Cornell in "pay-as-you-go mode"

Interesting Bloomberg article on how Cornell is piling up debt to pay for the New York tech campus and other expansion. Debt reportedly is just under $2 billion.

Ugh, beware bankers offering to sell you interest rate swaps.

I have to question the idea that universities should be expanding using "bricks and mortar". That seems so 20th century. I believe the whole undergrad business model is shifting radically due to the out of control cost structure of the conventional education we all received.

Would it have been more interesting to see Cornell expand into cyber space than to build in one of the most expensive places on earth?

Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

Towerroad

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

You might want to look into what Cornell is doing in the area of web-based education.

Towerroad

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

Fundamentally, I agree with you, and Cornell's got a bit of an uphill battle given its location (on the plan to be resolved via the NYC campus) and the paucity of its endowment per student relative to its peers.

But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

Kyle Rose

Towerroad

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

Fundamentally, I agree with you, and Cornell's got a bit of an uphill battle given its location (on the plan to be resolved via the NYC campus) and the paucity of its endowment per student relative to its peers.

But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

I think it is over $60k now. There are lots of types of classes that require lab time with specialized equipment. But, ask yourself what percentage of the classes that you took were this sort of course. My daughter '05 was a bio major. I think that no more than 1/2 of her classes had labs. My guess is that even for a science/engineering student 25%-50% of the content of their education could be delivered by alternative methods. In the end that means that some significant portion of the existing bricks and mortar could be deemed unproductive. The alternative is to admit more students who really only attend for perhaps 2-3 years. When you offer an exclusive premium product this could be a problem.

If the educational cost spiral is to continue unabated then the alternatives will take a greater and greater share of the business. In effect an ivy education will return to what it was before the Second World War, the province of the privlegded with a return to the Gentlemens C.

Towerroad

Kyle Rose

Towerroad

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

Fundamentally, I agree with you, and Cornell's got a bit of an uphill battle given its location (on the plan to be resolved via the NYC campus) and the paucity of its endowment per student relative to its peers.

But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

I think it is over $60k now. There are lots of types of classes that require lab time with specialized equipment. But, ask yourself what percentage of the classes that you took were this sort of course. My daughter '05 was a bio major. I think that no more than 1/2 of her classes had labs. My guess is that even for a science/engineering student 25%-50% of the content of their education could be delivered by alternative methods. In the end that means that some significant portion of the existing bricks and mortar could be deemed unproductive. The alternative is to admit more students who really only attend for perhaps 2-3 years. When you offer an exclusive premium product this could be a problem.

If the educational cost spiral is to continue unabated then the alternatives will take a greater and greater share of the business. In effect an ivy education will return to what it was before the Second World War, the province of the privlegded with a return to the Gentlemens C.

You're preaching to the choir, man. I agree completely and I think it's a good thing, but I also agree with Bill that the Ivies will be among the last to disappear (and as Al implied, among the first of the establishment to adapt). I wouldn't worry too much about Cornell's existence in the long run. Maybe I would worry about whether the name will be one of the few things left in common with our own experiences.

Kyle Rose
But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

Also keep in mind that generally speaking an engineering degree has a better RoI than the average Bachelors degree.

KeithK

Kyle Rose
But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

Also keep in mind that generally speaking an engineering degree has a better RoI than the average Bachelors degree.

Engineering degree: $50,000
Liberal arts degree: Priceless



It may simply be that liberal arts was, is , and ever shall be a consolation of leisure. Intellectuals from Plato to Jefferson have agreed that civilization and culture begin with leisure.

They had slaves to take care of all the crappy day-to-day stuff so they could get on with the serious business of thinking.

We have engineers.

Trotsky

KeithK

Kyle Rose
But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

Also keep in mind that generally speaking an engineering degree has a better RoI than the average Bachelors degree.

Engineering degree: $50,000
Liberal arts degree: Priceless



It may simply be that liberal arts was, is , and ever shall be a consolation of leisure. Intellectuals from Plato to Jefferson have agreed that civilization and culture begin with leisure.

They had slaves to take care of all the crappy day-to-day stuff so they could get on with the serious business of thinking.

We have engineers.

Of course in the "good old days" academics were supposed to live the life of scholarly poverty. My experience is that engineers often have the last laugh. Who after all would want a good job at good pay when you could have poverty.

Kyle Rose

Towerroad

Kyle Rose

Towerroad

billhoward
Among the 3000 4-year colleges, tThe Ivies are the brand that can best protect their price structure because of demand and quality. Cornell accepted 16% of applicants, Harvard 6%. The non-admits were mostly qualified. But the professors want to be paid like Ivy League profs and it costs money to grow Ivy and repair the damage the Ivy causes. Plus it has to compete with its peers, thus the new dorms and academic buildings.

No reason Cornell can't expand online so long as it doesn't dilute the traditional product.

It's also expanding its physical presence; middle East, Asia, New York City.

You are correct that as a preimium product the ivies have the ability to insulate themselves from change to some extent. However, the underlying model is broken. If more and more students take some or all of their courses on line then the pool of applicants for traditional brick and mortar, very very expensive, education will decline. The result will be that admission rates will rise as fewer applicants see the value vs the alternative models.

The reality is that those that run the ancient 8 came up through the brick and mortar system. That is the world they know, raise money by putting peoples names on buildings. The most dangerous time for an well established successful business is when the underlying business model is threated by new innovators and they refuse to adapt in time. That is my concern for Alma Mater

Fundamentally, I agree with you, and Cornell's got a bit of an uphill battle given its location (on the plan to be resolved via the NYC campus) and the paucity of its endowment per student relative to its peers.

But do keep in mind that it's the NYC Tech Campus, not the NYC Humanities Campus or the NYC ILR Campus: engineering is a discipline that will always require some kind of facilities that will, at least for the foreseeable future, benefit from economies of scale, so I don't think the same kind of "Why the F am I here spending $50,000 a year?" epiphany for most majors really applies to engineering.

I think it is over $60k now. There are lots of types of classes that require lab time with specialized equipment. But, ask yourself what percentage of the classes that you took were this sort of course. My daughter '05 was a bio major. I think that no more than 1/2 of her classes had labs. My guess is that even for a science/engineering student 25%-50% of the content of their education could be delivered by alternative methods. In the end that means that some significant portion of the existing bricks and mortar could be deemed unproductive. The alternative is to admit more students who really only attend for perhaps 2-3 years. When you offer an exclusive premium product this could be a problem.

If the educational cost spiral is to continue unabated then the alternatives will take a greater and greater share of the business. In effect an ivy education will return to what it was before the Second World War, the province of the privlegded with a return to the Gentlemens C.

You're preaching to the choir, man. I agree completely and I think it's a good thing, but I also agree with Bill that the Ivies will be among the last to disappear (and as Al implied, among the first of the establishment to adapt). I wouldn't worry too much about Cornell's existence in the long run. Maybe I would worry about whether the name will be one of the few things left in common with our own experiences.

Kyle - I think we are singing out of the same hymn book. However, I think the Ivies will be the last to adapt because their endowments will cushion them from economic reality longer than other institutions. I for one would like to see Cornell be the first Ivy to offer an on line degree. I think that is perfectly consistent with Ezra's vision which I think is as real to day as it was 150 years ago. That program might be a hybrid that still requires 2 to 4 semesters on campus but would be much more affordable.