671–680 of 771 posts
Reprinting a new edition every year with minimal changes but a nice $50 price increase (on top of the book already costing several hundred) is a nice way to do that.
Sick bastards, the lot of them.
Earlier quoted context omitted.
Easy access to credit is a good thing. I cannot believe I am saying this on HN. The problem as I see it, as a non-American, is that university in the US is a business trying to turn a profit. Even if most universities are technically non-profits, they are managed like businesses by MBAs. In the EU many countries offer guaranteed loans for Uni education, but this has not spiked the cost of education because Universiti…
Not-for-profit businesses in the US are not legally allowed to turn a profit. There are no financial owners to be paid a profit. So, everything you wrote about that is BS. Not-for-profit businesses are still businesses; they need to take in as much as they spend, whether it's through fees for service (e.g. tuition) or donations. Colleges and universities in the US spend a lot of time begging alumni to donate money. A…
One of the most crucial components of operating a 501c3 is the financial statements reporting requirements[1]. From an accounting perspective, the organization cannot keep retained earnings (owner’s equity) balance at year end since there are no owners. Rather than having retained earnings, 501c3s deal with net assets, which no person can have ownership of.
The crucial thing here is that the business does not retain profits at the end of the accounting period. However, it can earn what we would call profit in a non-501c3 scenario and then use that money for business activities, paying employee wages, investing, etc. Accordingly, a 501c3 can take in more than it needs to spend. It just has to properly handle that excess money to meet the accounting standards.
See the Wikimedia Foundation’s financial statements[2] for a great example. They spend a minuscule amount of their net assets on actual business expenses. They spend quite a bit on wages, travel and conferences, and various other things that are arguably unnecessary to serve their core mission. However, they follow all of the accounting guidelines and are therefore granted reasonable assurance that they are fairly representing their financials according to KPMG.
Back to the initial topic, it’s now clearer to see why and how a university such as Harvard can be a 501c3 and bring in exorbitant amounts of “profit” that probably do not better serve their core mission as an education center. However, it’s all about following rules and how you spin it. Harvard isn’t begging alumni for donations because they need it. They had $61B in net assets at year end[3]. I think it’s completely fair to argue that Harvard doesn’t need that much money while they deliberately stay at their current size. In fact, I would argue one step further that they have so much money on hand, they shouldn’t even be charging tuition. Their $59B investment portfolio makes up the bulk of their net assets. From a book perspective, they are essentially an investment fund with a university attached.
Looking at a public university, the University of Texas ended the year with a $66B net position[4]. They paid their football coach over $5[5] from their massive pool of assets and are still paying their former head football coach tens of millions of dollars.
I would be interested in hearing if there are universities in Europe that operate like this. Quickly looking up the aggregated statement of financial activities for all Oxford colleges[6], I see that they had a 63M£ expenditure (loss) but carried forward 1.35B£ to end the year with positive funds carried forward of 1.36B£ (after a prior year funds adjustment). That’s incomparable to Harvard. As a CPA (who is not an expert on UK tax law), Oxford’s financial statement appears much more inline with the spirit of what I imagine a non-profit university should be. Harvard and the University of Texas look like two of the most successful companies in America to me.
[0] https://www.irs.gov/charities-non-profits/charitable-organiz...
[1] https://www.fasb.org/document/blob?fileName=ASU_2016-14.pdf
[2] https://upload.wikimedia.org/wikipedia/foundation/2/26/Wikim...
[3] https://finance.harvard.edu/files/fad/files/fy22_harvard_fin...
[4] https://www.utsystem.edu/sites/default/files/documents/repor...
[5] https://www.texastribune.org/2021/02/22/steve-sarkisian-sala...
[6] http://d307gmaoxpdmsg.cloudfront.net/collegeaccounts2122/agg...
Earlier quoted context omitted.
Right but see the problem is how does a really smart poor person get an education so they can become a really smart rich person?
They study in a field which has a high likelihood of loan repayment, or study at a less expensive school. If a really smart poor person wants to become a really smart rich person by pursuing a degree in film studies, it's reasonable (in my opinion) for a bank to say "borrowers whose only education is a bachelors in film studies tend to have trouble paying back loans, so we won't lend you very much". If that very smar…
rising tuition is bad, but if schools had retained the monopoly on education they had before it would be fatal instead of annoying.
internet and cheap laptops ftw.
Earlier quoted context omitted.
The same incentive you'd have to do something for someone without receiving payment - a desire to help. I'd imagine the fact that people in that time had stronger familial ties to others in their village also helped increase payback rates.
And both religious created a way to indirectly pay interest by turning it into a business partnership. i.e. when you are helping someone (a friend, relative) you don't pay interest. But when it's a business loaning the money that desire to help doesn't exist, and it becomes a business partnership instead. https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism specifically: "Heter iska". And https://en.wikipedia.…
Makes sense when you have student loans backed by the federal government. If an 18 year old with no money and no credit history gets accepted into a qualifying university, she will be able to receive a loan since the bank knows that the government will protect their investment if she fails to pay them back. So now young people have this easy access to credit, and universities can greatly increase tuition and fees wit…
Worse than just "backed by the federal government," the loans are basically protected by the government. Being one of the small list of things you can't bankrupt out of, the risk in giving out the loans has been fully pulled from the lenders. It is frustrating to hear the discourse over the inappropriate students that are taking on too much debt, all the while ignoring the lenders that are taking on too much risk. At…
7% interest on a loan in a year with 3% inflation (the real cost of having money that year) that is guaranteed to be repaid seems like evidence of corruption to me. But maybe I think too simplistically.
Makes sense when you have student loans backed by the federal government. If an 18 year old with no money and no credit history gets accepted into a qualifying university, she will be able to receive a loan since the bank knows that the government will protect their investment if she fails to pay them back. So now young people have this easy access to credit, and universities can greatly increase tuition and fees wit…
Earlier quoted context omitted.
Of course Yale isn’t representative, it’s just one data point in a national trend. I don’t understand your point. Do you dispute that admin staff have grown at a high rate? My point is that universities have too much admin and that it’s growth quickly. I think it’s perfectly reasonable to compare this trend without knowing exactly what specific universities do. I agree that comparing medical system admin staff wouldn…
My point is that Universities don't just teach. They also perform research, which requires staff. Yale is researched focused and has more grad students than undergrads. Grad students and research faculty require more administrative staff than undergrads. An increase in admin staff could be caused by a shift to more research rather than bloat in undergrad. For example, a teaching university like Central Washington Uni…
The overall average trend in the US is for administration costs to increase and instruction costs, relative to admin, to decrease [0]. Some universities will vary, but the trend is important to look at overall.
Earlier quoted context omitted.
> a hospital still makes money when a resident sees and treats you Hospitals lose money on residencies. That's why there aren't enough and the ones that do exist need to be subsidized by the federal government.
How does this actually work? I have never worked in a medical context and am ignorant of their internals so this is a genuine question. I _have_ been a patient going to a specialist appointment where the only doctor I saw was a resident, and I don't think I or my insurance were charged any less. So if their work brings in the same amount of revenue for the same services, and if resident often do a lot of hours (I see…