Hand-wringing and complaining about UChicago's admit strategies

Colleges and Universities A-Z University of Chicago ✅
21

I think of this as the “more than one way to commit suicide” argument. In the context of constitutional theory, this is a debate about whether leaders should abandon/sacrifice/violate fundamental principles to save the polity vs. whether they themselves actually destroy the polity when they abandon its fundamental principles. Mercifully, it’s a dispute that generally only arises in crises. And U of C isn’t facing one. Personally, I think U of C is actually in a position where strengthening its distinctive culture is the most realistic way of maintaining/improving its “global brand.” So it’s not an either-or-proposition, much less a dilemma.

There is a vital place (in the US as well as globally) for an institution that believes that being smart, relentlessly curious, broadly educated, and hard-working is the key to making a positive impact on the world. The “being rich and well-connected is the key to fame/power/success” POV is already over-represented in elite American universities.

22

It doesn’t seem quite right that financial solvency destroys culture. Instead, solvency is a precondition to nurture the flame and, perhaps, to have it burn even brighter.

Chicago has a long history of financial problems (begging J.D. Rockefeller for more cash in the early days, until he finally said “enough;” almost merged with Northwestern in the 1930s; considered moves to Palo Alto/Aspen in the 1950s; finances were an absolute wreck when Hugo Sonnenschein became President in 1993). It’s arguable that Chicago has never reached its genuine potential because it has never had a firm financial platform. It’s also beyond argument (for me, at least) that the University did a poor job of making the College what it could have been. Chicago was founded as a university with a college, unlike its closest peers, which were colleges that grew into great universities.

A large private research university draws its income roughly from tuition, endowment income dedicated to operations, research grants (e.g. government), and donations. Chicago had fewer paying students and Chicago had a weak endowment–even now, Chicago’s endowment is small relative to its peers. In 2015, Chicago’s operating income/expenses were $3.7B and Harvard’s were $4.5B–same order of magnitude. Harvard got 35% of its income from endowment, while Chicago got only 17%. One imagines that Harvard’s donation income is better, too. Thus, Chicago must be even more diligent to manage tuition income.

In general terms, undergraduates and professional school students are revenue, while graduate students are costs. Undergraduates are also the most loyal alumni in terms of university support–including financial support. As a result, recruiting more and better undergraduates helps current income as tuition and future income as donations. Prestige associated with better students (those silly rankings, as well as the future accomplishments of College graduates) also helps attract outside gifts, which can support both current operations and raising the endowment. In turn, good finances help recruit and fund the very best graduate students and faculty, who will produce the new knowledge that will keep Chicago unique.

Sonnenschein paid with his presidency for recognizing that Chicago’s model was unsustainable. His presidency didn’t ruin what made Chicago unique (otherwise we wouldn’t be talking about Chicago being unique 15 years later). It would sort of ridiculous for Chicago to be more like other schools–those schools do what they do better than Chicago could.

Unless one has a theory that dodgy finances are what created the unique medium upon which Chicago’s unique intellectual achievements thrive, I don’t see how making the school more attractive to more and better qualified students will dilute what makes Chicago great. Managed correctly, Chicago could become even more “Chicago.”

23

Treating solvency as a constraint isn’t the same thing as trying to maximize institutional wealth. It’s the latter re-orientation (the only way to become one of the best universities is to become one of the richest universities) that threatens U of C’s culture.

[And, to be fair, it’s posters/arguments here that I’m responding do – I have no idea what the school’s rationale for making this change is.]

24

I wish the world worked differently, but it is not a coincidence that some of the most recognized brands namely HYPSM all have large and growing endowments. Stanford and Chicago started off more or less at the same time, but Stanford’s very different policies and robust endowment means there is no way for Chicago to catch up to Stanford in the near future. This was not the case in the 30,40’s or even the 50’s. If Chicago had jettisoned some its strange policies after world war II sooner, the school would have been on a very strong footing now. Now they are playing catch up. It is not an accident that the Tech industry blossomed around Stanford. Today they are reaping the benefits of that boom even threatening Harvard for dominance.
Chicago is swimming in debt now. The first order of business is to fix the financial situation. Every other good that Chicago can do is based on long term solvency and yes institutional wealth. I know of no poor schools that dominate the education landscape over long periods of time. Being poor is not a virtue in higher education. It is a huge Liability.

I personally believe that the move to ED is being done in some measure to improve Chicago’s financial picture. I believe they are trying to cut the cost of financial awards by courting a larger percentage of richer kids. Could this change the culture at Chicago? Maybe, but given the billions of debt the University has accrued and the razor thin operating margins year after year, some belt tightening is sorely needed. Having said that, it is sad that it is coming on the backs of students, but then even the staff and faculty of the school are paying the price now, so its not as if students are the only ones suffering.

25

The more I read this thread the more disillusioned I get with UChicago.

If people on this thread who went to UChicago are now referring to students who are looking for merit scholarships or needing to compare financial aid packages as “hostage takers”, “perfect little snowflakes” and “tramps” then I have lost hope in this school. I had hoped that someone coming out of UChicago could have a civil discourse about anything without petty name calling.

Yes, here’s looking at you, @ssn137.

Too bad, I had hoped for better results from such a fine school.

26

Dear GNM,

I am sorry if I have offended you, or anyone else. I have no official connection to Chicago. I am merely an alum who dearly loves his school–so much so that we allowed our child to attend, even where the cost of attendance at other excellent schools would have required considerably less financial sacrifice. My wish is that others can come to love Chicago as I do.

All best wishes for success in your admissions journeys, wherever they may lead.

27

Hi. Hostage taker/snowflake/tramp here.

FYI, I also chose to attend Chicago when other schools (including one a higher “prestigiosity ranking” and far lower tuition) would’ve been cheaper. I still waited for a merit offer, on the assumption that it would be nice if my brothers could go to college as well.

I can see some here believe I’m being unfair to the “little guy” - a university with a $7.5 billion endowment.

28

Not unfair–everyone has the right (imperative) to maximize their own utility. In terms of quality of scholarship, Chicago (rightly, in the view of many) views its peers as HYPS and, perhaps, Columbia. Through considerable investment in facilities, generous aid, and marketing, Chicago’s undergraduate prestige is now at near parity with its perceived overall academic quality. When Chicago was moving toward its current state (legitimate contender for the very best students) from where it started (unnoticed except by those who’d been born/conditioned to hear the Maroon dog whistle), the school had to offer incentives/discounts to lure students. Having reached something closer to steady state, such discounts to value are less necessary. They are also financially imprudent. I tried to lay out Chicago’s particular challenges in the post (#21) I made yesterday at 2:56 pm. Unmentioned as a revenue source in that post was debt financing, something that Chicago has used extensively–Chicago’s debt-to-endowment ratio is very high. The College is integral to the university, and it was poorly managed for a long time. It has cost big money to build new residence halls and facilities to improve the quality of student experience. For the last several years, there were some lucky people who got (are getting) a top-level education for a (relatively) budget price. After stoking the flame via debt, it is now financially sensible (necessary) for the school to ask students to pay the market price for their educations, which is what they would have paid HYPS (demonstrated need). Chicago cannot compete with HYPS by getting into merit aid bidding wars with the likes of Emory, WUSTL, or USC.

29

Chicago loses money on every undergrad student it enrolls, even at full pay. Just the instructional cost per student at Chicago is $66,200. Compare this to Northwestern where the instructional cost per student is only $32,693. Either the University is terribly inefficient in providing education or is focused on providing an exceptional experience regardless of the cost. Among HYPS only Yale spends more and only five other private universities spend more.

The school just cannot afford merit awards anymore. I would contend that it cannot really afford a “need blind” policy either, but that would be such a public relations disaster, that they will not abandon it. Chicago is indeed the ** little guy** among its peers. The only way it can keep paying generous merit or need based awards is to run its endowment down. Is it really fair to ask a University to do that?

30

“Chicago loses money on every undergrad student it enrolls, even at full pay.”

This will be true for every school utilizing endowment income. The number one concern of every private school must be ensuring its future financial health, even if it means becoming need-aware.

31

Wow, there’s an awful lot of hyperbole in this thread! The world is not nearly as binary as many of you imply. It is perfectly possible to attract a broader range of students AND to preserve a unique culture, especially when that unique culture appeals to a much broader range of students than have been aware of it in the past. It’s possible to emulate SOME aspects of one’s competitors without turning into a carbon copy of them. It’s possible to use debt without “drowning,” and a $7.5 billion endowment is (a) among the world’s largest, even if it’s meaningfully lower than HYPS, and (b) much more than any of HYPS had not so long ago. Yale’s endowment in the mid-70s, when I can attest that it was the most wonderful university on Earth, had a value in 2016 dollars of less than $3 billion.

What’s really valuable about Chicago’s culture is not limited to the College, and not dependent on the Core. It extends throughout the university and unites it; that’s one of Chicago’s enormous strengths, and it’s practically unique. But no one looking at Chicago’s Economics Department, Physical Science Division, business school or law school would argue that head-to-head competition with HYPS for faculty, students, and, yes, prestige was somehow weakening the university. There’s no special process to get top graduate students and faculty, no special quirky essays to complete, beyond the faculty selecting students and colleagues that they want to have around. The culture of the university is plenty strong enough to win over people who come to Chicago and could have gone elsewhere (and, if it doesn’t, they go elsewhere; no one wins 'em all, not even Stanford).

For pretty much all of my lifetime until recently, Chicago was not really in the fray to attract the most promising undergraduate students. It contented itself with “self-selection,” and with some coasting on the value of its location and overall reputation. It got some very good students anyway, including some who could have gone to other peer universities and some who, for one reason or another, would have had difficulty with that. At least according to John Boyer, a lot of that was fallout from the disastrous, Core-centric experiment with admitting 15- and 16-year-olds in the 40s and 50s.

I think President Zimmer, who had spent his whole career at Chicago before becoming Provost at Brown, came back to Chicago and effectively said, “We compete head-to-head with the top universities in the world for everything except undergraduate students. Why should we limit ourselves in that regard? Why are students out there our faculty would love to teach, more than they love to teach some of the students we have, going to Brown or Penn, not to mention HYPS? It makes the university weaker that so few of the most promising undergraduates take Chicago seriously.” And he was right about that.

It’s not Jim Nondorf’s job to solve the university’s financial issues. (Nor are the university’s financial aid policies or merit program existential threats to its continued success.) It’s certainly not his job to change the academic culture of the university. It’s his job to generate an undergraduate student body the faculty will like and that will contribute to the university’s long-term success within the available budget, and also, through both his admissions marketing and his applicant selection, to enhance the reputation of the university now. He’s unquestionably doing a good job at both.

32

@JHS

May I ask a few clarifying questions, because I am puzzled by some of your logic.

How much debt, pick a number would you consider “drowning in debt”? because market seems to have spoken as far as Chicago is concerned. Its long term bond rating has been downgraded. Compare it with the debt rating of other peer institutions.

The last part of this argument completely floored me. Why is Yale’s 1970 endowment even relevant here?

Yale is not competing in the marketplace for talent based on its 1970’s endowment value. It is competing in today’s marketplace with today’s endowment. And Chicago is slipping in this regard. Yes, compared to large number of schools $7.5 Billion seems like a huge number, but not in the neighborhood that Chicago plays in. We look like a poor cousin in our neck of the woods. Yale’s $3B endowment was ** relatively awesome ** in the 1970’s and its current endowment is ** relatively aswesome** today.

If Nondorf decides to dole out ultra generous financial aid to every student who walks in, he will be exasperating the financial problem. BTW do you believe or agree that Chicago is facing a tough financial problem operationally?

How long do you think Chicago can continue without making any changes? 5 years,10 years, 50 years? And in your mind, which one of those would constitute an “Existential threat”

33

I don’t think JHS was saying that Yale had $3B in the 1970s, but rather that Yale’s endowment in the 1970s, adjusted only for inflation, would be about $3B today, rather than the ~$25B that it is now. I found a link that showed that it was actually about $1B in 1985.

Since then, Yale has hugely benefited from having possibly the greatest college endowment manager of all time, David Swensen, run the show. He has achieved an average compounded return of about 14% per year, far outpacing the S&P 500, and with considerably lower risk. He is the highest paid employee at Yale, and deservedly so.

34

He’s the Norndorf of Yale. :wink:

35

…except that he has no input on anything other than how Yale invests its money, and isn’t doing anything hugely important to school culture like, say, deciding who gets in.

UChicago taking on debt was a result of the current administration. It isn’t a problem the current administration was brought in to fix. Zimmer deliberately took out a mountain of debt to fund a spending spree during the recession because interest rates were so low. It was part of his institutional plan. Pretending they have to change the culture to fix UChicago’s perennial problem of debt is disingenuous, the people trying to change the culture created the problem in the first place.

36

@VeryLuckyParent Why are you locked behind bars?

37

MODERATOR’S NOTE:
In order not to cross any lines, I’d suggest that is a user wants to answer why s/he is behind bars, that they respond via PM.

38

What does locked behind bars mean?

39

Yale’s endowment in the mid-70s was somewhere around $600 million. It wasn’t a bad endowment for that time period, but there were more than a few endowments that were larger.

@HydeSnark is absolutely right that the debt was a conscious choice by the current administration. It wanted to take advantage of historically low interest rates, and it didn’t want to do a capital campaign in the middle of the Great Recession. Plus, they thought the capital campaign would go better if they could point to all the beautiful new buildings and the gaudy USNWR rating for the college (plus its never-before-seen popularity). We’ll know when the current campaign ends whether that was a smart gamble or not. An interim bond rating downgrade at the end of the cycle, with absolute interest rates at rock bottom, is hardly the end of the world.

Are we going to wring our hands about debt-financed expansion here, too? Hasn’t the endowment return far exceeded the interest rate on the debt in recent years, providing some basic vindication for borrowing vs. spending endowment to do long-overdue upgrades to the university’s facilities?

40

The endowment had a return of 4.8% over the last fiscal year, while trustees are usually asked to approve endowment spending between 4.5% and 5.5%.

https://annualreport.uchicago.edu/page/endowment

With spending at 5.5%, the endowment’s return was slightly below the break-even point. It went down by just over $100 million as a result.

https://annualreport.uchicago.edu/page/financial-results-fiscal-year-2015

The chart on the right (second link) shows just over $6 billion in total liabilities, of which $4.2 billion consists of bonds/notes.

In the near term, the endowment is likely to decrease slightly in real terms. In the longer term, if the capital campaign comes anywhere close to its $4.5 billion goal, the endowment will increase further. Sooner or later, the debt will be paid down, when interest rates are no longer at a historic low and there’s less of an incentive to borrow more.