Someone made this comment:
“Private U[niversitities face a lot of pressure tor retain students, who then become alums and contribute to the school. A lot of pressure to retain tuition paying students”
Here was my response: (I should have qualified this statement by adding that some private schools do have financial problems.)
“I don’t see pressure at private schools. I see ambition. I see a desire to rise in the US News rankings. But financial worries? I think not. Look at Duke, as one example. Their investments (not their total endowment, just the investments) grew from $3.7 Billion in 2002 to $9.1 Billion i n2011. Princeton’s annual return in the same period averaged 9.8% . Princeton’s investment earnings in 2011 were $3 Billion. Their operating expenses were $1.3 Billion. They did use $700 million of the investment earnings to cover some of those expenses, and they gave a lot of financial aid. But Princeton actually stands out as a school with integrity. I’m sure they realize that they can afford it. But, even so, they publicly admit that they consider educatiionally adverse actions based on “business”. Here is an example.
Last year their new predident formed a committee to see if they should inflate their grades like Harvard and Yale are doing. The reason? They were worried that not giving out over 60% A’s like Harvard and Yale, fewer students were interested in Princeton. (In spite of this reputation, their acceptance rate is about 8%.) They are also worried that their students might have trouble competing for grad school. So they have started asking their customers what their opinion is. (Custumors = Students)
Can you imagine a S&P asking for input from their customers about whether they should increase the ratings so that the customers would look better to inverstors? Alan Blinder wrote in his excellent book that he thought that was as bad as asking students to pay for their grades. H.mmmm”
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