WASHINGTON—The nation’s college and university endowments—often used to fund scholarships and professorships—had strong growth last year, according to a report released Tuesday. That’s a bit of good news for higher education institutions under pressure to hold down tuition costs amid some enrollment declines.
More than 80 institutions reported endowments from the 2013 budget year valued at more than $1 billion. Overall, endowments returned an average of 11.7 percent. A year earlier, returns had held relatively steady, with a less than 1 percent decline, according to the analysis by National Association of College and University Business officers and Commonfund using data from the 835 colleges and universities that agreed to participate.
Endowments, managed as permanent assets, are especially important for large private schools. Often money donated to them is designated for certain uses and drawing them down generally doesn’t translate to lower tuition prices. Survey participants said, on average, that nearly 9 percent of their institution’s operating budget is funded by the endowment.
Among the endowments, the highest performer was Harvard University with $32 billion. That was followed by Yale University, $21 billion; University of Texas system, $20 billion; Stanford University, $19 billion; and Princeton University, $18 billion.
As tuition prices have increased, there has been pressure on colleges and universities to release more endowment money to help students pay for college. Last year, about two-thirds of endowments distributed more money than a year earlier, with much of that going to scholarships, said Verne Sedlacek, president and CEO of Commonfund.
Sedlacek said it used to be that only the larger endowments were fundraising, but now endowments of all sizes are doing so.
“Everybody is either raising money or thinking about raising money,” Sedlacek said.
In the fall, tuition prices on average continued the upward trajectory they’ve been on, but the increases were more moderate, the College Board has said. Increases are often blamed on the substantial decline in state aid to public colleges and universities.
The higher education community is feeling heat from the Obama administration to curb costs and improve graduates’ outcomes because of a ratings system under development that could potentially use data such as an institution’s graduation rates and graduates’ salary. Meanwhile, a reduction in the number of high school graduates has contributed to a decline in the number of students going to college. The National Student Clearinghouse reported 19.5 million students were enrolled last fall compared with a little more than 20 million two years earlier.