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You completely ignore the fact that STEM brings in research grants, which the university loots in the name of "overhead". I pointed this out also in a similar discussion. http://news.ycombinator.com/item?id=2799626

At every university I've attended, STEM grants are used to subsidize university operations.

Addressed here: http://news.ycombinator.com/item?id=3197531

(btw, it's an honor to cross swords. You're one of the people I most frequently CTRL-F on any threads even vaguely related to economics or finance)

Delirium makes interesting points, but he neglects the fact that universities wildly overcharge for overhead.

The university basically provides two services in return for overhead: commercial real estate and outsourced HR. They vastly overcharge for both, and the excess beyond market rates for these services goes directly into the university budget.

Some real numbers (I was the grad student): a professor gets a $50k grant which he spends on a graduate student to be a research fellow for 1 year. The grad student gets $20k + benefits (roughly another $10k).

The university pockets the remaining $20k for incidentals and overhead. You seriously think loading the grad student into the HR system and making 24 direct deposits costs $20k?

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