Why is the head of a university called a Vice-Chancellor?

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Why aren’t they called “Chancellor” instead?

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Because the Chancellor is a fairly ceremonial position / a governance position. In the british model (which is where the name comes from), chancellor’s usually basically the chairman of the university’s governing council (senate), whereas the VC is the actual person in charge of university operations. It’s analogous to the difference between Chair of the Board and CEO of a company, with the chancellor being chair of the board and the VC being the CEO. Some universities dont have the same kind of Senate like body, but retain the name VC for the effective managing director anyway.

The Chancellor, in UK universities at least, is often some figurehead; a minor royal or other aristocrat. (The big universities sometimes have major royals.) These people do the pomp and circumstance but have no real dealing with university business.

That business is dealt with by the Vice Chancellor who acts as the head of the university in their place.

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The situation is similar to the position of the Queen versus that of the Prime Minister. The Chancellor, like the Queen, is the nominal supreme person but in practice their role is largely ceremonial. The Vice Chancellor, like the Prime Minister, is the person with the real power who makes the decisions and run things.