Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

thenation.com

Post reply on HN
Print view View original

111–120 of 267 posts

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#111

Post by ams6110 »

Cacti wrote: post #88
rayiner wrote: post #72

Earlier quoted context omitted.

Yale's financial aid is extremely generous. It's free for HHI below $65k per year. It's $12,500 per year up to $150k. It's half-price up to $200k. I'd argue it's better for families making more than $200k/year to be paying in than to give them free tuition.

That's much better than I expected. That being said, outside of a handful of extremely rich universities (and we are really talking a handful or two), most tend to "tax" the middle class more than anyone. I mean... I'm not sure if I'd consider 150k for a household middle class (probably upper middle) but in most places, again, with a few exceptions, you're basically required to pay the full tuition. In cash. After ta…

Tuition is tax deductible, you can also save for it tax-free (529 plans).

If a family of 4 cannot save for college on $150K a year their priorities are out of balance. My parents did it and they never made half that. Put my brother and I through college with no financial aid. In-state, but still....

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#112

Post by jqgatsby »

whack wrote: post #99
jqgatsby wrote: post #82

Earlier quoted context omitted.

I walked out of MIT with $100K in student loans, because I had the combination of 'parents who make too much money' and 'parents who had five kids and did not adequately save for their children's education'. I'm all for soaking the rich, but how is that fair? I was apparently rich by association, and it was pretty upsetting to see kids who were ostensibly poorer than I was get a substantially easier start in life.

It's possible that you're one of the unlucky people who falls into the combination you described above. Unfortunately, even the best system currently available will often have cracks, and you seem to have found the one that currently exists. The vast majority of the time, kids with rich parents have a substantially blessed childhood & family-support, which justifies them having to pay substantially more in tuition fe…

Sorry, what you call a 'crack in the best system available' is the life I've had to live. I've had to take less societally-beneficial jobs because they paid more, while my loan-free friends were off joining the Peace Corps or teaching. I think the world is made a worse place when people like me are turned into mercenaries.

MIT thinks it's okay to boil down someone's financial future into a single dominant number (parental income). What if your parents had a lot of debt because of a major illness or death? What if that supposedly high income is counter-balanced by living somewhere expensive because that's where the high-paying jobs are? The fact that none of that is taken into account means it's not about bad luck, it's about an unjust system.

MIT could afford to make tuition free, but the popular misconception that they're levying a tax on the rich means they won't. If you want to control how much one generation passes on to the next, there are far better mechanisms to do that than college tuition.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#113

Post by jldugger »

77pt77 wrote: post #74
johnloeber wrote: post #59

Earlier quoted context omitted.

You are now encountering the concept of a safe withdrawal rate. If you have money and want to spend it effectively, the best course of action is not to immediately spend it all, but to invest it. Then, once a year, you'll want to take the profits, reinvest a sufficient amount such that your capital doesn't depreciate due to inflation, and then to spend the rest. A more conservative strategy would have you reinvesting…

> Or you could invest at a 7% profit rate Tips welcome.

Broad market indicies like S&P500 are regarded as having a 7 percent return after adjusting for inflation.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#114

Post by kchoudhu »

machinshin_ wrote: post #106
SilasX wrote: post #66

Earlier quoted context omitted.

Being able to find where you are on the risk/return and growth/income spectrums is not hard enough to merit the hundreds of millions of dollars in fees. For whatever strategy you want, find the corresponding index fund with that strategy, and it will probably have done better after expenses and will have more liquidity and less volatility.

When you have 40 BILLION to invest, you can't just dump it into an index fund.

I wonder what would happen if you did dump it into an index fund...

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#115

Post by _delirium »

amluto wrote: post #103
whack wrote: post #99

Earlier quoted context omitted.

It's possible that you're one of the unlucky people who falls into the combination you described above. Unfortunately, even the best system currently available will often have cracks, and you seem to have found the one that currently exists. The vast majority of the time, kids with rich parents have a substantially blessed childhood & family-support, which justifies them having to pay substantially more in tuition fe…

I tend to dislike systems of the form "if you make/own less than $X, you get $Y benefit". It often leads to nasty non-monotonic outcomes and like this. For actual public benefits, I'd much prefer to give all the benefits to all the people and raise taxes accordingly. This means that, as a CA resident, I think I should be permitted to deduct rent even if my AGI is $38,259, and I think I should get the full Affordable…

The universities I know of that have free-tuition programs do phase them out gradually, to try to avoid too much weirdness that would come from a hard threshold. For example, Harvard charges no tuition to students from households making under $65,000, but above $65,000 tuition phases in slowly, reaching full tuition only at $150,000+.

However I do agree your proposed solution is better. Have universalist public programs that everyone can take advantage of regardless of income (tuition-free public university, no-charge public healthcare, etc.), and then instead of mucking with means-tested benefits and aid phase-outs as a way of indirectly taxing the rich, just tax them through actual taxes, the old-fashioned way.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#116

Post by jimbokun »

noonespecial wrote: post #108
jqgatsby wrote: post #82

Earlier quoted context omitted.

I walked out of MIT with $100K in student loans, because I had the combination of 'parents who make too much money' and 'parents who had five kids and did not adequately save for their children's education'. I'm all for soaking the rich, but how is that fair? I was apparently rich by association, and it was pretty upsetting to see kids who were ostensibly poorer than I was get a substantially easier start in life.

The price of Serious Education, like that of Serious Illness is now quoted at $ImpossibleSum and then generously negotiated down to ($EverythingYouveGot + $EverythingYouCanBorrow).

This is the economic issue in the U.S. right now, and the only candidate who seems to even acknowledge it is Bernie.

It's a difficult issue for Hillary, whose husband oversaw implementation of some of the policies that created this environment.

And all of the Republican voters seem to be more afraid of brown people possibly getting money from the government, than about whether or not they can get sick or go to school without going bankrupt.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#117

Post by jimbokun »

jonknee wrote: post #70
andr3w321 wrote: post #68

I don't really care if universities hire hedge managers to manage their endowment, but it's absurd that schools with multibillion dollar endowments still charge tuition. Yale has ~12,000 students and a $26 billion endowment. Tuition is ~$45,000 per student. $45,000 * 12,000 = $540 million. They can't spend 2%(540/26,000) of their endowment per year on free tuition? What is this money for? Of course this ignores finan…

> I don't really care if universities hire hedge managers to manage their endowment, but it's absurd that schools with multibillion dollar endowments still charge tuition. Yale has ~12,000 students and a $26 billion endowment. Tuition is ~$45,000 per student. $45,000 * 12,000 = $540 million. They can't spend 2%(540/26,000) of their endowment per year on free tuition? What is this money for? It's mainly a tax on rich…

It's a tax on anyone whose parents have any financial assets. If your parents have next to nothing, sure, tuition will be very low. Whatever your parents do have, though, tuition will be set at the optimum value to extract as much of it they possibly can.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#118

Post by wallacoloo »

leakybit wrote: post #55
toomuchtodo wrote: post #7

Earlier quoted context omitted.

What if university endowments were used to fund research and implementation into ways to drive down the cost of education to zero?

The internet has already driven the cost of education to zero, what schools are really selling are degrees. Anyways, Yale only spends $170 million on tuition assistance, but in reality ; Yale covers full tuition and housing costs for students who's family income is less than $200,000.

> The internet has already driven the cost of education to zero [...]

For things like CS, sure - mostly. Excepting for slightly niche areas like embedded programming, you can achieve similar experience for $0.

But for most other [engineering] degrees, this isn't true. You can't tape out a custom integrated circuit (IC) for free, but this is something some EE undergrads get to do at brand-name universities. Even the licensing cost of the software used to design those ICs can reach six figures.

I imagine there are similar things with chemistry, material science students and especially medical students.

But yeah, even in those other engineering fields, the internet has reduced the cost of education.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#119

Post by allemagne »

prawn wrote: post #110
nemothekid wrote: post #71

Earlier quoted context omitted.

> Tuition is ~$45,000 per student. $45,000 12,000 = $540 million. They can't spend 2%(540/26,000) of their endowment per year on free tuition? What is this money for?* Most schools with that size of tuition don't. Stanford ( http://thinkprogress.org/education/2015/04/02/3642085/stanfo... ) is free is your household income is less than $120,000, and cheap from there on.

I didn't know that the aid would be that significant. Abroad, we hear so much about student debt and parents saving for college fees, but I imagine there'd be a large group of families under that $120k figure.

That's Stanford's own policy, not a standard practice for colleges in the US.

Re: Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached

#120

Post by diskcat »

jqgatsby wrote: post #82
jonknee wrote: post #70

Earlier quoted context omitted.

> I don't really care if universities hire hedge managers to manage their endowment, but it's absurd that schools with multibillion dollar endowments still charge tuition. Yale has ~12,000 students and a $26 billion endowment. Tuition is ~$45,000 per student. $45,000 * 12,000 = $540 million. They can't spend 2%(540/26,000) of their endowment per year on free tuition? What is this money for? It's mainly a tax on rich…

I walked out of MIT with $100K in student loans, because I had the combination of 'parents who make too much money' and 'parents who had five kids and did not adequately save for their children's education'. I'm all for soaking the rich, but how is that fair? I was apparently rich by association, and it was pretty upsetting to see kids who were ostensibly poorer than I was get a substantially easier start in life.

> but how is that fair?

Socialism is only meant to be fair if you are poor. And as you say you are rich by association.

Post reply on HN