top | item 43845874

Why can't Ivies cope with losing a few hundred million?

88 points| sneakerblack | 10 months ago |economist.com

290 comments

order

Kapura|10 months ago

This framing conveniently ignores the question of whether the president should have the authority to single-handedly withhold funding for universities, broadly considered to be one of the foundational pillars of America's strength in the 20th century. While I think it's interesting and answers the specific question it raises, it's wild that the economist has just accepted that the president has dictatorial powers.

_cs2017_|10 months ago

"Conveniently" is the wrong word to use here. "Conveniently ignores" implies that the author intentionally disregarded some known facts to make their argument look more persuasive. However, this is not the case here. The article's argument is that a reduction in government funding is very damaging even when it is small relative to the endowment size. This argument would not lose any of its power if the author covered the topic of whether the president has the power to withdraw funding.

(On a side note, the word "framing" is also the wrong word to use.)

One way to phrase your message correctly would be: "This article is about the impact of the president's decision, but I wish it also talked about whether the president has the authority to make that decision in the first place".

rayiner|10 months ago

The word "dictatorial" doesn't apply here. What we're talking about is government funding being provided to private universities. And Congress hasn't appropriated specific amounts of money to specific universities. It has created a pool of funds and given the executive branch discretion to allocate those funds. The powers of the executive branch are invested in the president. See Article II, Section 1 ("The executive Power shall be vested in a President of the United States of America.").

Congress, moreover, has enacted laws that use those funds as a hook to influence the behavior of private universities. Specifically, Title VI of the Civil Rights Act of 1964 allows the executive branch to deny federal funds to universities that discriminate on the basis of race. Now, it just so happens that, in 2023, Harvard university, among others, was found by the Supreme Court to have flagrantly violated that law: https://www.ed.gov/media/document/dear-colleague-letter-sffa...

There is nothing "dictatorial" about the President withholding taxpayer dollars from a university that is in violation of the law, where Congress has authorized the executive branch to do so. Indeed, I'm at a loss to understand who else you think has the power to do this, if not the President?

snickerbockers|10 months ago

America is a democracy, not a bureaucracy. The executive branch is governed by a single representative elected by the people. It is becoming increasingly apparent that the people didn't make a great choice this time but our constitutional republic is also one of the foundational pillars of american strength and trump being an idiot doesn't change that.

The judicial branch has authority to stop him but they're only supposed to use it if they are convinced that what he's doing is unconstitutional. Some of the executive branch's appointee's have authority over him but only in specific circumstances (such as 25th amendment) and they're usually in agreement with him since he gets to appoint them anyways. Otherwise, all authority in the executive branch effectively belongs to the president and random midlevel bureaucrats can only exercise it on his behalf.

nine_k|10 months ago

This is a fair question, but it's being asked a lot already.

Let's imagine that completely legitimate circumstances lead to the US Government stopping the stream of grants to the Ivy League universities. How would they cope, given their enormous endowments that generate significant interest? This question is asked much less, and the answer is much less obvious. Hence the value of TFA.

codexb|10 months ago

At some level, someone needs to have discretion on which grants to award and not award. You can call it "dictatorial", but I don't see how it's any less dictatorial if the decision-maker is some faceless, unaccountable bureaucrat vs a President that is accountable to voters. Surely, grants were being denied before for other reasons.

throwawaymaths|10 months ago

if you want to go that way, you're conveniently ignoring if congress should have the authority to allocate funds to nonprofits that aren't part of the government under the enumerated uses in article I section 8.

catapart|10 months ago

Yeeep. This is the only thing worth knowing about this whole mess. The people trust their reps to handle the money, and the reps are the only people who are supposed to be able to manage that money.

Yet here we have tacit acceptance that the president can fuck with citizens' money just because he's in his feels about something. Absolute clownery.

themgt|10 months ago

A few other commenters have alluded to it, but Obama's 2011 (and then 2014/2016) "Dear Colleague" letters are critical to understanding what's going on here. As FIRE tells it:

In April 2011, the United States Department of Education’s Office for Civil Rights (OCR) established new mandates requiring colleges and universities receiving federal funding to dramatically reduce students’ due process rights. Under the new regulations, announced in a letter from Assistant Secretary for Civil Rights Russlynn Ali, colleges and universities were required to employ a “preponderance of the evidence” standard—a 50.01%, “more likely than not” evidentiary burden—when adjudicating student complaints concerning sexual harassment or sexual violence. The regulations further required that if a university judicial process allows the accused student to appeal a verdict, it must allow the accusing student the right to appeal as well, resulting in a type of “double jeopardy” for the accused. Additionally, OCR’s letter failed to recognize that truly harassing conduct (as defined by the law) is distinct from protected speech. Institutions that did not comply with OCR’s new regulations faced federal investigation and a potential loss of federal funding.

The innovation in these letters was realizing OCR could just come to a new understanding of what civil rights law required, then tell universities that since this is what civil rights law means, following the guidance would be a mandate for institutions to receive federal funding. So now Trump's come in and reinterpreted civil rights law once again.

At this point probably a supermajority of the country thinks this innovative idea for enacting ad-hoc nationwide policy changes has been abused by one or more administrations, but I haven't heard anyone seriously working on a generalized solution. Everyone's mostly given up on Congress and just hopes their team can take control of the magic pen.

https://www.thefire.org/cases/us-department-educations-offic...

renewiltord|10 months ago

Certainly one could argue if evidence of widespread racism by specific institutions should face punishment by the executive. It is entirely reasonable to believe that we should turn the cheek to institutional racism so that we can get good research out of it.

bitwize|10 months ago

This question was not raised when the Obama administration dictated procedures and evidentiary standards to universities in cases of sexual assault, with threats of being found liable under Title IX for noncompliance. Well it was raised by some on the right, and then dismissed because, you know, the right, and who wants to defend campus rapists anyway? Those Duke University lacrosse kids should have hung -- even if they didn't actually rape that girl, they might have... or they might have raped some other girl.

When Orange Man exercises a power he presumes to have, it's "dictatorial", but when "Pen and a Phone" Obama exercised that same power -- together with the people, follow where Obama leads.

ahmeneeroe-v2|10 months ago

Why are you citing the these institutions' contribution to the 20th century? We are 25 years past the 20th century, 35 years since the end of the Cold War (which was the spiritual end of the 20th century).

What have these elite institutions contributed to the 1990+ world order?

steveBK123|10 months ago

I am not a fan of the orange man.

But I think its an interesting question if the feds should be funding rich Ivies with small numbers of students vs more efficient state universities which educated 100s of thousands each at a fraction of the cost per student.

All of the Ivy League combined educate 65k undergrads. SUNY by comparison educates 5x that many at a tuition of 1/5th to 1/10th depending on in/out of state and community vs vs 4 year college.

Obviously what he is doing is punitive. BUT, I think the constant focus in the press on the Ivys when we talk about education is a huge distraction from how we are actually going to improve access, quality & cost to education in this county.

mattlutze|10 months ago

Too many people think these are funds to just run the universities. By and large, what is being withheld are funds for research.

Federally-funded academic science often looks like:

  1. The university + government fund/run a project
  2. Project creates new knowledge (cool!)
  3. The government gets a pretty awesome license to use that knowledge
  4. The government more often than not gives that knowledge away (or offers great accessible licensing), so that
  5. Private industry can adapt, apply and commercialize the knowledge, driving new GDP growth and opportunities for improving life, etc.
Withholding these funds ends the research projects, because Universities are not startup incubators. So the research stops, and one of the highest returning pipelines of new GDP growth for the US dries up—unless today, the professors and universities kiss the president's ring and promise to wipe out 50-100 years of human rights improvements.

dragonwriter|10 months ago

> But I think its an interesting question if the feds should be funding rich Ivies with small numbers of students vs more efficient state universities which educated 100s of thousands each at a fraction of the cost per student.

The funding at issue is research funding, not educational funding, and it goes to both kinds of universities (vastly more, in aggregate, to state universities than Ivies.)

> Obviously what he is doing is punitive. BUT, I think the constant focus in the press on the Ivys when we talk about education is a huge distraction from how we are actually going to improve access, quality & cost to education in this county.

If research funding is used as a lever to establish political control, those things literally do not matter, since whatever universities survive will simply be tools of totalitarian indoctrination by the regime.

umanwizard|10 months ago

The feds aren’t funding ivies for the purpose of education, they’re funding researchers who happen to work at the ivies to do research.

cg5280|10 months ago

Many of the "good" universities in general seem more focused on prestige and acceptance rates than they do educating the masses. The Ivies could significantly expand the sizes of their student bodies (and to their credit they do make some content accessible online), but they don't because a lot of the value of a Harvard education is the exclusivity and the social network it gets you into.

jccalhoun|10 months ago

It isn't about that efficiency. I teach at a community college and my state's republican supermajority just cut our budget by 10%.

titanomachy|10 months ago

Most of the money is research grants, not for training undergrads.

onepointsixC|10 months ago

The feds are funding research, which elite schools have the best faculty and scholars who are conducting the very best research. May as well as why are VC’s funding promising startups instead of less promising ones, when those promising ones have already wealthy founders who have exited their previous venture.

mmooss|10 months ago

Universities have two roles: education and research. The funding is overwhelmingly for research and it's going to those that provide the best return on investment. Should cancer research funding go to your local community college?

Educating the best and brightest is also of special value, but that is beside the point.

ahahahahah|10 months ago

> All of the Ivy League combined educate 65k undergrads. SUNY by comparison educates 5x that many

What a weird comparison. Yes, picking a group of universities that comprises 64 campuses is going to have more students than a group with a small fraction of that.

etrautmann|10 months ago

This framing is a little strange, since these universities serve multiple purposes. Much of this funding is for scientific research, which is somewhat distinct from the undergraduate teaching mission.

aidenn0|10 months ago

Comparing tuition is silly, IMO. Lots of people don't pay full-price at private universities, and nobody who is in-state pays the full-price for public universities.

If you care about efficiency, then divide the budget by the number of students.

Harvard has a budget of about $9B, which is about 4-5x larger on a per-student basis than a few public universities I compared (I couldn't find the SUNY budget with 30s of searching, you are welcome to provide that info if you have it).

joshuanapoli|10 months ago

So far, the funding in question is research grants. There's an argument that research is more effective at the universities that have concentrated the best researchers.

e40|10 months ago

It's unfortunate that a rational discussion could not be had before the cuts were made. I can see a scenario where you and I and many others agree with cuts to many organizations.

tencentshill|10 months ago

It's one of the only ways people can still get into "The Club" without having a lineage of wealthy connections.

senderista|10 months ago

Funding teaching is not the same as funding research. Some of the best research talent is concentrated in the Ivies.

blitzar|10 months ago

Universities are research institutions with loss leading teaching operations on the side.

ToucanLoucan|10 months ago

> BUT, I think the constant focus in the press on the Ivys when we talk about education is a huge distraction from how we are actually going to improve access, quality & cost to education in this county.

Because the entire discussion around colleges of all sizes, who gets to go and who pays has been turned entirely into yet another fucking stupid culture war issue by Republicans, putting rural/tradesman "real" Americans against the "educated coastal elites" of which it is far easier to cast Ivy league schools, professors and students as, rather than your local grocery store stock boy who is attending a tech school to go into STEM.

At this point the notion of the actual issue as in: "how we are actually going to improve access, quality & cost to education" is barely a factor in it. It's just about pitting poor people against other poor people and a handful of rich nepo-babies who are so insulated from the consequences of our system they might as well not be considered to be part of it.

For anyone interested, college used to be nearly in totality funded by the state, not per student, but via the grant system. Our parents will talk about "working their way through college" working as waitstaff, because that was once an achievable thing: to work while you studied and pay your tuition, and graduate with little if any debt, and go on to do all sorts of things my generation struggles to do, like buy a home and a car, and not a run down refrigerator box and an old wreck from the side of the road that barely runs, no. They got to buy good homes, at fair prices, and cars that were if not new, really close to it.

Then as with everything Reagan fucked it up, the "no more free lunch" lobby got to add another notch to their bedpost as they set about destroying yet another fucking thing funded with public money that was doing exactly what it was supposed to be doing to pass yet another goddamn tax cut and worsen the ability of America to compete on the global stage.

ssalazar|10 months ago

This author presumably understands but buries the lede that for an endowment of $15 billion a university would typically only spend 5%, or $750 million, annually. So "a mere $400m" is over half of the annual funds from the endowment (not including tuition income and donations) that might be available to a university with such an endowment.

It should be relatively obvious that spending into the principal of an endowment is not a sustainable practice over the long-term for universities that are operating at the scale of centuries.

kccqzy|10 months ago

At a scale of centuries, monetary units themselves become highly unstable. On this time scale it was recently that people thought deflation was good for the economy, and that spending 5% every year would be reckless.

strangeloops85|10 months ago

Public schools in the US get a relatively small fraction of their budget from state funding. The distinction between public and private is not as large or substantial as one might imagine.

For example the 10-campus UC system's total budget is $54 billion of which $4.6 billion comes directly from the state's general fund. https://lao.ca.gov/Publications/Report/4998 - the federal funding here is the same as for private universities, to do research or other work in the form of contracts/ grants.

pjc50|10 months ago

"Free speech" is when the President unilaterally withholds research grants from universities, based on statements made by students (not faculty)?

ty6853|10 months ago

This is the double edge sword of moving away from voluntary transaction in the market and towards government-imposed funding. The government takes away your ability to choose what to fund, holds the purse, then smacks the purse at you filled with the weight of your own money.

niemandhier|10 months ago

Göttingen and Berlin were arguably the best universities in the world in 1930.

They were not in 1940.

amai|10 months ago

For physics and math that might be true. But Copenhagen was also very important.

linguistbreaker|10 months ago

The POTUS should not have this authority obviously, BUT

As "Ivies" grew their endowments at hundreds of percent faster than their student bodies, they became essentially hedge funds that do some education.

mathgradthrow|10 months ago

They might also be happy for an excuse to implement some of these policies and have the administration as scapegoat.

steveBK123|10 months ago

Yes some of them have said as much...

boplicity|10 months ago

To be clear: It's not as simple as funding for these schools being taken away.

What's being threatened is funding for research being done at these schools. That's a huge difference.

arduanika|10 months ago

It's not as simple as that, either. Every research grant comes with an "overhead" charge on top that goes to the university admin, which can be something like 60%.

https://www.dailysignal.com/2025/02/10/lies-damn-lies-and-un...

And moreover, it's not just the research grants that are being threatened, as seen in TFA. There's also the massive subsidy in the form of tax exemption. No other hedge funds receive that kind of preferred tax treatment. Only universities.

aianus|10 months ago

Does the admin of the school get any of this money today or is it entirely allocated to the individual researchers?

xnx|10 months ago

I keep seeing this presented as if the money were being given away, but isn't it more accurate to describe it as payment for services (e.g. access to research facilities)?

didgetmaster|10 months ago

It is part of the political reality that we live in. Whichever party is currently in power, will inevitably use that power to promote ideas that are favorable to them and to dissuade ideas that they are opposed to.

The same people who are whining about the Trump administration abusing their power by doing these things; were cheering on the Biden administration for doing similar things from the opposite angle.

This is why we have to be very careful when crafting laws. Before passing it because we want our party to use it to help us, we have to imagine what would happen when the opposing party tries to use this law against us.

lief79|10 months ago

The last part is accurate, but equating the two is a bit of stretch. The democrats went out their way to do everything by the book. They also generally took the time to understand the systems they were working with.

The current presidency went in with the assumption that everything was wasteful, and didn't take the time to understand what they were cutting. Hence, emergency rehires, judicial blocks on firing, etc.

The amount of noise about it was the same, but the root causes and support are far from equivical.

gryfft|10 months ago

> cheering on the Biden administration for doing similar things from the opposite angle

What is the #1 thing you consider "a similar thing from an opposite angle?"

gs17|10 months ago

I'm not aware of mass cancelling of research grants under Biden in the same way Trump is doing. The Trump to Biden transition took place during my PhD, and I never heard a peep about anything similar. Now all I hear about is cancelled grants.

Under Biden, many grants did have to appeal to liberal sensibilities to be selected, but he didn't order all grants that didn't focus on DEI cancelled in 2021. I'm not even sure if "inclusion" was added to the NSF's list of "broader impacts" under Biden or well before him.

mmooss|10 months ago

> the political reality that we live in

Reality is something that exists regardless of what you think. Politics is what you make it; you don't 'live in it'; it's yours.

> Whichever party is currently in power, will inevitably use that power to promote ideas that are favorable to them and to dissuade ideas that they are opposed to.

No prior president of either party has done anything like what Trump does, and you know it. Do you think nobody will notice if you make some rhetorical argument?

primer42|10 months ago

As I understand it, billionaires take out loans with their stock/investments as collateral to get cash without selling said assets.

Why can't universities do the same? Or is my understanding of billionaire money shenanigans incorrect?

indoordin0saur|10 months ago

Or just use the endowment directly. Quick napkin math says that Harvard could make tuition free for all undergrads for 26 years with what they current have. Originally this money was meant to be spent on education but they just let it grow forever. Some of their hedge fund managers are approaching 8-figure annual compensation packages and I can't help but assume this is part of what has corrupted the university. Citadel LLC has $65 billion AUM, while Harvard has $53 billion while getting special tax-exemptions.

Papirola|10 months ago

[deleted]

PaulHoule|10 months ago

I can't speak for other universities, but Jewish students have no reason to feel endangered at Cornell.

Some crazy Asian student wrote death threats to Jewish students and was kicked out. [1] When the lid blew off in Gaza all our sports events went clear bag, which was a hassle to me as a sports photographer. Security cameras popped up all over the engineering school over a weekend, contrast that to any blue collar projects in my building which always go on for months or years. The encampment on the arts quad was polite, nobody could say they were deprived of an education by it. Students who disrupted a job fair were suspended and ultimately reported.

[1] Black students, gay students, women, etc. can't say that they get this kind of service from public safety.

Calavar|10 months ago

Let's be real, this is a Maoist attempt to supress the intelligencia. The anti-Semitism angle is just a thin veneer to sell it publicly. This is why, after Columbia accepted the first set of demands, the admin immediately came back with a second set of demands

Larrikin|10 months ago

Not withholding cancer research because two countries on the other side of the planet can't get along and make it everyone else's problem shouldn't be difficult either.

barbazoo|10 months ago

> Asking to stop harassing Jewish students is not an "assault".

Quite the strawman

marricks|10 months ago

I believe what’s under discussion is a students right to protest the US governments involvement in the genocide of the Palestinian people.

jmyeet|10 months ago

People need to understand how the pharmacology pipeline works.

The Federal government provides funds for research. That research finds novel compounds and new treatments. The product of that resaerch then gets transferred to private companies who commercialize it and then make massive profits from it.

Generally speaking, drug companies don't research with one exception: patent extension. A given compound will be patented and then the patent owner will have a monopoly over that for a number of years, supposedly because there'd be no investment otherwise, but that patent will ultimately expire. Except... it doesn't really. It's why over a century later we're still dealing with insulin patents. "Patent extension" is the process where you make a small change to a molecule or a delivery system and then get a new patent, refusing to sell the old. And it can be hard for someone else to produce a generic for many reasons.

Now I have a lot of problems with this system:

1. Any form of patent extension should be illegal, basically;

2. The institutions who actually come up with this should share in the profits. After all, it's the government paying for it;

3. We give a monopoly to these companies in the US where it's illegal to import the exact same product from overseas, which leads to something costing $800 in the US and $5 in France.

But given this is the system we're stuck with, cutting off funding makes absolutely no sense. Why?

1. It's going to dramatically impact drug companies negatively in the future as their supply of new products dries up;

2. It's antoerh element of soft power where the US can use the power to produce certain medicines to influence other countries. Think about what happens if China becomes the source for the world's medicines (personally, i'd be a fan but the purveyors of this policy most definitely are not).

Government research has given us things like the Internet and mRNA vaccines. This is so unbelievably shortsighted.

And why are they doing it? Well, the party of Free Speech is punishing institutions because some of their students made factually correct but mean statements about Israel.

dekhn|10 months ago

pharma does plenty of research outside of patent extension.

daft_pink|10 months ago

I feel things like Universities and Hospitals are some of the most questionable non-profits in existence.

They operate and appear as for profits businesses to most people.

amanaplanacanal|10 months ago

There are no owners (shareholders) getting dividends, is the major difference.

amazingamazing|10 months ago

private schools shouldn't be getting public money. shocking people disagree. yes they do research that benefits the public. so does Meta and Google, who don't get public money. public money should go to public schools.

especially considering that the PIs who do the work in the private school scenario effectively boost the private school's clout with public money, but these private schools do not increase accessibility by opening up admission further.

that said, trump is also doing this for the wrong reasons, sadly.

e40|10 months ago

> private schools shouldn't be getting public money. shocking people disagree. yes they do research that benefits the public. so does Meta and Google, who don't get public money. public money should go to public schools.

Those two are not the same. Research funded by Meta/Google doesn't benefit the public in the same way as research in Ivies (and non-Ivies).

s1artibartfast|10 months ago

This is the government paying for a service.

Should a private cement company get public money for delivering cement?

djtriptych|10 months ago

Meta and Google definitely get a ton of public money.

op00to|10 months ago

What about private research institutes which do no education of undergraduates? What do you base your pronouncement on?

micromacrofoot|10 months ago

Meta and Google absolutely do get public money, for another commonly known example, every single one of Elon Musk's companies have gotten significant funding paid for through our taxes — government contracts, subsidies, grants, you name it