The University of Chicago is in crisis. Under extraordinary financial strain, it has diminished its faculty-student ratio and hired hundreds of “lecturers”: teachers whom it pays little and whom it does not expect to do research. It has deliberately driven down the percentage of undergraduate tuition that it devotes to actually teaching undergraduates. This summer it proposed to “merge” (read: “close”) departments; send some students online—or perhaps put them on buses—to study at other institutions; and teach some languages via ChatGPT. It is freezing budgets, closing academic units, slashing doctoral education, and contemplating the use of restricted endowment payouts to support functions not covered in the gift agreements.
The effects of these changes—and a further expansion of the undergraduate population already in the works, with no expansion of faculty—will be dire. Fewer subjects will be taught; classes will be larger; students will have less contact with faculty; more teaching will be done by people with no formal contact with research.
It is tempting to ascribe this betrayal of implied contract—with students, parents, and donors—to the pressure that the Trump administration is placing on higher education. If this were in fact what is happening, the university’s actions would be lamentable but necessary.
But that would be false. The effect of the administration’s moves on university operations—in Chicago’s case—is likely to be small. The true problem is the debased ideals of the university’s leadership and the extraordinary debt it has taken on in pursuit of them. The university’s trustees and leaders view it preeminently as a tax-free technology incubator, and its debt load is so great that it is abandoning ideals it once held dear in order to sustain that goal. We are simply choosing not to be a university.
“No peer institution has borrowed so much in relation to its assets.”
The story of the University of Chicago is in one sense unique. No peer institution has borrowed so much in relation to its assets; none spends remotely as large a percentage of tuition on servicing debt. Despite gifts and the surge in the stock market, the University’s endowment has actually shrunk under its current president from 2021 to 2024 because it has been liquidating assets to mask the size of its deficits.
But its story also distills forces and trends in American higher education that are corroding ideals, and wasting money, throughout the land.
America’s leading research universities distinguished themselves both in their commitment to an extraordinary ideal, namely, the creation and questioning of new knowledge in every field that touches on human existence, and in their commitment to integrating persons at every stage of learning into this process. One way Chicago and all research universities actualize these ideals is by placing undergraduate students in the classroom with faculty who perform research. Students at these universities learn from people who exist at the cutting edge of what we know.
In a 2009 strategic plan, Robert J. Zimmer, the then-president of the University of Chicago, confessed to the university’s trustees that the faculty-student ratio was lower in 2009 than it had been in 1972. This decline, Zimmer averred, “threaten[ed] our core ethos as a University that places a premium on rigorous inquiry.” And yet, after a brief amelioration, the faculty-student ratio at the University of Chicago has gotten worse nearly every year from 2011 to 2024, for the very simple reason that the University of Chicago placed itself so deeply in debt it could conceive no other way out. (There were plenty of ways out.)
“This has not been an accident.”
This has not been an accident. In 2016 and 2017, the university was running deficits so large it held a fire sale of university buildings and expanded its undergraduate population (again), in order to draw in more tuition. But the university did not intend to give students after 2017 the same education that students had received in the past. Instead, the then-provost of the University of Chicago, Daniel Diermeier—now Chancellor of Vanderbilt University—told the university's trustees that if one held the numbers of tenure-stream faculty constant, “the marginal cost of adding these students would be fairly minimal.” He estimated that increased cost at 10 to 20 percent.
In other words, if we deliberately changed the way we teach—but did not tell the students we were doing this—we could skim off at worst 80 percent of their tuition for purposes other than their education, and ideally as much as 90 percent.
The reason today’s Dean of Humanities wants to send students to other universities to learn subjects that she would like to cancel, or use ChatGPT to teach subjects tomorrow that humans teach today, is to drive the “marginal cost” of teaching students from 20 percent of their tuition down to 10 percent. Future applicants should know that the University plans a further expansion from around 7,400 students to 9,000 ... and has simultaneously announced an intent to hold the number of research faculty constant. Perhaps we can drive the cost of educating students below 10 percent? Perhaps that is what the president and provost and dean of humanities mean when they say that we need to position ourselves as leaders in the field.
If the history of debased ideals and betrayal of implied contract at the University of Chicago does not commence with Donald Trump, when does it begin? What are its causes? I focus on the two most important ones, the Bayh-Dole Act of 1980 and the stunning change, which commenced largely in the same era, in which America began to conceive of education as a private, personal good, to be measured solely in terms of increase in lifetime earnings.
The Bayh-Dole act provided for the private licensing of discoveries made during federally funded research. It was motivated by a concern that discoveries made in the preceding decades had not been fully exploited because the lack of opportunity for private gain deprived the system of incentive for development. In short, it granted intellectual property in discoveries made during federally funded research to the universities that hosted the projects and the people who did the research—not, as before, to the people of the United States, who funded that research.
In all fairness, it should probably be said that the Bayh-Dole Act achieved in some narrow sense what it intended. In 1979, on the eve of Bayh-Dole, American universities received only 264 patents. Within a quarter of a century, applications for patents by universities had increased to more than 7,500, thousands of which were licensed to private corporations for commercial application.
But the Bayh-Dole act has also fundamentally corroded policymaking at universities. Within perhaps a decade of the act, universities had begun all to pursue each latest fashion in applied science, hoping to score a windfall via licensing that would pay for all: from biomedicine, to imaging, to molecular engineering, to quantum computing, to AI. What could go wrong?
For one thing, building facilities and competing to hire the same experts in order to do the same projects at the same time as one’s peers is incredibly expensive. The University of Chicago has now borrowed $6.3 billion, more than 70 percent of the value of its endowment. The cost of servicing its debt is now 85 percent of the value of all undergraduate tuition. (This is not normal. No peer institution has a debt-to-asset ratio greater than 26 percent. Perhaps that is one reason why Chicago’s tuition is so high and yet it wants to spend so little on education?)
But universities as non-profits are fundamentally not suited to competition of this kind. If one plots the trajectory of spending on computer science at the University of Chicago in the decade leading up to 2011, and then counts up the additional spending on buildings, materiel, and operational costs through 2024, the total comes to hundreds of millions of dollars. During that time, despite that additional investment, the ranking of the university in computer science has declined from 40th to 56th.
But it’s worse than that. For one thing, the employment model of the research university requires that the best researchers receive contracts effectively for life. So as the university’s leadership flits from fashion to fashion, for its own glory and the university’s never-realized profit, universities can rarely shed the costs of the last misadventure.
And for another, in the process of seeking to maximize its gain from technologies discovered in its labs, the University of Chicago now does more than participate in licensing. It actively invests in start-ups by its faculty, millions of dollars in dozens of investments. Quite apart from the fact that these investments have mostly been a bust, the practice raises serious questions. Can a university make rational decisions about the value of a given employee when it co-invests in commercial ventures with that employee?
“Is the university functioning as a kind of tax-free pass-through organization?”
And more seriously, where does the money come from? Is the university driving down what it spends to educate its own students so that it can use unrestricted funds to invest in startups? Or is the university functioning as a kind of tax-free pass-through organization? Does it receive third-party money that it invests as a tax-free enterprise, to the benefit of other investors in the same start-up?
Spending as little tuition as possible on educating students, and (instead) investing in start-ups ... This is why I say the University of Chicago’s leadership and trustees run it as a tax-free technology incubator. All of which raises the question, whether an operation of this kind deserves the status of 501(c)(3) charitable organization.
Over the last half century, American conservatives have argued that higher education is a private good. On this reckoning, its value lies exclusively in the additional lifetime earnings that it affords to graduates. For this reason, the argument ran, students ought to pay for their own education via tuition or loans and support for universities through state appropriations should be cut, and cut, and cut again.
“American conservatives have argued that higher education is a private good.”
And for a very long time, the leaders of American universities went along with this, whatever they might say over their cups. One reason to do so was that it supported their own ethical commitments—and financial longings—regarding access. We could serve social justice and the bottom line by increasing forever the range of people who ought, for their own good, to get another degree.
But the effects of this ideology have been disastrous in every conceivable respect. For one thing, neither education in general nor any specific degree should derive its value from the narrowest vision of professional usefulness. The goal of education is to create people as lifetime learners, seekers, and questioners. And the fact that higher education takes place in a community—that we experience learning as an enterprise conducted amidst other experts with whom we disagree violently but whom we recognize as committed to a shared project—is absolutely fundamental to what we do.
And of course, just as universities themselves have nearly always failed to make money as they flit from fashion to fashion, so students who were deceived into thinking of higher education as a kind of pre-job are now discovering that the path from coursework to salary is fraught: economics PhDs are going unemployed; finance and computer science BAs have higher unemployment rates than do Art History graduates; coding is a path to Chipotle.
The present landscape, in which AI is coming first for the supposedly high-paying jobs that involve rote forms of data analysis or ground-floor coding, recalls an earlier moment in the history of the University of Chicago. In 1982, a committee at the university published a report on the history and future of doctoral education. It is a remarkable piece of analysis and offers a stunning affirmation of the ideals of the university. It allows that interest in doctoral degrees in STEM fields had plummeted so far that one could fairly pose the question of whether these should be sustained as fields of advanced education at all. The answer, according to the report, was emphatically yes, because that was the duty of the university—to sustain inquiry and training into all things that touch on human existence, both for them in themselves and because we as leaders of universities cannot possibly know the fashions and needs of the future.
In fiscal year 2024, the University of Chicago had revenues of $3.027 billion. Why not teach undergraduates according to its historic standards? Why decimate the humanities? Why “pause” doctoral education in fields that do not concern North America? Why disdain everything not written in English or which occurred before the modern world? Not because they need to; not because they are forced to. These are simply the expressed preferences of the University of Chicago’s leaders and trustees. Its rank is declining; its endowment is shrinking; its investments in programs and start-ups are questionable. They are succeeding only in destroying a great American university.