Mounting debt poses threat to mission, Chicago warned

The University of Chicago faces rising debt levels more serious than those at any of its peer institutions, a result of overspending in the sciences that could cost the elite campus its traditional strength in the humanities, a professor has warned.

The situation at Chicago seemed comparable, said Clifford Ando, professor of Classics and history at Chicago, to that of West Virginia University, which recently caused angst by cutting 143 faculty positions – heavily in the humanities – to address an estimated $45 million (£36 million) budget shortfall.

While such cutbacks may not be imminent at Chicago, with an endowment worth about $10 billion, “what we have done, in the scale of our leveraged investments, what we have done in terms of borrowing or issuing bonds, is just outrageously beyond any peer institution”, Professor Ando said.

By his calculations, Chicago has a debt-to-asset ratio of 68 per cent, while no other institution considered “Ivy Plus” has a ratio higher than 30 per cent. “Our debt-to-asset ratio looks nothing like anyone else,” the professor told Times Higher Education. Those debt levels are so high that Chicago’s annual interest payments of roughly $200 million absorb about half the $60,000 average paid by each of its 7,600 undergraduates, he said.

Such figures aren’t entirely a surprise. When Paul Alivisatos took over Chicago’s presidency in 2021, the institution acknowledged facing budget deficits and a declining endowment.

A key problem, Professor Ando argued, was the university’s creation of and heavy investment in its School of Molecular Engineering – founded as an institute in 2011 and later expanded into Chicago’s first school of engineering.

But more fundamentally, he argued, Chicago is joining the trend across US higher education of prioritising academic fields that show evidence of high starting salaries for graduates, and de-emphasising majors that appear less remunerative, regardless of whether they actually are.

That emphasis on job market value “is pernicious to the broader meaning of the idea of a university”, Professor Ando said.

In response, Chicago said that its budget situation was improving and that it was growing in the humanities, with a 10 per cent gain in tenure-track faculty since 2010.

“We chose to operate with annual operating deficits for a period of time, and this proved to be a successful strategy for students and faculty across the university, creating new disciplines even as areas of historic strength were supported,” the university said. “We are confident that in the coming years we will continue to thrive while addressing the operating shortfalls.”

West Virginia University’s president, Gordon Gee, has faced similar complaints, from within his institution and beyond, about putting too much emphasis on job training and paying too little attention to the overall value to students of a college education and the accompanying experience. He rejected such concerns, saying universities have to pay close attention to student demand. “We’re looking to create a much more modern approach to how education focuses itself,” Dr Gee said.

Chicago’s pursuit of molecular engineering, in many aspects, “has been remarkably successful”, Professor Ando acknowledged. But heavy spending in one area was endangering others that were just as fundamental to overall human well-being, he said.

“We should be realising, or actualising, a kind of noble version of the idea of the university at the University of Chicago,” he said. “If America’s elite research universities can’t do this, who will? The University of Chicago, both by preference, and by reference to this debt crisis, is nudging us in the same direction as everyone else. And that’s depressing.”

paul.basken@timeshighereducation.com