The Decline of Universities: A Fiscal Cliff Scenario

America seems to have blundered into a blind slashing of federal spending. Perhaps the most interesting aspect of this will be the cut in military spending, but many other impacts may be felt if a total seize-up of the legislative branch really occurs in this way.

I would like to suggest that one important consequence may be the collapse of the elite-university=pecking-order. If every federal grant is abruptly cut by 20%, the impact will not be felt by the universities themselves, but by the individual grant-holders, whose research programs will be thrown into chaos. Particularly junior scientists (postdocs, grad students) will most likely get the axe by virtue of some seniority arguments.

This selectively hits research at the most selective institutions, whose relative influence may decline abruptly.

Given the other pressures under which the modern university struggles, it is likely that smart people will abandon the near-elite educational institutions in the US, favoring those few, generally at the very top, making the transition to online open-source education platforms. The great mass of middling schools who have increasingly been cut out of the pie will possibly fare better. But those elite state schools (those which don’t actually own half the oil in West Texas anyway) that lived on federal grants will have their increasing irrelevance accelerated.

This is happening anyway, but the cliff may give a huge push in that direction.

Of course there are more imediate and spectacular effects possible. Meanwhile there are signs elsewhere that the financial stability that Obama and Geithner managed to glue together is coming apart:

Also the mayan calendar stops tomorrow:

Mayan-Weather-Forecast-630x472 (1)


  1. Unfortunately, everyone thinks that research grants benefit only the grant-receiver. All federal grants pay universities about 1/3 of the total cost of the grant for indirect expenditures to support research. These indirect dollars go into the general pot,not into a separate research account, so affect all the educational aspects of the university. Most of the indirect costs of research--the library, technical support, costs of maintaining laboratories--remain the same after the cliff. The university then loses not only support for young scientists, but also tuition for graduate students and the indirect support. This is on the order of 5% of the total university budget.

  2. Yes, I might have said that more explicitly. A decline in research weakens all research institutions, for exactly that reason, improving the relative position of the second tier primarily non-research schools.

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