'Princeton Isn't Free - But It Could Be'
An anonymous reader shares a report: Princeton University is so rich it has become a perpetual motion machine -- an institution that can operate with no outside financial support whatsoever. That's the claim made by Malcolm Gladwell, in a recent newsletter, and opposed by Harvard economics professor John Campbell, in a letter to The Browser. Gladwell is broadly correct. Campbell's quibbles might change the exact numbers, but Princeton really does seem to have reached the point at which it's capable of funding itself in perpetuity, even without research grants or tuition income. A handful of ultra-rich universities increasingly resemble hedge funds with a nonprofit educational arm attached. Critics like Gladwell say that endowments have become so huge that Princeton and its ilk no longer need to beg for money from alumni; that such donations would almost certainly be better spent at almost any other nonprofit; and that even charging tuition seems unnecessary at this point. Princeton's endowment hit $37.7 billion in 2021, or $4.5 million per student. The school's entire annual operating expense that year was $1.86 billion, which is less than 5% of the value of the endowment. The endowment will probably decline in value in 2022; such are the markets. But over the long term, it's reasonable to expect the endowment to continue to grow more quickly than the university's expenses. Princeton's historical investment returns alone have been significantly higher than the rate of inflation in tuition and other education costs -- that explains why proceeds from the endowment account for an ever-greater share of spending every year. On top of that, Princeton continues to be very good at persuading its alumni to continue to donate generously to the fund.
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