Sunday, April 20, 2008

Will The Real Private University Please Stand Up?

By Richard Vedder and James Coleman

We often draw a distinction between public and private universities and colleges. Public schools ostensibly are ones that are heavily dependent on government funds for support, and are under some control by some governmental entity, usually state government. Private universities, or so the myth goes, are mainly dependent on private funds and derive little of their support from government agencies.

The reality is quite different. With respect to the federal government, by far the most subsidized institutions are the so-called private colleges and universities. This is shown in the table below, which lists federal revenues received per student at the 15 most generously subsidized institutions.

1. California Institute of Technology --$289,154
2. Massachusetts Institute of Technology-$257,953
3. Johns Hopkins University ---$173,429
4. Stanford University--$125,196
5. U.S.Military Academy--$114,455
6. Case Western Reserve U. --$91,003
7. Columbia U. --$85,881
8. U.S. Naval Academy --$83,378
9. Yale University --$78,272
10. Washington U.St.Louis --$72.242
11. U. of Chicago --$71,350
12. Duke University --$67,515
13. Harvard University --$64,402
14. Yeshiva University --$59,577
15. U. of Rochester --$56,894

13 of 15 schools are so-called "Private" institutions, the sole exceptions being two of the service academies. Not a single "state" university is on the list (the top one, the University of Washington, ranks 22nd). Two of the schools of the above list are so rich their endowment spending would exceed $100,000 per student if they followed the five per cent rule required of private foundations.

The federal government is widening the gap between the rich and poor schools by the way it allocates funds. To be sure, the totals for a few schools are distorted because they run national laboratories (e.g., the Jet Propulsion Laboratory) for the federal government under contract. And most of these schools are receiving large sums for medical research. This may be well spent money --although how one can say that definitively, we don't know.

Each of these schools collects hefty overhead fees --usually around one-half the amount of direct research support. My guess is that Harvard gets at least $20,000 per student in overhead support, while Slippery Rock State College gets far less than $1,000. Which school is more "private"? Is Harvard really vastly more deserving of administrative (overhead) support than Slippery Rock? Interesting questions, deserving good answers.

Another question: if we separated research programs from the instructional activities by creating separate research institutes, would it help or hinder society in its quest for both disseminating and creating knowledge?

Richard Vedder directs the Center for College Affordability and Productivity, while James Coleman is an undergraduate at Ohio University and a CCAP student associate.

1 comment:

Duniway said...

Three comments. First, looking only at Federal dollars is misleading. State colleges are more heaily subsidized by the government than private institutions, but most of that subsidy is coming from state funds.

Second, the issue of federal aid being based on need, which is defined as total cost of attendance minus family ability to pay does make more federal aid available at higher priced colleges. If federal aid was based on a standard or maximum college cost instead, individuals might have more incentive to choose lower cost schools.

Third, college costs are likely to rise faster than the rate of inflation as long as students choose higher cost colleges over lower cost colleges. When it makes sense to look for a lower cost college option is too complicated a topic to address in a comment. But you can find food for thought at, which is the companion website to my book, Winning the College Game: How to find, get into, pay for and thrive in a great college.