This piece was first published in The Phoenix‘s Winter 2026 print issue. Read the full issue at uchicagophoenix.com/magazine.

The University of Chicago rarely makes headlines. Insulated by its commitments to free speech and institutional neutrality, UChicago has mostly stayed off the radar of the Trump administration and major news outlets. That insulation is wearing thin, however. After years of leniency—mixed in with some praise—bad press is finally catching up with UChicago. 

Lately, The Atlantic, The Chronicle of Higher Education, Inside Higher Ed, The Chicago Tribune, Forbes, and other outlets have trained their sights on the University’s dubious finances. A chorus of faculty critics and disgruntled students has also piled on. 

It is undeniably a little ironic to imagine the world’s premier factory of Nobel economists struggling to make ends meet. But UChicago’s critics are not so amused. They argue that it runs deeper than this: that UChicago has burned through resources and is now gutting several core assets—doctoral students, academic departments, allegedly even entire fields of study.

At first, I agreed. On closer inspection, though, what has passed for analysis is largely back-of-the-napkin math. And it does not take an economist to see this.

Debt and Drama

What, exactly, is UChicago’s financial situation? The Wall Street Journal serves up a now-familiar refrain: years of “spending big on new labs, dorms and technology,” and now, a “financial reckoning.” Clifford Ando—a professor at the University and the unofficial lead skeptic—offers a more fleshed-out version, but with the same emphasis on debt, risk, and what he considers reckless capital spending. 

The University’s “debt load is so great that it is abandoning ideals it once held dear,” Ando laments in his Compact article. He goes further, claiming that 85 percent of undergraduate tuition dollars are now destined for interest payments; an alarming statistic—if it were true. 

While UChicago’s debt—about $5 billion excluding the medical center—is obvious, its connection to a present “crisis” is not. Interest expense was about four percent of total operating expenses, down from six percent in FY21. Outstanding debt has also been shrinking relative to the budget, falling from 169 percent of operating expenses in FY21 to 131 percent in FY25. Context is important here: UChicago is rated the same as U.S. sovereign debt. Even a downgrade, while undesirable, would only cost a few million dollars annually. 

Ando’s claim that 85 percent of your tuition is being siphoned off to interest is particularly misleading. Yes, interest payments equal roughly 85 percent of tuition revenue, but undergraduate tuition itself is a fraction, less than one-seventh, of the University’s total revenue. Interest payments are not, then, a zero-sum tax on undergraduates. Not that this would be possible anyway. The University spends far more on educating students than it collects from them in tuition. In FY24, UChicago brought in $611 million in tuition and fees, while paying $874 million in academic salaries and related benefits alone—that is, before a dollar is spent on buildings, libraries, advising, labs, and the litany of other instructional costs. 

Endowment 

To the extent that UChicago faces financial strain, it is not the product of unhinged “risk-taking.” Instead, we find a more plausible culprit in the endowment. From 2013 to 2023, UChicago’s endowment returned just 7.48 percent annualized, compared with 12.8 percent for the broader stock market and 10.8 percent for Ivy League peers. Far from being risky, Chicago’s investment approach is widely derided as “incredibly conservative.” 
A little compound math illustrates this. Had UChicago merely matched the market, its endowment would now be nearly $6.5 billion larger. Universities, of course, cannot simply “track the market,” but even by the realistic benchmark of Ivy League performance, UChicago would be nearly $4 billion wealthier today. That is roughly two-thirds of its outstanding debt. UChicago’s debt looks scandalous, but only because its endowment failed to recover this money. 

Chronic endowment underperformance also played a role in substantial deficit years, of which UChicago has many. Last year, Chicago’s endowment payout—funding issued to support day-to-day operations—totaled $625 million. Harvard’s exceeded $2.5 billion. While Chicago’s endowment is improving, the bottom line is this: 14 percent of university expenses were covered by this payout—that number is 38 percent at Harvard. Even a middling endowment showing could have eliminated the current deficit; far larger deficits routinely are, even at the aforementioned small liberal arts school. If there is a villain in UChicago’s “debt” drama, it is not aggressive borrowing, as critics suggest. It is the billions left on the table by a notoriously cautious endowment. 

It is also worth noting that, all of this said, the endowment is improving rapidly. The University of Chicago’s endowment logged a 10.2 percent return on investment in FY25—not bad at all. 

STEM and the Humanities

Still, Ando has other reasons to believe that irresponsible capital spending is driving university finances and that students have been forced into the backseat. He is blunt: “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.”

The endowment spent a mere $32 million endorsing faculty, student, and alumni start-ups. Mere, because this is insignificant in the context of an $11 billion endowment, roughly 0.3 percent. Not to mention that this is standard practice in higher education.

But the startup point is only one piece of Ando’s broader argument: his charge that UChicago has shifted priorities toward the “latest fashion in applied science”—and away from historic humanities departments—without delivering the promised payoff. 

Ignoring the pedagogical success of these STEM investments—which even Ando concedes—there is still little reason to believe that they have decimated UChicago’s finances. The balance sheet suggests the opposite: research growth, virtually all in STEM, has given rise to a major new revenue stream. In FY25, UChicago raked in $530 million in government grants and contracts, almost as much as it made via tuition. That number was barely $200 million, at the turn of the century, as UChicago was ramping up this so-called “misadventure.” 

To be sure, grants are often earmarked for specific purposes, but they also come with “indirect-cost recovery”— overhead that pays for infrastructure and administration. UChicago’s on-campus federal overhead rate is 64 percent. More research funding means more indirect-cost recovery—dollars the University can use to cover shared overhead, which means less pressure to treat tuition as the budget’s gap filler, and more room to spend tuition on students. 

Future Changes

The final charge levied against the University is one I have heard from many UChicago-ans. I have heard it repeated often: that, even setting the past decade aside, the next will see UChicago change dramatically. The University is changing, and this is rarely said in a positive light. 

When it comes to finances, the story takes a familiar form: that UChicago is ramping up its efforts to squeeze more money from students. It is letting the student-faculty ratios slip, leaning more heavily on untenured lecturers, sending students online, and possibly onto buses—and still, somehow, losing money. Once again, there is reason to be skeptical. 

Ando writes, “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…” This ratio, according to Ando, was 5.83 in 2011, then 6.13 in 2017, and 6.71 in 2023. There are a few problems with this. 

Ando’s “faculty-student ratio” is not the College’s student-faculty ratio. His series counts students per tenure-track faculty across the University, but for undergrads, the relevant metric is the College ratio, which has actually improved from about 6:1 to about 5:1. This is because while all tenure-track faculty sit somewhere in the University, being counted as “College faculty” requires an additional College appointment—and because, over this period, College-appointed faculty have grown faster than University-wide tenure- track hiring. Nor is there reason to think this progress will be effaced. The faculty has grown by 20 percent in the last decade, and the latest changes only reduced the hiring rate by 30 percent. 

Ando’s claim that the University is “looking into” teaching via LLMs and busing students to other schools is the most misleading of all. The “Languages Working Group Charge” he cites has been widely mischaracterized. It does not propose replacing instructors with AI; it simply poses open-ended questions about peer partnerships and the use of technology to support instructors. No faculty leaders, program directors, or senior administrators have answered these questions by proposing substituting language faculty with LLMs. Moreover, “partnerships” with peer institutions are not new: since 2015, UChicago has participated in CourseShare, which allows students to take less-commonly-taught languages across partner universities. 

So no: UChicago is not siphoning off your tuition, nor is it poised to do so. Ando’s claim that “85 percent of tuition goes to interest” is designed to alarm you, and it works, but it does not survive serious scrutiny. Insofar as the University has a real financial problem, it is not the product of a debt-fueled binge spent chasing STEM fads. The real story is duller, less sinister, and—unfortunately for me—less headline-worthy: a decade of weak endowment performance and a steady expansion of staff. If there is a legitimate debate to be had about UChicago’s direction—about the humanities, about what counts as an “investment”, about students—that debate must, at the very minimum, begin with the right numbers.