Universities Are Becoming Billion-Dollar Hedge Funds with Schools Attached • Hacker News Board

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

#121

Post by jimbokun » Tue, Mar 22, 2016, 2:17 AM UTC

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…

"I think I should get the full Affordable Care Act subsidy regardless of my income"

I appreciate your sentiment, but you realize all of the insurance companies will just raise their rates by the amount of the subsidy, right? More demand in the form of government money earmarked for a specific good, with the same supply of the good, means higher prices.

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

#122

Post by inthewoods » Tue, Mar 22, 2016, 2:17 AM UTC

digikata wrote: post #50

inthewoods wrote: post #35

I've been waiting for this article to surface on HN. The other problem here is that hedge funds, as an investment vehicle, really haven't done that well. So it is essentially a transfer of donations to the hedge fund industry while the endowment could have done better avoiding them altogether. Obviously there are some hedge funds that have done well - but on the whole they are expensive and do not add alpha. Back in…

Is the outsourcing somewhat recent? I've been reading through the actual text in the Piketty book and he discusses the relative advantages of large university endowments vs smaller ones. He has a data table in it for 1980-2010 where the returns seem pretty reasonable (but much higher for larger account balances of Harvard-Yale-Princeton). http://piketty.pse.ens.fr/files/capital21c/en/pdf/T12.2.pdf People can argue ab…

That's a great question - when I was in the industry (back in 2005-2006) Harvard had already outsourced a large portion after their managers left. In many cases, the managers started up their own funds and then Harvard immediately placed money into them.

I think the answer may be that Harvard (and others) continue to see decent returns - the question is at what cost relative to managing it internally.

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

#123

Post by superuser2 » Tue, Mar 22, 2016, 2:19 AM UTC

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).

It's not quite $EverythingYouveGot (for parents), but $EverythingYouveGot - $WhatWeThinkYouReallyNeed. Financial aid offices compute an allowance for parents, and then demand the "extra" money.

It is "Everything You've Got" for students, though. If you have any college savings in your own name (or earn any scholarships), it will simply cancel dollar for dollar with university grant aid. Unless you can save more than the total of your grant over 4 years, better to spend it before the first financial aid paperwork (or not save it at all).

Though this only comes into play at a school that offers substantial grant aid. At a state school your savings can actually help.

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

#124

Post by 50CNT » Tue, Mar 22, 2016, 2:20 AM UTC

timrpeterson wrote: post #96

Pyxl101 wrote: post #92

The article title "...with Schools Attached" misses an important fact about most universities. The purpose of most universities is to engage in scientific research. They are not schools, not primarily. They are chiefly research institutions that, yes, have schools attached. For more about this, read: http://blogs.discovermagazine.com/cosmicvariance/2008/05/29/... > [T]here is one misimpression that people seem to hav…

Except, they treat their researchers like total crap. Taking 2/3 of all grant money for overhead? Salaries for 45 year olds with 20 years of experience that are the same or worse as 25 year old with zero experience in private sector. Publish or perish? This whole thing you say these schools focus on, research? Pathetic. And trust me I know I've been at all the top schools and am now a professor.

Coming from an outsider, having heard about how much sifting there is in Academia, couldn't that be because there's more people that want to be researchers than there are research positions? Someone who works in a sub-field without private sector research positions and with post-docs pushing up against them doesn't seem to be in the strongest negotiating position.

I do agree however that it is messed up.

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

#125

Post by kough » Tue, Mar 22, 2016, 2:23 AM UTC

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.

I'm in a similar situation right now: on paper my father's business owes him a lot of money that he "loaned" it from his salary, but in reality that money does not exist and it's not going into his pocket any time soon. Mix in two brothers with their own college costs, stir to taste. I took two gap years to work and save money; it's absurd to me that I'm paying full tuition price in this situation, but the financial aid office doesn't give a fuck because they know as soon as my savings run out I'll take loans.

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

#126

Post by inthewoods » Tue, Mar 22, 2016, 2:23 AM UTC

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…

Even worse, in my opinion, is that these institutions can continue to be considered Not for Profit organizations.

Harvard is very interesting in this way - they have so much money in their endowment that they seek all kinds of investment. Real estate is one of their favorites. When they buy property, it can no longer be taxed. This is why the towns surround Cambridge hate when Harvard buys up property. Watertown, in particular, has really been furious at this trend. In Worcester, the colleges use up city resources and yet pay nothing in taxes in terms of city services.

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

#127

Post by dbjacobs » Tue, Mar 22, 2016, 2:25 AM UTC

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…

Just to add some fact. According to Yale's financial statement [1], their operating expenses in 2015 was around $3.2 billion. So tuition doesn't come close to covering their operating costs. And it looks like they typically spend around 5% of their endowment (the spending level most foundations target because that is the minimum a foundation must spend to maintain their status).

[1] http://finance.yale.edu/sites/default/files/2014-2015%20Annu...

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

#128

Post by dangrossman » Tue, Mar 22, 2016, 2:26 AM UTC

jimbokun wrote: post #121

amluto wrote: post #103

Earlier quoted context omitted.

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…

"I think I should get the full Affordable Care Act subsidy regardless of my income" I appreciate your sentiment, but you realize all of the insurance companies will just raise their rates by the amount of the subsidy, right? More demand in the form of government money earmarked for a specific good, with the same supply of the good, means higher prices.

> you realize... right?

Gosh, I really dislike that turn of phrase.

Anyway, they can't do that, since the ACA has mandated that insurers spend at least 80 or 85% of premiums on health care costs since 2012.

The insurers ride that line as closely as possible, since their profit has to come out of the 15% allowed margin. This means an increase in total premiums without a commensurate increase in the cost of claims cannot happen. If an insurer's payouts don't exceed the mandated Medical Loss Ratio, they have to refund their insured customers for the difference by mailing out rebate checks. I've received two such checks myself.

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

#129

Post by jorgecurio » Tue, Mar 22, 2016, 2:30 AM UTC

> Combine all of the above with the recent stories about hedge fund managers being exploitative sociopaths—

what the fuck. I mean come on but sociopaths thrown around like a cheap slut is too much.

When you have to perform and you are getting paid to gamble and WIN, you are going to need insider information. You SIMPLY CANNOT WIN in the hedge fund game without insider. a hedge fund guy once told me everybody fucking does it. Pay some underpaid, underappreciated guy at the company in cash. He told me SEC does a fuck job and only goes after the guys that really stand out, the too big to let them get away. They only go after high profile guys and once they go to jail for white collar crime, they have extensive network they tap into for employment and working together.

Yeah it's fucking scary what hedge fund managers are capable of but it's also overreaching to say all hedge fund managers are this corrupt, obviously ones that weren't smart enough to figure out how the game is really played.

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

#130

Post by branchless » Tue, Mar 22, 2016, 2:33 AM UTC

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…

Great question: what is this money for?