Wednesday, February 20, 2008

Dollars and Sense


Will Cornell's Finances Sink the Big Red?


Something is happening in the Ivy League that already seems to be changing things for all the athletic teams.

After years of relative parity when it came to financial aid packages for athletes and everyone else, some Ivy schools are now proving to be "more equal than others" when it comes to how much money they're offering potential students and potential student athletes.

According to this article in the Cornell Daily Sun, the Big Red are bearing the brunt of this new paradigm with Columbia somewhere in the middle, and of course Harvard, Yale and Princeton at the top. (With Cornell's men's and women's basketball teams both on top of the league right now, this seems a little alarmist... but overall I think it's a good argument).

The elephant in the room is the spectacular new tuition procedures Harvard and Yale have already adopted that max out yearly tuition at 10% of a student's parents' annual income. The schools with huge endowments are the only ones who can offer this, and just about all the Ivies have a pile of cash. But with Cornell's semi-state school status, it's endowment is not as large as it could be.

Columbia's endowment is impressive by any standard, but the costs of operating in New York City may keep it from offering that 10% income-based tuition plan. Or would it? I'm in favor of the Manhattanville expansion 100%, but not all the new buildings and other expansions you've seen in the past at Columbia and other schools have really been necessary. And when you realize that so many new projects at major schools are directly the result of private donations, the need to use the endowment to start reducing tuition becomes more obvious.

Here's my rant: Instead of lauding these schools for finally lowering tuition to a reasonable rate we should be screaming at the top of our lungs about how all of this is about 30 to 35 years overdue! Universities should not be allowed to sit on billions and billions of tax free dollars while they charge huge tuitions to people who basically end up borrowing the money from the taxpayers to pay those tuitions.

As a Columbia alum whose parents and grandparents sacrificed tremendously to send me to college at what is now less than half the annual costs faced by today's students, I am very grateful. But unless Columbia and the other schools can match the 10% plan, the Ivy League will disintegrate both as an athletic and an academic conference. The schools that cannot make tuition more affordable will become the 21st century versions of Bennington, Swarthmore, and all those other schools that basically cater to the rich and have basically dropped competitive athletics.

COLUMBIA'S ENDOWMENT IS CURRENTLY MORE THAN $6 BILLION!

I figure that even if all 4,000 or so students in Columbia College are paying full tuition, (which of course they are not), we're talking about $120 million per year coming into the school that would be cut back significantly if Columbia adopted the "10% solution" like Harvard and Yale.

But let's say Columbia set aside 10% of the endowment, ($600 million), and let's say that money is put in an interest bearing savings account, (if such things exist for that amount of money), with just a 4% annual interest return on that money. That's $24 million right there. To make up the addition $96 million, I know I would be happy to pledge at least $1,000 a year in additional donations to Columbia in return for the reduced tuition promise to current and future students.

But again, Columbia College is SURELY not taking in the full-freight tuition from all its students. Instead of that $120 million, it's probably more like $80 million in undergraduate tuition revenue. And just to have more fun with math, let's say the average family income of current Columbia students is $150k. That would mean that even under the "10% solution," the school would be taking in roughly $60 million in tuition revenue anyway!

So, take that $20 million "loss" from going to the 10% solutions and, subtract the $24 millon from endowment interest, and now you're talking about a $4 million annual surplus!

And what about the kind of money that could come back in spades from happier and more successful alumni?

The money is there, it's time to use it to make a real difference.

The fact that it would help athletics is just the icing on the cake.


Jeff Orleans is on the Clock (CREDIT: IvyLeagueSports.com)


New Leadership on the Way

Ivy League Executive Director Jeff Orleans has announced he's leaving office in less than 18 months. Now is the time to campaign hard for a replacement who will make the following issues a priority:

1) Creating some kind of league-wide rules on financial aid for athletes in order to make sure the richer schools don't extend the lead they already have in sports.

2) Sending the Ivy football champion to the FCS playoffs and establishing an 11th regular season game.

3) Postseason conference tournament for basketball.

4) Relaxation of some of the most restrictive rules governing practice times and other schedules. (Not an elimination, but Spring practice could be extended a week and summer training camps should also be longer for football).

Commenters can feel free to add their major platform issues as well.

But all of us should make sure the true fans of Ivy sports get our voices heard about who we want in the leadership position. This is not a joke, die hard Ivy sports fans are some of the best donors and devoted alumni in the country. People who do not care whether competitive Ivy sports live or die should not be allowed one iota of influence in this decision-making process.


Here's my sketch of who would make an ideal candidate:


1) A former Ivy basketball or football player who has made a nice fortune in his/her post athletic career and thus would not be cowed by the "powers that be."

2) A former Ivy athletic director with keen knowledge of what the students, fans, and administrators need to succeed.

3) A former U.S. Senator or state Governor who knows that "rules" mean squat if they p*ss off your top donors.

21 Comments:

At Wed Feb 20, 02:05:00 AM GMT+7, Anonymous Anonymous said...

A couple of thoughts on the financial aid issue, which needs to be looked at on a national level, not just the Ivy League in isolation.

For many years, League policy was that all financial aid packages would be close to identical, so a student could choose his school without having to take finances into consideration. The benefit to the Ivies was that they didn't have to get into a bidding situation for kids. A wider social benefit was that financial aid was reserved for lower income families--upper income families wouldn't get financial aid from any of the Ivies.

The Justice Department claimed this practice ran afoul of antitrust regulations and forbade the Ivies from meeting to agree on common financial aid packages.

At the same time, some of our non-Ivy competitors such as Duke, Washington University, Chicago, Stanford and many smaller schools started offering merit based scholarships even to upper income kids in order to pry some of the top students away from the Ivies, who were offering need-only packages. The Ivies began to lose kids to non-Ivies for financial reasons, and in response they began competing more vigorously with financial aid packages. This meant that the less endowed schools would not have enough financial aid to go around their entire class.

So HYP's new policies aren't really new practices. For a number of years now the schools have competed for kids using enriched financial aid packages, and the schools with the larger endowments have held the advantage. All they are doing now is seeking favorable publicity for codifying these practices.

I don't think it's going to affect athletic recruiting as much as people think. I think all the schools will compete financially for top student-athletes. I do think the less endowed schools like Brown and Cornell will be forced to limit the number of financial aid recipients in their first year class, so kids from families who can pay the freight will be advantaged at those schools. So they'll have more rich kids and fewer poor kids. This is obviously not desirable from a social opportunity perspective, but the Justice Dept has ruled out sharing financial aid information. They thought it would help families if the schools had to compete with each other on finanicial aid packages. That's true, but it means more financial aid for top middle and upper income kids and less for lower income families.

In any case, the breakdown in financial aid parity began years ago with the Justice Dept and increased scholarship competition from non-Ivies. This is really nothing new, just more of the same.

Leonidas

 
At Wed Feb 20, 03:22:00 AM GMT+7, Anonymous Anonymous said...

Didn't Brown, Penn and Cornell drop need blind admissions?

 
At Wed Feb 20, 03:22:00 AM GMT+7, Anonymous Anonymous said...

Didn't Brown, Penn and Cornell drop need blind admissions?

 
At Wed Feb 20, 03:51:00 AM GMT+7, Blogger dabull said...

Leonidas, I beg to differ with your take. If you don't think an athlete from a family making say 250k that can now go to Harvard for 25k/yr. is not a huge reduction from what their fair family contribution would be on the FAFSA formula and is also a tremendous amount more generous than he would receive from Columbia would is not advantageous in recruiting I think you are mistaken. This goes down the line of income level too. A family making 90k goes to Harvard for 6k? Huge advantage over what Columbia would give in the old need based formula. This for the most part would put any non-matching schools at a HUGE disadvantage. Until now the aid packages between schools was NOT much different, as they all used the FAFSA formula to determine need. The only real difference was the threshold of 60k or below that Harvard and I think Princeton used to eliminate and need for family contribution. Also, if you don't think limiting your recruits to families who can afford to pay full freight is not another HUGE disadvantage, you are again mistaken. Trust me AD's and coaches around the league are not taking this as nonchalantly as you are.

 
At Wed Feb 20, 03:53:00 AM GMT+7, Blogger dabull said...

Sorry for the bad math in my rant. 90k family would of course pay 9k at ten percent.

 
At Wed Feb 20, 04:03:00 AM GMT+7, Blogger Jake said...

The tuition and aid packages are making a lot of other schools scared right now, but I think as Ivy fans we should celebrate this and put the pressure on for our alma maters to match it.

Look, the Manhattanville expansion is going to happen, and I think the money is there and more will come from individual donors who want their names on buildings, etc.

The endowment has to be used at Columbia and the other Ivies to get that 10% tuition formula too. Let's do this for the athletes, let's do this for the forgotten middle class, let's do this so the Ivies can finally prove that they recognize that the majority of Americans are neither millionaires nor paupers.

The rewards will be many. I think of the many new millionaires and billionaires coming from the ranks of the middle class who will take their Ivy diplomas and make fortunes and then donate a lot of money back to their schools.

If it takes threat of ending all competitiveness in the Ivies to wake us up to this, then fine.

 
At Wed Feb 20, 04:51:00 AM GMT+7, Anonymous Anonymous said...

Harvard's yield has varied between 80% and 90% for decades. When did any other Ivy including Yale not lose the large majority of overlap kids to Harvard? The league has always had a recruiting hierarchy. I really don't think these "new" financial aid policies are going to alter the recruiting dynamics in the league.

I have never been one to make a big deal out of Cornell having easier admissions standards and a larger undergraduate student body than the other schools, but honestly those factors in Cornell's favor easily balane out the disadvantage of a smaller endowment when it comes to recruiting top athletes.

Of course Cornell may find it loses the occasional student-athlete to a non-Ivy school which offers a full ride, but that is different than saying they are going to lose more kids than formerly to other Ivies.

Leonidas

 
At Wed Feb 20, 05:45:00 AM GMT+7, Anonymous Anonymous said...

But can't Cornell put its athletes in its state schools like hotel admin, animal husbandry, labor relations, etc, which have lower tuition? Very few of Cornell's football and basketball starters are in Arts & Sciences or Engineering in any event. Most are in hotel admin., a state school.

 
At Wed Feb 20, 05:45:00 AM GMT+7, Anonymous Anonymous said...

But can't Cornell put its athletes in its state schools like hotel admin, animal husbandry, labor relations, etc, which have lower tuition? Very few of Cornell's football and basketball starters are in Arts & Sciences or Engineering in any event. Most are in hotel admin., a state school.

 
At Wed Feb 20, 05:48:00 AM GMT+7, Anonymous Anonymous said...

It's not about H/Y/P losing schools to other Ivies...

It's about H/Y/P being able to attract some who might otherwise go to Stanford/Duke/Northwestern because the new FinAid makes it a better option...

 
At Wed Feb 20, 12:26:00 PM GMT+7, Anonymous Anonymous said...

It's not quite on topic, but I received a copy of the Columbia College Fund's Annual Report in the mail today, and Barack Obama, Class of 1983, failed to make any contribution. Something's very wrong when the probable Democratic Party nominee for President of the United States doesn't care enough to contribute a nickel to the college he attended. I'm more interested in Columbia Football than politics, but after all this guy is running for President of the United States. What do you think, Jake?

 
At Wed Feb 20, 02:05:00 PM GMT+7, Anonymous Anonymous said...

Obama was a transfer to the College for his final two years at a time when the College did not offer housing to transfer students but let them fend for themselves. On top of that he says in his autobiography that he was socially withdrawn in those years. I think he got what he wanted, which was a rigorous classroom experience and exposure to NYC, and Columbia is benefiting because he is a reflecting glory on us. If he doesn't feel all warm and fuzzy towards the College he is like a lot of other students, commuters and transfers, who were admitted to Columbia and denied housing in the old days. We're way ahead even if he never shows us much love, and we can't complain because he didn't get shown a lot of love in his time. I think we should just be proud of him and cut him some slack.

Leonidas

 
At Wed Feb 20, 06:42:00 PM GMT+7, Blogger Jake said...

No matter how much Obama gives or supports Columbia, having a CC grad in the White House would be a huge coup for Columbia. Not that that is at all a good reason to vote for Obama, but let's make it clear that Obama's possible victory in November would surely be good for Columbia.

Of course, one of John McCain's children is a recent grad of the College and he gave the Class Day speech at Columbia not long ago.

 
At Wed Feb 20, 08:09:00 PM GMT+7, Anonymous Anonymous said...

I disagree with Leonidas on this one. There are many Columbia College graduates including myself who commuted or transferred to the College who do feel "warm and fuzzy" to the College and contribute every year to the Columbia College Fund. A Presidential candidate should make contributions to his Alma Mater. How do you know Obama "..didn't get a lot of love in his time?" Finally, it's pretty pathetic to sugggest that I have to "cut him some slack," because of my question why he didn't contribute to the Columbia College Fund. Are you really suggesting that Obama should not be criticized for showing no love back to the College?

 
At Wed Feb 20, 09:50:00 PM GMT+7, Anonymous Anonymous said...

I am a huge Obama supporter despite the fact that he is dissing us. It's actually pretty stupid for him to do so. I know some people in the campaign and intend to tell them that he should show some love, because there are a lot of College alumni who would feel more inclined to invest in the reflected glory of an Obama presidency were he to acknowledge us just a little. Now if he were to show up at Levien this Friday and root against his brother in law, I'll really forgive him ofr all of his transgressions. PS, didn't McCain address the football team one year, thanks to his daughter?

 
At Thu Feb 21, 01:52:00 AM GMT+7, Blogger mark said...

Obama gave to Columbia this year. He missed a year:-) cut him some slack.

 
At Thu Feb 21, 04:52:00 AM GMT+7, Anonymous Anonymous said...

Jake,

Don't you dare think that none of the CU parents are not paying the full boat and working very hard for it!

 
At Thu Feb 21, 04:59:00 AM GMT+7, Blogger Jake said...

Please read carefully. What i said was that surely not all of the students are paying full price. It;s probably more like half.

 
At Thu Feb 21, 07:48:00 AM GMT+7, Anonymous Anonymous said...

Obama's odd avoidance of all things Columbia is nearly pathological at this point. He was invited by the College Democrats to speak on campus (remember, John McCain has done so) and instead he gives a no-comment and holds a rally at NYU.

He's on the record as saying he roots for his brother-in-law against his alma mater.

Maybe "community organizing" wasn't all he was doing in NYC... and that's why he doesn't want to be pegged as being at Columbia for two years...

 
At Thu Feb 21, 11:30:00 AM GMT+7, OpenID arador said...

"The schools that cannot make tuition more affordable will become the 21st century versions of Bennington, Swarthmore, and all those other schools that basically cater to the rich and have basically dropped competitive athletics. "

The suggestion that Swarthmore caters to the rich is grossly uninformed. Swarthmore is exceedingly generous with financial aid and recently dropped its loan component.

 
At Fri Feb 22, 02:17:00 AM GMT+7, Anonymous Anonymous said...

How's the Swarthmore football team doing?

 

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