Former College President Explains the Funding Strategies Behind Universities | WSJ

Colleges and universities need a lot of money to operate-and how they get that money is complicated as wealth disparity in higher education is massive. Five schools-Harvard, Stanford, Yale, Princeton and the University of Texas-make up a quarter of the U.S.’s 839 billion endowment dollars. So how do smaller institutions afford to stay afloat?
Former Northwestern President Morton Schapiro breaks down the finances and shows how university funding has changed in the last few years and what that change means for the future.
Chapters:
0:00 Wealth disparity
0:55 Endowment
3:14 Tuition
5:23 State appropriations
8:01 What’s next?
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[@wsj]

Inside the Pro-Palestinian protests disrupting Columbia University: www.wsj.com/us-news/education/pro-palestinian-protest-new-york-city-universities-71c4c93e?st=ohb2ykd0nqo6xd6&mod=googlenewsfeed

[@AMPProf]

SLOW OLD NEWS btw

[@jamesnmcmanus]

“Pro-Palestinian protests” is an illogical misnomer. Protests are against things, and these people are protesting Israel. They are anti-Israeli protests.

[@ayesha6498]

i think whats really "disrupting" to students all over the world is that there are NO universities left in gaza. all turned to rubble.

[@timogul]

I'd really like to see an equally deep dive into school _costs._ How much do schools spend on teachers, administrators, facilities staffing, real estate, materials, etc.

[@alicetheegreet]

Exactly!

[@jvssocialmedia2459]

Worked for one. Disgusting how bloated and top heavy they are. Plus the additional of useless chairs/programs of studies drives up costs more. Courses and specialties can be offered without adding so many extra top heavy jobs. Too much compensation for top administrators, too.

[@geraldwatts5492]

Let's be real here, they are professors, not teachers. They got a PhD in their field but that says very little about their actual aptitude for effective instruction. Actually some of my favorite professors only had master's degrees.

[@timogul]

@@geraldwatts5492 There are professors that make for poor teachers, mostly in research fields, but it's hard for a PHD to get a teaching role at a university without some actual talent at passing on knowledge. There are way more PHDs than there are teaching roles, and there are way more lucrative opportunities in the private sector for most PHDs than teaching.

[@user-em1em6zc1u]

Agree. Most of this presentation consisted of metrics that are “% of total”. There should be frank facts on absolute costs which increase at a drastic rate because universities are inherently inefficient.

[@jloiben12]

I mean most large schools are mainly just hedge funds with a nice little education business on the side

[@nachiketpatil9338]

Actually they are more like expensive social clubs. You pay for the prestige and connections. If all you want is cheap education study in community college and go to graduate school at decent school.

[@pan2aja]

US government is hedge fund with governance on the side

[@treyshaffer]

@@nachiketpatil9338 That doesn't make much sense though. You can't get into a good graduate school if you don't go to a good undergraduate program with tons of resources. Although, this may very a lot from program to program.

[@piggynatorcool668]

​@@nachiketpatil9338​the point is higher Ed is to give normal students a shot at being exceptional. Wealth doesn't belong behind those doors since people who are wealthy are already exceptional. It's a school, meant to teach but now it's mostly an edifice for old money and what's already been taught.

[@Mystiverv]

@@piggynatorcool668i saw that talk too but the point of higher ed has never been to make normal people exceptional. Its roots are in wealthy familes sending their children to be educated before going on to do whatever it is their family does whether that be continue a family business or rule a country

[@papa_pt]

Northwestern is so wealthy, hardly depends on tuition, and yet continues to charge crazy tuition and spend only a small % of those billions on the students and faculty

[@jpm5205]

Smart way to run a university for the long run.

[@dzcav3]

DEI costs a lot of money.

[@smallfgb]

Funny to hear he doesn’t need a 25 million dollar donation either. I’ll bet the whole department he had there asking for donations begs to differ. Few give large in the modern era without strings to the money.

[@tymarley1441]

The tuition is really only high for those who come from wealthy families. As someone who is middle-class and was accepted into Northwestern this year, I can say there financial aid is probably the best out there. Other private schools I was accepted into this year -USC, Duke, etc.- had much higher tuition prices.

[@naphvictor9797]

@@dzcav3literally, to many breaks to legacies and white women

[@Hyp4562]

It's funny how only 16% of students paying full tuition in 2020 vs 29% in 1996 is framed as being a positive outcome, when it's obviously due to the fact that more people could actually afford tuition in 1996. Accounting for inflation Northwestern tuition went up roughly 70% in that time--are college students learning 70% more? I don't think so.

[@marshall3278]

It's actually just a big deception where they jack-up the price and then offer the vast majority of their acceptances "scholarships." It's kind of like how you go to Guitar Center and all the guitars are on sale 365 days a year.

[@bobthemagicmoose]

Yeah, it’s just price discrimination. It hurts me so much to see “universities” advertise about the scholarships you’ll get there. They’re copying the Kohls pricing model where sticker price means nothing. I think it does help the students get access to greater student loans… though that’s a pretty bad thing too…

[@Dave05J]

1996 students didn't have access to the tools that are available today. That too counts.

[@_orodrigofernandes]

​@@Dave05Jwhat tools? If you mean state-of-the-art, I'm pretty sure they got what 1996 had to offer.

[@pan2aja]

It is a legacy media. Lying is their norm

[@greg4367]

To bad you did not have the courage to discuss the ballooning price of excess administration. Cut the administration by eighty percent, getting it back to historic norms, and solve the tuition problem instantly.

[@willshumway1627]

The statement about the percentage of students paying the full endowment in the 90s versus now is really misleading as it doesn't take the increase in the tuition cost increase corrected for inflation. People are paying more than they ever have for college, even now

[@makeitmakesense2616]

Wild keeping the country broke and uneducated is wild

[@danielguardiola3698]

I think done purposefully to separate the rich and the poor. If you go in there with resources the skies the limit.

[@machinmon.]

Wyld

[@TheAussiePencil]

If these students are what "educated" people look like, then the money is better spent elsewhere. I say this as a biomedical researcher

[@sriig]

6:53-54...some Georgia state treasurer, I forget who, outright said on record, "out of state kids keep our state schools' lights on"

[@bobthemagicmoose]

Especially international students that all pay full price.

[@Syvercusa]

3:43 drive by slap in the face

[@davidnadaud4859]

Seen from Europe, where the University budgets are almost never above 8 figures , one can't help but think that the US universities offer a pretty poor ratio of academic production per dollar spent. I mean, the the academic level isn't superior to that in Europe, and both what the colleges pay per student and what the students pay per year is far superior (multiples!) from what's spent in Europe. In a way it's similar to the Health system spend per Patient...

[@x-men69-96]

Since when university is about money not education?

[@ladhkay]

Since always? Education is a business smh

[@paani3327]

@@ladhkay but it shouldn't be

[@TommyMac]

Since they have to pay bills, pay employees and pay expenses.

[@J.o.s.h.u.a.]

Since we live in capitalism

[@x-men69-96]

@@TommyMac yeah, still makes billions of dollars in profit? Look up Harvard

[@somaghosh2960]

Good topic, many information, thank you WSJ.

[@31686]

Finally someone tries to help people understand tuition is just a piece of the puzzle.

[@christophscholz]

Medical centers plus grants and contracts is almost 1/2 of the UC system revenue! In other words, almost 1/2 of the revenues comes from graduate programs. Yet this piece only analyzes endowments and tuition. Zooming into this part of the academic industry might be a good follow-up piece?

[@ipsilonia]

agreed

[@docsays]

Yup as faculty we are constantly going after grants or funded research.

[@samschumacher721]

Morty (president in this video) was truly a class act - out on campus, tons of face time with students at all levels. He’d show up to dorms and just chat at scheduled times. Proud to see him speak on this topic.

[@SahilShirazee]

I think you guys missed talking about the lack of expansion of freshman seats in colleges.

[@kurtphilly]

You should expand on that. It is really on relevant at the best or top ranked schools in the country. Overall college attendance is shrinking due to demographics, cost and high starting potential salaries in trade jobs.

[@cursorsequence]

Wells college in the Finger Lakes of NY just announced today after 156 year that it will be closing.

[@docsays]

They forgot to mention all the frivolous lawsuits they payout each year! I worked in HR dept for a large public college & in any given moment we had 10-20 active lawsuits. The legal would always payout to avoid going to court.

[@Jordan-slmo]

What were the nature of these lawsuits if I may ask?

[@docsays]

@@Jordan-slmo - mostly wrongful termination of employment by employees. Usual related to non-renewal of contracts.

[@pastramionrye247]

@@docsays Interesting. Because that adds another layer of cost -- retention of underperforming or even grossly incompetent faculty (particularly those with tenure) to avoid the threat of a lawsuit. Many universities have some faculty who are no longer research active and get abysmal teaching evaluations, but they keep being assigned classes to teach each semester. (In fairness, this is usually a tiny percentage of the overall faculty, but they increase the workload for the actually productive faculty and diminish the overall student experience.)

[@AndreaDoesYoga]

Interesting perspective on university funding! 🎓

[@jostsomuan8012]

The WSJ does such an amazing job at demonstrating their POV… Bravo! 🙌

[@DoShiAcademy]

*Nice vid*

[@vsk1997]

looking at state funding as a % of total funding paints an incorrect picture since it's impossible to know how much state funding increased or decreased and that relationship with inflation. could be that the total pie increased due to more tuition intake or larger endowments

[@scipioafricanus4875]

Complicated issue

[@samudra_dasgupta]

Very insightful

[@Abraham-uk4xy]

Superb report.

[@Eoin-B]

Where is the money from patents and papers? Here in Ireland, it's mostly part state and part funded by postgrad output as well as the smaller €2500 per student.

[@bobthemagicmoose]

Parents can’t be that much money except maybe for a school with a lot of biomedical activity.

[@Eoin-B]

@@bobthemagicmoose But that's why so most research post-grads are free here. It's a huge part of our university funding even if it's probably wrong. The state's contribution to university funding is proportional to how much money it makes through patients and papers with postgraduates. Our very old Universities (about half of them) owned a ton of land and property in the city they're based in since the 17 & 1800s so they also have a lot of rental income but that's it.

[@pan2aja]

That is why Ireland is NOT economic super power. They didn't squeeze every dime from their citizen and future offspring

[@WillieFungo]

The U.S. is not Ireland?

[@IMGX]

4:05 That is Holmes High School in San Antonio, not a college 😭😭😭

[@pascalbolduc]

Is there a similar video about the expense side? Why has it got so expensive?

[@EverettBurger]

4:30 is why you still see state universities offering in-state tuition to out of state students.

[@Esbbbb]

Meanwhile, I paid 120€ per year in Aalto University in Finland. And for that price, I also received private healthcare which didn't cost much (e.g. my wisdom tooth removal was 40€). Oh and I received 1500€ from the university for taking an exchange semester. And the student union gave me another 2000€.

[@contact594]

Scandinavian models are the best in the world, mixing socialism and capitalism, I can't understand why other democracies don't emulate your systems.

[@aanandax]

I wish it was the same for international students. I would love to study in Europe but the tuition is tooo much unless you’ve got absolutely amazing grades (sadly mine is in the 80s) and get into a public university, that too has only 15-20% seats for international students.

[@nativecompanion1562]

It seems to me that many classes could be taken online inexpensively. As long as students show up in person for testing, I don't see a problem.

[@spacewalker9375]

Geez. What was happening in 2001 that the UC system was getting so much money from the Department of Energy?

[@RichardAmesMusic]

The nuke labs were part of the UC system.

[@ipsilonia]

^ that’s true

[@adamheuer8502]

Probably nuclear weapon counter proliferation research ordered by Bush. The department of energy is the agency in charge of investigating countries secretly building nuclear bombs

[@snipinmonsta]

I think it was a nuclear power plant research project but I could be wrong. Chicago and Berkley both get a lot of money as research universities for nuclear programs

[@hcallahan1963]

It was the Human Genome Project, actually. Weirdly, it was within the DOE rather than other more typical agencies (NSF, NIH)

[@electricaltimelapsetest5713]

I got my ged in jail in 2003, 2016 I sobered up and now I'm a journeyman electrician and I make 120k a year in seattle. Not bad.

[@Defy_Convention]

Congrats on choosing to better yourself and your successful outcome.

[@electricaltimelapsetest5713]

@@Defy_Convention ❤

[@geordi-gabrielrenauddumoul449]

How many hours are you working ?

[@WillieFungo]

This is a great example of why America is the best country. You make more than most of the highest skilled workers in Europe.

[@electricaltimelapsetest5713]

@@WillieFungo seriously. A homeless heroin addict like me can turn his life around. First I stopped drugs, went to aa meetings, got a dishwasher job, then was a helper doing construction, then got residential electrical apprentice job, then switch to commercial electrical work, then did my 8000 hours and pass my journeyman test. Then get married and buy a home.

[@georgemaximus694]

The actual education and usefulness you get out of college is pretty minimal. What you get out of it is brand name, and can put it down on your resume that you graduated from a prestigious university.

[@shahidakhanam3449]

Even then a job is not guaranteed

[@geordi-gabrielrenauddumoul449]

Bro ...

[@robertewalt7789]

Notice Hamilton College, based on tuition revenues, has no graduate school. These graduate schools, like at Harvard, get big research grants.

[@segurosPROFUTURO]

Interested in knowing how the funds get spent.

[@summertime69]

Those pie charts at about 7:20 includes a sloce for medical centers revenue. Can someone make an explainer on that???

[@WickstarRunner]

All University’s endowments should be seized and that money returned to the students that got screwed by the Student Loan industry.

[@jimmaag4274]

Weird that you changed the title so quick

[@0741921]

What was it before

[@njpme]

From what?

[@jimmaag4274]

I forget the exact syntax, "Why Colleges Don't Fear Their Large Doners on the Palestine Protests" is what I remembered, a few minutes later when I came back to watch it was changed.

[@Arcwol]

@@jimmaag4274 Noticed that too.

[@mawesomenessg1]

They probably dont want to get shadow banned

[@vanyac6448]

5:17 - undergraduate "experience": meaning useless stuff like on campus ski resorts. The whole point of a university is you get an education. So I won't say tuition helping the undergraduate "experience" is a good thing.

[@jaguarkaboom8967]

go to community college. this is CRAZY $$$$ DO NOT SPEND MONEY YOU DO NOT HAVE YOU WILL END UP IN DEBT FOREVER.

[@Eveningbreeze721]

So many of these schools took covid funds. And didn't filter it to students or lower tuitions whole having zoom courses.

[@victorlin4645]

As someone who has spent a decade or more outside the USA, the USA funding system and universities themselves are ridiculous. Bang for your buck, the USA stands last in education and healthcare.

[@angelm3670]

u dont know what ur talking about 95 of the world most prestigious universities are in the US

[@danorman33]

Those colleges with big endowments say it helps keep tuition low have some of the highest tuition rates.

[@peterbedford2610]

The CA UC system favors accepting foreign students because they pay way more money.

[@ryanh9388]

The higher education system needs to contract and should be forced to face market forces. There are too many colleges and universities producing too many unviable degrees.

[@jeremyburch5850]

I'm sure this is more complicated than what I understand, but it seems that colleges have no reason to drastically spend down their massive endowments if students/parents are willing to pay the raised tuition. And students/parents are often willing to pay them because student loans are easy.

[@user-wo3ty7ui4t]

The panel is exactly right.

[@f.c.6441]

The fact that a former university president talks about endowment growth without talking about the student loan crisis is SHOCKING and shameful. This is the largest transfer of funds from public coffers to private pockets in history.

[@anurag01a]

2:12 😅

[@readoantamider5758]

Havaerford college ❤❤❤❤

[@juliazhang8612]

and when you are an international student the costs are just like... yeah......

[@alexandrugheorghe5610]

Thinning of the middle class, growing wealth of top 1% via centralization in the hands of the few, growing wealth inequality renders a society one wouldn't want to live in.

[@ace448]

If I was Harvard and had an account with Citadel I would have pulled my money out. Watch them change their tune

[@chad9971]

There’s atrocities happening all over the world each day. Not saying Oct. 7 isn’t also horrific, but the US and US institutions (such as UCLA and other colleges) have a financial interest in Israel unlike the other atrocities happening around the globe. They’ll sooner eat their own hands than sever that relationship. Such is capitalism.

[@Jackdaniels19894]

What are the expenses? paying for utilities and professors?

[@MB26535]

a lot of it goes administration: bureaucratic positions, staff, departments and what have you

[@Jackdaniels19894]

@@MB26535 I see, I feel like there are a lot more money coming in then going out however, I wonder whose pockets it’s going to

[@donaldspaulding6973]

Wealth and greed seem to be synonymous when it comes to colleges. One must wonder why, with the huge tuition increases, they any need money at all.

[@dsolis7532]

Incredible that he finishes saying that the universities should be private AND talking about inequality haha

[@TheHersonCastillo]

Universities are literally in the business of banking and hedge funding. Education is an extra-curricular activity for recruitment and workforce data-sourcing.

[@jebbrown5961]

Non profits w no shareholders or owners. How do the schools “make money” and what would that even mean? When money comes in, it goes towards covering operating costs, salaries, infrastructure, tuition etc. Endowment is just a structured subsidy that most students receive.

[@andriytroyan3888]

So glad I paid 200 euros for mine in France 😊

[@bobthemagicmoose]

One nit: greater diversity of student tuition payments just means they can squeeze the rich more for tuition (price discrimination). It doesn’t mean “more poor people are coming”.

[@Mugiwara77777]

Love Morty ❤

[@TheMaddenComebackKid]

"The idea that university trustees and university administrators are going to say 'oh my gog, im going to change my strategic vision because I'm worried about a $25 million gift when you have $50 billion in the bank' is ludicrous" That doesn't stop my alma matter from sending me a few dozen emails asking me to leave them in my will 🙄

[@iali00]

Why is a state as wealthy as California unable to spend more than $4B on its UC system. Triple that amount.

[@naoufalelaisati1815]

well that money u send to isral is enough for all the universities

[@tatendacharleszindoga7542]

Wait did it hear properly, Northwest took 5% = 600 million. How much do these Universities have??😳😳

[@domderegis5457]

“This idea that admin say oh my god I’m going to change my strategic vision bc I’m worry about a $25M gift when you have $50Bn in the bank is ludicrous” -> *proceeds to go right into how pertinent large endowments are to universities*

[@dsolis7532]

The United States is losing its edge on education and research, mean while Tsinghua University and USTC have climbed the ranks of universities with more papers on Nature. An empire founded in innovation is in decline when it’s people can’t be educated

[@WillieFungo]

Foreign students will always prefer to come to America or even Canada if they can afford it.

[@matiaschultz]

Too many students graduate from top universities with crushing debt but without a marketable degree. It’s reassuring to know that these universities are financially prudent. Unfortunately, they often fail to help impulsive 18-year-olds understand that university is not merely a four-year journey of self-discovery; it’s an investment in their future. As the saying goes, ‘If the business model isn’t broken, don’t fix it'

[@Seanpfree]

Formerly prestigious universities.

[@0d1n253]

The anti-trust cases against some of the ivies and ivy+ schools show that "need blind admissions" is simply a lie. And most public colleges these days get very little support from States. I don't know what the average is, but it's not uncommon to find a 'public' college getting only about 2% of its annual budget from State appropriations.

[@JosephSolisAlcaydeAlberici]

Universities should become publicly listed corporations and enter the stock market through IPO and let's see what happens to their balance sheets if they are forced to face market forces.

[@RichardAmesMusic]

One issue I rarely see addressed is public universities that get vast amounts of federal government dollars refusing admission to Americans while admitting foreigners. I have no issue educating foreigners in our taxpayer-funded public universities but not when they're being admitted in place of extremely qualified American students. I never realized this was an issue until my son and his friends got rejected by pretty much every major public university outside our home state despite them all having about the best credentials you can hope to have - 1500+ SAT, 35+ ACT, 4s and 5s on a dozen AP exams, community leadership with demonstrated effect, nationally competitive in sports, music, drama, etc. Kids with these credentials were almost universally rejected by public universities outside our home state. At best a few got waitlisted. Public universities literally across the United States told these kids they aren't college material, telling them all that they consider "holistic" approaches to admissions. Well, whose definition of "holistic" includes them? None of the admissions offices answered that question. I'm still in disbelief at this outcome, and I'm not alone.

[@mnoi6788]

As a person or company, you need to have a clean income so that you can stand up for what is right.

[@mazzy_vc]

Someone explain to me why these places are called “colleges” when literally every one of them has “university in the name”. Same weirdness that created 4th of July instead of July 4th and calling a sport played with your hands football?

[@jm9371]

Clearly you have absolutely no insight into North American traditions and naming schemes. BTW, most people refer to the sport as Soccer to eliminate ambiguity. American Football is very much a big thing and the NFL generates many times more revenue than FIFA could ever dream of.. just saying.

[@WillieFungo]

First, explain to me why Europeans are so obsessed with America? Focus on your own continent. What we do here is not your problem.

[@jakevendrotti1496]

Friend, a simple dictionary search of the difference between college and university may be helpful here

[@vincenttraylor1696]

Who would pay 72k for one year of tuition

[@flowertowerrr]

Like asking a tobacco company if cigarettes are good for you

[@Mr.Miller9]

Debt

[@YouTube_is_trash_365]

Ken Griffin didn’t withdraw his support because of Israeli support instead the lack of it. Which is exactly the opposite reason stated by the reporter.😅

[@StrikerTube]

Should make a video on how lobbying works in United States. How so many politicians are funded by AIPAC.

[@KeliK1]

The education system in the USA is so broken!

[@Zero11_ss]

Imagine paying like 60k a year for school and then you see our tax dollars going to israel where they have free college and free healthcare.

[@clynesa7443]

I graduated college 11 years ago and I simply can't say earning a bachelor degree improve my chances for better employment. I just feel that college is a scam and it is not worth it unless you want to be engenier, doctor or lawyer. But most major that school offer are kind of worthless. I think is better going to community college or learning a skill there is more work opportunity.

[@cxluan2]

Maybe we should boycott the businesses that these billionaire donors make their money from

[@user-gj7fe9lc8b]

Чисто кайфовые завозы) все как я люблю. Почаще делай такие видоски бро🥽

[@felixpope6073]

Good, now we know why they don't let students speak

[@samuraijack1371]

The sooner the people realize that college education is a means to funnel young minds into dead end jobs and life long servitude the better the society would be.

[@smarteveryday1606]

universities should enter stock market, very profitable education business

[@samyzy]

some universities in asia are publicly traded

[@keithwisdom1663]

Maybe paid tuition of the low wage students from poor and middle class families 😊

[@themdr00]

👍

[@emanuelamorandini]

It's more convenient to study in Europe: for that amount of money send your students oversea.

[@t.s5806]

Colleges make money by admitting children of the wealty, charging them full price then asking the wealthy family to donate large sums of money. Multiply that hundreds of times.

[@edgaranaya4961]

Beg the federal government for money it usually works

[@yankrizzuto6760]

Calling them “Pro-Palestinian protests” at the beginning means the video is not worth watching.

[@Deficurrency]

I respect billionaires who support public schools. Period.

[@TizBaz5]

Oh, you mean Qatar.

[@IQstrategy]

Lucky enough to goto UC Berkeley in 90's where I paid 10k/yr for 2 years as out of state. Got a lot of tuition support for all 4.5 years. No, don't privatize it. One of the reason I went there was because of the cost. One of the few public schools that can stand up to any top X schools in the world. Other would be UCLA: Univ Cal of Lower Achievers :) Oh, if top U like UCB & Columbia r protesting this hard, then u would be a fool to dismiss them. R u listening Nutanyahoo?

[@goldengate2369]

"The greatest higher education system in the history of the world " AHAHAH what a joke

[@jang1809]

US tax money should build public colleges & universities for American kids so they don’t end up food servers.