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Dartmouth’s Squanderlust

To date we’ve looked in some detail at spending at Dartmouth and Brown, and we’ve seen in the past that Brown’s tuition is lower than Dartmouth’s and that Brown is more forthcoming with financial aid. Now it’s time to look at where the money comes from.

In addition to tuition revenues and research grants, the schools’ most substantial income comes from payouts from the endowment and annual gifts from alumni and other donors.

In 2013, Brown drew out $125,858,000 from its endowment (4.72% of its $2.67 billion endowment) to fund operations, and its generous alumni contributed $70,505,000 to the school, for total receipts in these categories of $196,363,000.

Brown Revenue 2013.jpg

Dartmouth drew $183,816,000 from its endowment (5.25% of $3.48 billion) to fund operations, and its even-more-generous-though-less-numerous alumni contributed $90,332,000 to the College, for a total of $274,148,000.

Dartmouth Revenues 2013.jpg

Comparing those two figures, Dartmouth used $77,785,000 more income for its annual operations from its endowment and gifts than Brown, even though Brown has 36% more students than Dartmouth.

On a per student basis, Brown’s 8,454 students were subsidized by endowment distributions and giving to the tune of $23,227 each; Dartmouth’s 6,144 students were supported by $44,620 each. In short, Dartmouth’s administration had $21,393 more per student to work with than did Brown’s leaders.

Yet, to repeat, tuition and financial aid at Brown are more generous than at the College. One would think that the administration at Dartmouth would use some of this treasure to support students in Hanover. But, no. Successive Presidents, especially Jim Wright, had other priorities. Why support Dartmouth students and faculty when there is a bloated bureaucracy to be fed?

Will Phil do anything about this sad state of affairs?

Addendum: The Wall Street Journal ran a piece the other day on the increasing anger at state schools on the part of students whose tuition more than covers the entire cost of their education — with the excess going to fund financial aid for other students. Such “set-asides” do not occur at Dartmouth. As we saw recently, the annual cost of a year at the College is well over $100,000/year, far in excess of the $60,201 cost of tuition, room and board, and fees. The difference is provided by the endowment and alumni giving, as we saw above.

Addendum: An alumnus, who recalls for me that money is fungible, writes in with an admonition concerning the above addendum:

I admit that I am not sure whether your addendum that Dartmouth imposes no set-asides because the average cost per student exceeds tuition, room, and board was a test, a joke, or a lapse in your usual financial acuity.

But whatever the excuse, yes, Dartmouth definitely compels the middle and upper-class students to subsidize the rest. And it costs them a lot.

The College says that it’s average grant is about $42,000. About half the students get grants, meaning about half do not. Last time I looked, about half of this financial aid comes from funds restricted to this purpose.

So that means each year, the half of the student body not getting a grant is paying for the half of the grants (about $21,000 each) not paid from the restricted endowment. That’s the set-aside. Worse, every time tuition, room, or board goes up, this subsidy must go up because those who could not afford to pay before the price increase still can’t afford to pay more (and, in fact, a large increase will create more grant receivers).

I don’t deny that for the hedge fund guys and the private equity guys who are sitting on hundreds of millions or billions of net worth, this $21,000 a year is a pittance. It’s the middle class family or student who gets the sucker punch from this because they have to borrow this extra money.

PS: I do appreciate that having less wealthy students in the student body adds immensely to the educational experience for everyone. Perhaps that’s worth a $21,000/year surtax. Perhaps.

PPS: I also realize someone can play shell games here, as they often do, and claim that it’s the income from the unrestricted endowment or the unrestricted alumni fund. If that delusion makes them feel better, so be it.

The only argument that one could advance in the face of the notion that any student who pays more is always subsidizing any student who pays less is that the Dartmouth College Fund, to which almost half of all alumni contribute, has as its stated goal the financial aid of needy students — and perhaps such monies would not be given by alumni if they were not intended to this end. That said, last year at the College, financial aid amounted to $124,223,000, a figure well in excess of the amount of money given by alumni: $90,332,000. Touché.


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