All Else Equal: Making Better Decisions Ep58 How Rich Are The Ivy League Universities, Really? University Endowments Explained
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Mar 26, 2025 Did you know Ivy League universities face financial pressures despite their massive endowments? The hosts dive into the paradox of hefty billion-dollar funds versus the struggles for federal spending. They explore tuition pricing strategies, revealing how financial aid skews real costs. Harvard's financial health is scrutinized, showing accounting can disguise vulnerabilities. The discussion prompts a reevaluation of sustainability strategies in higher education, emphasizing the need to balance current spending and future financial health.
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Tuition Discounts and Price Discrimination
- Private universities use tuition discounts (financial aid) as a form of price discrimination, charging students based on their willingness to pay.
- The advertised tuition cost doesn't reflect what most students actually pay.
Harvard's Financial Health
- A study on Harvard's Faculty of Arts and Sciences reveals a dire financial situation.
- Comparing their commitments' present value against their assets results in a negative balance.
Accounting vs. Financial Reality
- Traditional accounting principles can obscure an organization's true financial health by spreading costs over time.
- Accurately assessing a university's financial situation involves valuing future expense projections against current assets.