I will write more about actual physics soon, but it has been a very busy period with other commitments. In the meantime....
Princeton did something remarkable this week. They raised their graduate stipends across the board to $40K/10 months, roughly a 25% increase. That's already quite impressive, but the really wild change is less readily apparent.
It's important to understand how graduate students are paid on research grants in the US. Grants pay for the stipend + indirect costs ("overhead") on the stipend + tuition remission. "Tuition remission" is some effective graduate tuition rate. Indirect costs ("overhead") go to the university and are meant to pay for things like keeping the lights on and the buildings air conditioned and the cost of running the office that does the financial reporting, etc. Indirect cost rates are set by negotiations between the university and the US government. Rice's indirect cost rate right now for on-campus research is 56.5%.
Tuition is trickier. These are funds meant to cover the university's cost of graduate education. Different universities do different things with that money they take in on grants for tuition remission - usually it covers things like support for first-year grad students, part of the TA salary pool, etc. In STEM doctoral programs in the US, students do not pay tuition out of pocket. It is either waived by the university (for incoming students supported on fellowship or TA, for example) or paid through research grants for students supported by external funding. (Note that this is money that doctoral students never actually see - that's why it's dumb that every few years (here is the 2017 example) someone in Congress tries to argue it should be taxed.) It's unclear what a true fair value is for doctoral tuition; grad students are much more independent than undergrads, and when they are doing purely thesis research it's not clear how to think about their educational costs. Rice has a "tuition remission rate" of 38.5%, rather than a fixed dollar amount, with the idea that this strikes a balance between beginning students taking a lot of courses and later students working only on their thesis. That means that if our graduate stipend is $S, then on a federal grant the total cost of a doctoral student at Rice is \( (1.565 + 0.385)\times\) $S.
Anyway, along with raising stipends drastically, Princeton also cut their graduate tuition rate to zero (!). That means that a graduate student at Princeton will cost less on a grant now than before, even though they have jumped up stipends by 25%.
This is pretty radical. The university is going to take in many millions of dollars less on grants to do this, but given their roughly $38B endowment, they can afford it. Even if they took a $40K hit per grad student per year, the $100M of "lost" income would only be 5% of their operating budget. I assume that this also plays well against the criticism that elite institutions don't spend enough of their resources. No idea what the implication is for, e.g., their professional masters degrees in engineering, where they surely charge students (or their employers) substantial graduate tuition.
The long-term effect of this will be interesting and complicated. I would think that STEM faculty at other comparably wealthy universities will turn to their administrations and ask why students are so much cheaper on grants for Princeton faculty. This zero doctoral tuition approach would require wholesale restructuring of financial models at most US universities.
Update: President Eisgruber has publicly announced the tuition change here in his state-of-the-university address.
20 comments:
I'm already asking that question.
I already know the answer.
Old and cynical over here. What's the catch? 5% of any operating budget is a non-negligible amount. Can't believe this will not be compensated somehow.
Anon, their endowment grew from $25B to $38B in one year. Assuming the standard 5% annual distribution, that increased their annual operating capital by $650M/yr in the absence of any other changes. Between that and the fact that this will give them improved competitiveness in grants as well as student+faculty recruiting, and it will likely reduce some external criticism that elite universities don’t spend enough of their resources, it looks like they probably won’t miss it much.
62% F&A rate for an institution with a $38B endowment is an interesting concept from a taxpayer's perspective. (Don't mean to single Princeton out, there are plenty others in the same bucket.)
This is incredible. I hate to be that guy, but do you have a link about this? The Princeton website doesn't seem to say that they nixed graduate tuition, as well.
Anon@3:57, that is not on the web (yet). I got the information from two friends on the STEM faculty there. I presume that they will issue an updated version of this document at some point: https://orpa.princeton.edu/sites/orpa/files/revised-rate-sheet.pdf
Amusing that the graduate income is now the same as some postdocs... which is also to point out how poorly paid postdocs are.
This will be a huge edge for Princeton compared to other universities. Unfortunately, only very very well off universities will ever do this. For public universities I can't see how they'd manage.
@Anonymous 11:36AM
Just two comments to add perspective:
1. The F&A rates at universities are set by Federal rules, which are based on the size of the university, the number of square feet of lab space, and other demographic data. Neither public nor private universities have any freedom to adjust those numbers. We are stuck with them.
2. One might find it illuminating to compare to F&A rates at non-academic research labs, e.g., corporate research labs. Their rates are typically MUCH higher. When I was at Bell Labs, the charged overhead rate was well in excess of 100%. In fact, despite the F&A, universities are by far the cheapest place to do research.
As Douglas states, this is enabled by the massive increase in the endowment, which many institutions, public and private, have experienced in the past years. The question then comes where to invest the money. Hiring of super-star faculty, adding buildings, increase administration? Princeton seems to bet on increasing their reputation best by putting their graduate students first by giving them a stipend increase.
Tuition, as the article says is trickier. Given what tuition is used for, the money just comes from another pocket. The student does not see it either way and it seems at least questionable whether it makes grants (at least federal grants) more competitive if the cost is slightly reduced due to zero tuition. However, it will help PIs with limited funding.
I wonder if this puts Princeton in a good space to negotiate a higher overhead rate. If so, they might even get out ahead!
This might be a naive question because the accounting of universities is just very confusing...
My understanding of indirect costs was that they were added on after you already got the grant, so for example if you asked for $100 from NIH for your grant, and your institution has a 56.5% indirect cost rate, the institution would get $156.60, with the lab still getting $100 and the institute getting $56.50. That is to say, the indirect costs are related to the amount of money that they granting agency gives, but they do not "come out" of what a lab would normally get. Is that not also the case with Grad school tuition? If the tuition rate was 38.5%, does that come out of the funds that the lab would normally spend on research, or does it just change how much indirect costs the university accrues.
@DanM:
Regarding your comments: F&A rates are determined as a matter of negotiation, not by dictum. Leaving aside the arbitrariness in the determination of the F&A rates, which, for example, does not take into consideration an endowment in the billions, the highly problematic reality is that universities have staunchly refused to account for the distribution of dollars received through F&A with the excuse that "it is too complicated to do that." I do have an issue as a taxpayer when an unknown but sizeable portion of those funds have fueled, for example, the cancerous expansion of an administrative caste. The >100% overhead at Bell Labs was probably well justified. We have no way of knowing if, for example, Princeton's 62% really is a bargain.
Anon@3:07, your summary is correct. The grad tuition as described is like a differently categorized indirect cost. However, the funding agency does not pay indirect on top of the tuition. (There is no 1.565*1.385 term, if you see what I mean.)
Anon@4:57, I get what you want re transparency. I should point out, though, something I said in the linked post. If you ask any provost or vp for research, they will (infuriatingly) tell you that universities “lose money” on sponsored research. The true cost of running the research enterprise at a university is considerably larger than what is taken in through indirect costs. (I don’t have hard data on this, just the repeated claims of multiple provosts and vprs whom I’ve known over the years.) Basically universities subsidize the research enterprise. Of course, they do this because in some hard-to-convert-to-dollars way, research universities perceive that they get value out of research, in the form of prestige, status, enhanced donations, etc. If doing research was truly a losing proposition in global value, they’d stop doing it.
(An exception to that last point might be university patenting and tech transfer. The fraction of universities that actually come out financially ahead on patents and IP licensing is small, but some of them occasionally hit the jackpot, like Wisconsin and the patent on vitamin D in milk that set up their whole endowment, or Stanford getting a piece of Google. All universities play the game because there is a small but nonzero chance of winning the lottery.)
When I was on the job market several years back there was also casual discussion that WashU and USC were going to cover 2nd year of grad stipend(/tuition?) through some alumni gift or something - I never followed up to see if that happened. But I felt that could be a slight game changer in being able to recruit faculty and possibly students if it was not tied to a TA.
The sad thing is at my university the grad stipend works out to be <$15/hr currently (assuming 40 hr work weeks for 50 wks). So they're making less than any staff on-campus and what I offer for undergrads. Their work is valuable, but it's depressing we do not treat it as such in the name of "education."
Universities can follow The Princeton approach of raising scholarships provided you don't pay to publish ask too much money . The money paid to journals come from the funds allotted. Elizabeth Bik the winner of John Maddox award has raised this issue She wants an audit. This issue is huge issue. Here is reference below.
https://www.theguardian.com/science/2021/dec/01/misinformation-fuelled-by-tsunami-of-poor-research-says-science-prize-winner
I heard that graduate students are often equal or more expensive than postdocs. Is the tuition issue raised here the explanation for that?
Or you could publish in non-profit society journals.
It is almost certainly true that universities do not recover the indirect costs incurred performing sponsored research with their low rates. Now I am on the other side of the equation, performing sponsored research in private industry, where rates are substantially higher and yet we only barely recover our indirect costs. Universities, however, have endowments, student tuition, and alumni gifts which close the gap.
Anon@2:31, yes, grad tuition could be one reason a student could cost a lot on a grant, though it's hard for me to see how it could readily eclipse a postdoc unless the postdoc salary is particularly low and the fringe benefit rate for the postdoc is also low.
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