Interesting press release, given this discussion
“A new $25 million gift from the Neubauer Family Foundation, the largest in the University’s history for PhD education, will provide enhanced resources to recruit PhD students in the divisions of the Humanities, Physical Sciences and Social Sciences.”
Interesting. The opportunity cost of remaining in a PhD program (as opposed to getting an MBA or JD) is probably a lot higher than it used to be. Naturally, some simply aren’t going to be attracted to a professional degree and definitely want to go the academic route, but you are foregoing earnings in your prime years in order to do so. Also, not sure if this is still the case, but some UChicago PhD programs could be pretty stingy with the aid.
Listening Mr. Neubauer speak from time to time I think he is intensely interested in preserving pure academic pursuits. He’s put his money where his mouth is before in establishing the Neubauer Collegium. He is keenly aware of these increasing opportunity costs mentioned above and thus the donation.
I think Chicago is not looking to attract MBA or JD candidates. Instead it is trying to attract PhD candidates who were going to peer institutions because Chicago’s financial aid package was not competitive. They were losing good students because of it.
The reason that peer institutions have upped their compensation for PhD grad students is precisely because the opportunity cost has increased. I’m glad UChicago is following suit.
$25 million is a really generous gift – I could only dream of making a gift like that! But how much difference is it really going to make? If you treat it as endowment, and don’t attribute any administrative costs to it, maybe it generates $750,000 - $1 million per year. That’s enough to provide an extra $5,000 stipend to . . . a grand total of about 30 students per year commencing PhD programs. Not exactly transformative.
I checked with someone I know at a large state flagship - and they have a 4.5% return on their endowment. Assuming the same for Chicago, that’s $1,125,000 per year, assuming no admin. costs. Not sure when they would cut you off but let’s say six years. A $5,000 yearly scholarship means they can fund closer to 38 grad students per year, assuming they are making full payout. It will take six years before they are at that point so in the meantime the capital will grow somewhat.
Another possibility is that they don’t spread it so thin but target fewer prospective students applying to a few key depts. in soc. sci. and humanities and give them more. In either case, they might also reserve this scholarship for continuing students who have passed the first year hurdles, although I doubt it. Sounds like they are using the money to attract those prospies who also have offers from Harvard, Yale, Princeton, MIT (while I don’t know this for sure, my impression is that at least some of those institutions have more bucks for the grad programs).
Most departments allow in around 20 per year - probably fewer if your program takes longer to finish - from a world-wide pool of applicants. Those kids will be vetted by peers in the field in addition to having superlative stats, courseload, etc. They are probably able to target a handful and offer them a $20,000 stipend in addition to their tuition waiver. That’s more like 10 kids but if UChicago graduated PhD’s per year who went on to become tippy-top in their field, it wouldn’t take long to begin making a big impact.
The article says that a portion of the funds will go to current grad program initiatives so the above numbers might be a little optimistic. However, very glad to know that UChicago is paying attention to the professional development of its PhD students!
Ugh - amending #26 as I deleted small parts of it w/o noticing (blaming it on my keyboard . . . )
2nd para. should include phy. sci. as well as soc. sci. and humanities. I believe that’s the scope indicated in the article.
Last sentence of 2nd to last para. should read “That’s more like 10 kids but if UChicago graduated 10 PhD’s per year who went on to become tippy-top . . .”
In the current interest rate environment, no one would view a 4.5% annual payout as consistent with maintaining endowment. A decade ago, some colleges did that, but then they stopped. I think 3% is a current prudent level. It could go up in the future.
You are right that principal would build up during the first years, so the annual payout level on the initial gift could be somewhat higher. So, sure, maybe you could give $5,000/year to 38 students, or $20,000/year to 10. I stand by my comment: Not transformative. Nice for those 10 people, though.
I don’t know that you can really pick winners that way, either. Not everyone who is hot stuff going into a PhD program remains hot stuff throughout it. Every once in a while there is an obvious stone genius in some field or another, but I doubt there are 10 a year in all fields combined, and I doubt they make their choices based on short-term considerations anyway.
Edited to add: 545 new students began PhD programs at the University of Chicago this fall.
For the university I mentioned earlier, it’s definitely a 4.5% yield. The foundation that runs it invests about 40% bonds 60% stocks. If you give $25 million as the XYZ graduate fellowship program, they create a “bank account” for that gift. That bank account pays 4.5% yearly to be used to fund fellowships. Since the returns on the foundations investments is risky and has admin costs, their goal is to make enough on average over and above admin costs to cover their 4.5% obligations. If they do really well, they will, over time, up the 4.5%. If they do too poorly, they will eventually have to cut it.
That’s straight from someone who knows. I suspect UChicago is run similarly, although I haven’t looked into it.
@JHS, according to the quarterly booklet, the number of year 1 grad students in the divisions of physical sciences, social sciences and humanities for autumn 2016 is 370. See table 1-A of the link below. Might not be the exact number who matriculated in that quarter but probably not far off. That’s still a large number! $5,000 per year will partially fund the top 10%. $20,000 will fund the top 3%. (All that is assuming no funds are allocated to other needs within the grad program).
https://registrar.uchicago.edu/sites/registrar.uchicago.edu/files/uploads/Autumn_2016_EOQ.pdf
Yes, many who are stars going in are not so once they are ready to go on the market, and there are lots of students who don’t get much aid from UChicago initially who turned out great (they usually get more aid as they progress through the grad program). $5,000 seems a safer bet than $20,000, to be sure, and funding the top 10% seems more reasonable than funding the top 2-3%. So I think you might be correct that the stipend is closer to $5,000 than $20,000. I do know that stipends in some top departments other than UChicago are getting pretty large, but it’s possible that UChicago has department-specific funding that can keep up. According to the article, this is the largest in UChicago’s history for PhD programs and I hope it’s just the beginning.
DS is in STEM PhD so that is the only area I know of. He receives $18K/9month stipend in addition to full health insurance and tuition/fees. During the application/courting process, the schools that particularly wanted him offered him a fellowship which freed him from any departmental responsibilities (TA/RA). This was much more attractive than more money. The opportunities in the department/areas of research were of course the main drivers of choice and not the $ differences in programs, esp given significant cost differences in living expenses in different cities.
JHS, a 3% CAGR on an endowment? That is way too low. 7-10% would be average in the long run.
I went to one of the LACs at the top of the PhD lists (Reed), and comparing it with UChicago, the sincere interest in the life of the mind is similar if not more pure there. At LACs, by definition, there’s less of a preprofessional angle, less of a trajectory into finance or business, and, maybe due to other factors, into med or law school. Interestingly, these are some of the same reasons that the LACs can find themselves near the bottom of the “value” scoring reports, with much less $$$ earned some years after graduation because many are still toiling away in the ivory tower.
The concept of a “feeder” school is a bit farcical.
One of my kids works at a lab with various grad students and post docs. The hours they put in (10 hours a day, six days a week) and the lifestyle these students voluntary go through is amazing. One of post docs complained that after 10 years of college and a postdoc, his brother, who only graduated from high school, has better career prospects repairing cars than he does in academics.
@Zinhead I know from talking to other academics that there are non-pecuniary benefits to that career choice 