New figures on university endowments confirm it’s not just the “haves” and “have nots” in academe these days. Beyond the great majority of colleges, there’s a growing group of the newly rich schools, and at the top of the heap a tiny cadre of ultra-wealthy institutions.
The latest endowment figures from NACUBO, a college business officers’ group, highlight the growing prosperity but also the stratification among elite universities. That development is creating tension.
There are now 76 colleges and universities with endowments that have passed $1 billion including 16 new members of that club like Georgetown and the Universities of Oklahoma and Missouri.
But five at the top each have nearly $6 billion more than any school outside that group: Harvard ($34.6 billion), Yale ($22.5 billion), Stanford ($17.2 billion), Princeton ($15.8 billion) and the University of Texas system ($15.6 billion). The survey marks the end of the most recent fiscal year, which at most schools ended last June 30, so the numbers don’t reflect the recent downturn in the stock market.
Among them, Harvard’s endowment the largest overall expanded by an amount last year that’s more than Ivy League rival Cornell has altogether. Princeton now has over $2 million in the bank for every student. Stanford raised nearly $1 billion during its last reported fiscal year alone.
There is a “tremendous dispersion in wealth from the people right at the top to the lesser ones,” said Dr. Ronald Ehrenberg, an expert on higher education economics at Cornell. “It falls off very, very quickly.”
The figures come at a time when the advantages of that small group of superrich schools have been a contentious topic.
There’s been growing criticism from the public and some in Congress that the wealthiest schools should be dipping deep into their savings to hold down prices. But when Harvard and Yale recently announced they would do so by boosting aid for families earning well into six figures, they were sharply criticized.
Other schools complained they would be forced to keep up by spending more on aid for wealthier students and less to help students who need it most.
Harvard President Drew Gilpin Faust added to the tension by getting into an exchange with Big Ten provosts over whether ambitious science research should be left to the most elite universities. Some objected to her suggestion that it would be better for some institutions to focus on social sciences and humanities.
There’s also rising resentment in higher education over faculty raiding, with wealthier colleges offering salaries that poorer schools can’t possibly match.
It’s not just the very richest schools prosperous public universities raid poorer peers, too. Some argue there’s a public benefit when talented scholars gather in one place and collaborate. But there’s also a cost when the schools that educate the most people lose their stars. Harvard now pays full professors on average about $177,000, compared to about $106,000 at the average public research university.
“The publics lag woefully behind the prestigious privates not only in terms of faculty salaries, but in terms of their ability to attract the best graduates students and pay them competitive stipends,” said Mark Yudof, chancellor of the University of Texas.
Yudof says he doesn’t mind competition, and his system is better off than most its $15.6 billion endowment is the largest by far of any public university. Texas leads a group of public institutions like the universities of Michigan ($7 billion) and Virginia ($4.3 billion) that have achieved real financial clout.
But for a big university, the money doesn’t go as far. Texas’ funds support 300,000 students, more than 10 times the number at schools such as Harvard and Yale.
The NACUBO survey reports colleges earned on average 17.2 percent on their investments last year, with schools with $1 billion or more returning 21.3 percent, compared to 14.1 percent for schools under $25 million. Those figures are comparable to a similar survey released earlier this month by the Commonfund Institute.
Overall, institutions spent on average 4.6 percent of their endowments to support their operations, about the same as last year.
Sen. Charles Grassley, the Iowa Republican who has pressured wealthy colleges to spend more, called on them to do just that in a statement responding to the survey.
“Based on the new numbers, a 5 percent payout requirement wouldn’t break the bank,” he said. “It seems a lot of these schools could go beyond 5 percent and consider a payout commensurate with their rate of endowment growth over time. That would offer real relief for low- and middle-income families.”
David Ward, outgoing president of the American Council on Education, an umbrella group that lobbies for colleges in Washington, said he worries the focus on the wealthiest schools distracts the public. In fact, most colleges are much more hand-to-mouth, and state funding will likely take a hit this year with the economic slowdown.
“I agree the anxiety is there,” he said. “I think the magnitude (of wealth at the richest colleges), the scale is sometimes exaggerated because of the visibility of the schools. That doesn’t mean it doesn’t have a perceptual impact that’s very powerful. That’s what we’re dealing with.”
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