective, it's more of an ideological problem than anything else.

was responding to my perception that his or her written / implied sentiment was conveying that it's so strange that students would need to work to be able to afford to go to college. That we should have a system where students have a special right to get something for free as an entitlement of society.

Now, whether that is a good policy is a legitimate question. My response was to point out that the above kind of thinking regards students as a special class of people who should be insulated from having to work. While implicitly, it is ok for other people to have to work or pay taxes to fund that privilege. Often that attitude is easy to adopt when you forget who's paying the bills.

You already believe that, you just disagree on the definition on student. Or should we take 14 year olds out of school and send them back into the coal mines?

That said University's don't exactly make an external product to sell, so some money would need to flow inwards from grants or otherwise for salaries and capital expenditure.

> Make the business students hash out contracts with vendors

A second semester senior without a job lined up negotiating a seven figure contract... what could go wrong?

> IT students handle the networking

This is already a thing at most colleges.

> mechanical engineers the boilers

Might be possible, but could also be a disaster.

> hospitality management majors dorm maintenance

Students already do work in dorms at front desks and so on. Business majors aren't qualified to do plumbing, electrical, etc.

Students who are qualified to do plumbing and electrical are probably better off selling that labor on the open market.

At the end of the day, the other basic problem is that at most colleges, most college students who need work can get better-paying work than the sort of work that's available on campus. Why work in Uni IT over the summer if you can get an internship literally anywhere else that probably pays better and could become a full time job?

Even teenagers are perfectly capable of most administrative tasks. People rise to the challange, if the environment is right

Why would I spend so much time educating these kids if I thought its okay that we blow that all up literally?

I think the point is not that people don’t rise to challenges, but that the ones who do graduate quickly thereafter. I can turn an 18 year old into a competent roboticist in 4 years, but that doesn’t mean they aren’t completely lost and making very costly mistakes for a good portion of that time.

Anyone who has operated in a student-run organization will tell you that when you're doing anything complicated (like managing a college IT department), the ~4-year limit on institutional memory is a serious issue, especially when it involves people who mostly don't have the experience to be proactive about documentation (and, I should note, institutional documentation is not an easy problem for organizations filled with seasoned professionals).

Both soldiers and drivers can be alone for hours and sometimes have to make life-or-death decisions during that time.

Students are students. Their job is to be students, not administrators or full time workers. That's why things run and maintained by students typically don't have the follow through and professionalism of people who are paid to do it.

We have this. They’re called grad students and if they hang around long enough we call them professors.

I have a roommate who went to a sort of coding school where they take in random people who score well on a general aptitude test and they agree to work for the company a couple of years as IT contractors in exchange for free training. (If memory serves, the first few weeks of training is unpaid, but the later part of their training they do get paid.) After training, the students get paid less than market wages, but the expectation is that they'll leave and get a much better job elsewhere and it's better to get paid less that market wages as an IT person than a lot of other low-skill jobs people might find themselves doing instead. Kind of a weird system, but it seemed to work out well for him.

I went a different route post-college, which was to become a grad student. Our department financed mostly through federal grants to do basic research in computer science. For certain fields this can work pretty well, as long as the grant funding is stable. (In our case it wasn't. But for a while I got paid to be a student, which was a nice reversal of the usual trend.)

- Internships/co-ops prove that students in high-skill degrees can command high wages by working for industry. How can we capture similar sorts of value in other places, either by integrating real industry projects into class work or something else. My senior capstone project tried this, but integrating it across the entire curriculum is hard.

- Professors command high salaries, and are the largest single cost of most universities, but with proper resources and support students can also be very effective instructors. We had a few student-taught classes at university, and in many cases they were regarded as better than professor-taught classes because student instructors can empathize with the other kids better. Again, scaling this to cover most classes is a hard problem.

I guess it depends on what you mean by "high". At most institutions, faculty will make $50K-$60K starting, max out at $100K, and often do not have access to a pension. In many states, you're really better off, financially, as a high school teacher or police officer.

Which, I mean, high school teachers are highly paid by some standards. But saying professors command high salaries on a tech forum where even new grads are probably making more than the average full professor is probably misleading.

> but with proper resources and support students can also be very effective instructors... better than professor-taught classes

1. It really depends on the course; undergrad-lead core courses tend to be a disaster.

2. On that note, there's an important confounding factor: undergraduate-lead courses are often "topics" courses outside of the core curriculum, which naturally attract better feedback than "broccoli and spinach" courses regardless of the instructor. E.g., in CS, a course on game design or crypto will always attract higher ratings than "core" courses like Data Structures or especially Intro Programing.

3. Good faculty do a lot more than teach. And I don't even mean research. Industry relations and job placement are huge value adds of a good faculty member.

There's an important split between courses that need careful pedagogy and courses that really just need engagement. For an intro programming course serving all students, you really need a professional educator who is practiced at going through the slog of helping people understand for loops. Sometimes an undergrad will pass through who could totally teach the course, but that tends to be an exceptional student.

Once you have a bunch of juniors/seniors who know how to program, and assuming you're teaching a course that's primarily about applied programming (eg, not a proof-based CS Theory or Algo course), engagement becomes more important than pedagogy.

Student-lead courses can be great, and ARE often way better than prof-lead courses especially for "applied programming" type courses, but it's probably not feasible to run core major requirements with undergraduate instructors as a steady-state.

My university (Olin College) was undergraduate-only, but your general point about good teaching being a rare skill is definitely valid. Our student body was definitely pretty high caliber both technically and in terms of explaining-things skills.

> it's probably not feasible to run core major requirements with undergraduate instructors as a steady-state

This seems to be mostly false, in the sense that many schools run huge class sizes for many core courses (cough couch Berkely) and in practice non-TA instruction in those courses could be pretty easily replaced with videos. It's not ideal, but seems to work OK.

> For an intro programming course serving all students, you really need a professional educator who is practiced at going through the slog of helping people understand for loops.

This is certainly true if you just hire some students and tell them to do their best, but I think you might be underestimating how much better intentionally-designed support resources can make the process. For example, it's reasonable to provide instruction for the instructors on how to be effective, and invest more in quality video or written content to explain technical details that a student might not be able to articulate well. In my experience, being taught by student instructors definitely also helps prepare students to teach as student instructors, in a virtuous cycle.

Many of the tools for doing this well don't exist in a cohesive form today, but to the extent that people are working to make education cheaper, this seems like a promising direction to investigate.

Berkeley is not a good counter-example.

There are usually several teaching professors doing a full time job behind the scenes -- handling a myriad of student crises, handling a huge quantity of special accommodations, plagiarism and other academic misconduct, behavior issues (on the part of both students and staff!!!), constant question bank maintenance, constant schedule tweaking, interfacing with faculty demands from down-stream courses, and so on. Those are all trivial, though. Most important -- by far -- is training and managing a large course staff most of whom have never taught a recitation or graded a homework assignment!

Scaling up from a class of 1 instructor and 40 students (at Olin 20 or 15 I'd guess?) in one class to class with 40 staff members and 1000+ students and several lecturers is its own skillset. Those instructors are not teachers. They are mid-level managers. It's a different job, and not one that most undergraduates are prepared to take on.

And the face that it's a machine matters. Teaching a few recitations or lab sections and grading homework is not even remotely the same as instructing a course.

It's a bit like saying that you don't need experienced management at a logistics company because, after all, everyone learns how to do the warehouse job within a week. True, but keeping that machine running requires institutional memory and is itself a full time job. And just because you can train cogs quickly doesn't mean many of those cogs would do a particularly good job at designing and operating the underlying machine. Or even a miniature version of that machine.

> but I think you might be underestimating how much better intentionally-designed support resources can make the process.

Having spent time both inside and outside the elite academic institutions, folks who use places like Olin or Berkeley as barometers for "normal" are wildly out of touch with 90+% of the 4,000 colleges and universities in the USA.

Students at places like Olin or Berkeley are already the cream of the cream of the crop. At Olin or Berkeley you have a handful of good student-educators every year. At normal places the acceptance rate is closer to Olin's reject rate, and the applicant pool is way lower quality. At normal places an above average Olin kid comes around once a decade or less, and the annual cream of the crop at Olin or Berkeley simply never pass through.

Went to a vocational high school for electrical installation and in senior year we did jobs around the school. My friend and class partner put up the schools first CCTV system and we did everything ourselves. I was crawling around in the ceilings stringing coax and 24V power wires, on ladders with a hammer drill mounting brackets, and in the court yard drilling holes through the walls into the deans office on the 2nd floor. That was a 2 month job.

Two other classmates did an amazing rewiring job in the automotive electrical shop with all new conduit bent to perfection, multiple parallel runs and all. Of course we were the top students in our class. We were hand selected for such jobs by our teacher who was a licensed master electrician so it allowed us to legally do work in the building. As long as you have a good head on your shoulders, sharp teacher and the right equipment you can achieve a lot with a little training.

If governments are going to fund anything, education and research should be number one, the returns are not even complex to realise and it removes, or at least competes well with and provides alternatives to the corrupting incentives of privately funded research.

This system is only used in German-speaking countries but it works there. The basic is that students are employed by a company and work there half the time. In return the company pays for the studies in the other half.

It's called 'an apprenticeship' in the UK for example, and similarly elsewhere I assume.

Some universities offer them for professional degrees now too - I had a colleague at Arm who was part-time and a student on such a programme. (Two days a week year round apart from a break for exams iirc - quite distinct from the (more common) summer internship format.)

The school is paid for by the tax payer and the company pays the apprentice a salary that should represent the value they create as an apprentice.

The company also pays for additional courses organized by their guilds. For programmers and system administrators this might be how to build a pc or a network or how to build some software project.

It‘s a great system for companies and apprentices. I think there are even some Swiss companies that try to build similar programs in the US because they have a hard time hiring in the US.

Dyson Institute (<https://en.wikipedia.org/wiki/Dyson_Institute_of_Engineering...>) is something similar in England. All students are paid employees of Dyson while working toward their engineering degree.

[0] https://en.wikipedia.org/wiki/Baden-W%C3%BCrttemberg_Coopera...