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

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

#161

Post by xenadu02 » Tue, Mar 22, 2016, 6:26 AM UTC

Grishnakh wrote: post #139

jimbokun wrote: post #116

Earlier quoted context omitted.

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…

The Republicans aren't as bad as you think. Trump has said (vague) things about providing health care for everyone. He's said a lot of things that are a big departure from standard Republican ideology, which is why a bunch of Republicans are calling him "not a real Republican" and the party as a whole is having a major shit-fit about him possibly getting the nomination. The guy isn't really a right-winger, he's a cen…

Trump made that claim about health care. Then when it polled badly with the hardcore Republican base (you see Obamacare = bad because Obama = bad, mumble mumble ~reasons~) he flipped faster than you could blink.

Go look at his website now. It's the same old tired Republican canards like selling insurance across state lines (aka gutting your state's insurance commission as all insurance companies relocate to states without meaningful regulation like South Dakota).

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

#162

Post by tanderson92 » Tue, Mar 22, 2016, 6:42 AM UTC

chrisabrams wrote: post #147

inthewoods wrote: post #126

Earlier quoted context omitted.

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…

Am I reading this correctly? A non-profit can buy real estate property and not pay taxes on the property? Is this investment property, or property being used for university usage?

It is both, it is the nature of mega universities as the operating arm of large trusts. Northwestern is receiving similar pushback from Evanston, IL.

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

#163

Post by ww520 » Tue, Mar 22, 2016, 6:47 AM UTC

jldugger wrote: post #104

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…

> They can't spend 2%(540/26,000) of their endowment per year on free tuition? What is this money for? The safe withdrawal rate is set at 4 percent. Earmarking half of that 4 percent for student aid is pretty severe on the budget.

Just to clarify so that people won't plan their retirement wrong, the 4% safe withdrawal rate from the Trinity study is for having at least $0 of a fund at the end of 30 years. The withdrawal rate for an indefinite fund like Yale's is much lower.

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

#164

Post by bkantt » Tue, Mar 22, 2016, 6:48 AM UTC

inthewoods wrote: post #126

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…

It gets even worse. Harvard Housing charges students "market rates" [0], i.e. they don't even subsidize what they are not paying in taxes off their own students' rent.

[0] http://news.harvard.edu/gazette/story/2014/01/harvard-housin...

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

#165

Post by tanderson92 » Tue, Mar 22, 2016, 6:51 AM UTC

nostromo wrote: post #80

huac wrote: post #73

A bit tangential, but don't donate to Ivy Leagues. I get that you might feel a sense of pride in having graduated from the school, but with a 11 digit endowment, you can rest assured that the school will be there for future students in perpetuity. Rather, give to state schools or community colleges or really, any other school. Help them serve students of all economic backgrounds, not just the elite. The most importan…

I agree with you, but many people see that as a plus when donating. If I give $x to an organization that desperately needs it, it will be spent immediately. If I give $x to an endowment, it will sit there in perpetuity, providing investment income to the organization for decades or centuries. Ben Franklin understood this and left a small amount of money (1,000 pounds) to the cities of Boston and Philadelphia in his w…

Another good story and an excellent piece of reading on long-term trust funds (Methusaleh Trusts) was in Lapham's: http://laphamsquarterly.org/future/trust-issues

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

#166

Post by tanderson92 » Tue, Mar 22, 2016, 6:59 AM UTC

saryant wrote: post #159

machinshin_ wrote: post #106

Earlier quoted context omitted.

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

One Vanguard fund has $186 billion under management. The whole company manages $3 trillion. I think they'd be okay.

I really shouldn't nitpick (so please do forgive me), but strictly speaking the whole company doesn't manage $3T. It is true that's the best number to compare to the rest of the industry, but Vanguard has a rather unique corporate structure. The end result is that each Vanguard fund is a company which owns part of the umbrella group. This inverted corporate structure is set up so that the fund-owners have direct stake in management 1) of the umbrella organization 2) only of each individual fund, not other "leaves" of the tree.

It might seem like a distinction without a difference, but it's the single greatest reason their cost structure is so much more attractive.

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

#167

Post by tanderson92 » Tue, Mar 22, 2016, 7:01 AM UTC

adminprof wrote: post #149

timrpeterson wrote: post #96

Earlier quoted context omitted.

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.

It's strange to me that you're a professor but the things you're saying aren't true. The 2/3 grant money thing I think you are talking about indirect costs? That's not money off the top of received grants, it's computed like a tip, where when you receive $1 of grant funding, the university receives $0.66. And only on non-equipment, non-tuition (for funding students) items. So it usually works out to being about 35%.…

Let's make sure to compare apples to apples, even when discounting the 9-month salary (no CS professor truly gets the summer off, that isn't how the academy functions):

* Entry-level software engineers have 0 months experience.

* Full professors in CS have 5 yrs of a Ph.D., and perhaps 2-4 years of postdoctoral experience, and 5-7 years of professorial work.

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

#168

Post by 13thLetter » Tue, Mar 22, 2016, 7:08 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 all for soaking the rich, but how is that fair?

Perhaps this experience should make you rethink your support of "soaking the rich."

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

#169

Post by venomsnake » Tue, Mar 22, 2016, 7:12 AM UTC

jimbokun wrote: post #116

noonespecial wrote: post #108

Earlier quoted context omitted.

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…

The Trump supporters are driven by the same things that Bernie ones are. Anger at economic insecurity. The racism is mostly a side dish.

If we have a great compression, growth and redistribution like in the 50s/60s expect racial/immigration tensions to decrease a lot.

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

#170

Post by timrpeterson » Tue, Mar 22, 2016, 7:20 AM UTC

adminprof wrote: post #149

timrpeterson wrote: post #96

Earlier quoted context omitted.

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.

It's strange to me that you're a professor but the things you're saying aren't true. The 2/3 grant money thing I think you are talking about indirect costs? That's not money off the top of received grants, it's computed like a tip, where when you receive $1 of grant funding, the university receives $0.66. And only on non-equipment, non-tuition (for funding students) items. So it usually works out to being about 35%.…

Yes. Cmon man. You're being overly literal. I'm just starting as a professor in biomedical sciences, where you probably know the terribleness reaches its peak. I'm also nearing 40 so the duration of "training" required is also a total bullahit factor especially in my area.

The general point is true: the financial incentives in academia are blatantly terrible. The quality of what's produced isn't much better. So this whole thing about universities being all about their research missions? Sadly for all those hundreds of billions the hedge funds are generating, produces a depressingly small output.