2010 Fiscal Year College Endowment per Student*

College Search & Selection
21

<p>“Out of curiosity, can you provide a source for the 5% figure? I’ve never heard that term before. Also, where’s the proof that Michigan or any other state school spends all the money they receive from the state annually instead of investing it in financial assets?”</p>

<p>LDB, it is pretty common knowledge that universities limit spending of their endowment to 5% annually. Some universities are slightly conservative and use only 4% while others are more liberal and use 6%, but 5% is the norm.</p>

<p>"It’s tough to gauge the financial security and stability of state universities since they receive cash inflows from numerous sources and their money is tied up in the hands of so many independent organizations that it would seem almost impossible to me that UT Austin or Michigan can effectively streamline their financial resources to target their undergraduates specifically like a private school such as Emory or Northwestern can.</p>

<p>All these state schools have a lot more faculty members that they have to pay and a lot more facilities to maintain with their money. Private schools such as Duke or Emory don’t have nearly the capital expenditures that public schools like Michigan and Berkeley do."</p>

<p>Endowments are developped by donations that belong to the university and by how it maintains that endowment. The state has no control on a public university’s endowment. I don’t see how private universities use their endowments differently from public universities, other than the fact that they depend more on their endowments because they do not receive state funding. Believe it or not, Standard and Poor’s and Moody’s give universities bond ratings and the University of Michigan is one of just 7 universities in the US to receive perfect AAA (S&P) / Aaa (Moody’s) bond ratings. UVa and the UT system are the only other two public universities that receive the top ratings while Dartmouth, Princeton, Stanford and Yale are the only private universities to do so. Needless to say, Michigan’s financial situation is enviable to say the least. Duke’s ratings are also very good with AA+ (S&P) and Aa1 (Moody’s). </p>

<p>[U-M&lt;/a&gt; maintains top bond ratings](<a href=“U-M maintains top bond ratings | University of Michigan News”>U-M maintains top bond ratings | University of Michigan News)</p>

<p>[Duke</a> gets $500M in debt issue | The Chronicle](<a href=“http://dukechronicle.com/node/148325]Duke”>http://dukechronicle.com/node/148325)</p>

<p>“All these state schools have a lot more faculty members that they have to pay and a lot more facilities to maintain with their money. Private schools such as Duke or Emory don’t have nearly the capital expenditures that public schools like Michigan and Berkeley do.”</p>

<p>That’s correct. At the same time, schools like Duke and Emory do not generate nearly as much money as Michigan. Michigan generates $650 million annually from state budget appropriations and endowment, while Duke generates roughly $240 million. While duke is three times smaller than Michigan, its revenues are also three times smaller. All things are relative.</p>

<p>"A lot of this school’s endowment goes toward funding its large graduate programs that accomodate approximately 15,000 postgraduates as well as its undergraduate population of about 26,000.</p>

<p>The private school that has experienced the largest growth in endowment over the last 20 years only has 7,000 postgraduates and about 6,500 undergrads to take care of." </p>

<p>All is relative LDB. Michigan is three times larger than Duke, but generates three times as much income and spends three times as much. Both universities have healthy graduate programs and are major research institutions.</p>

<p>But the fact remains that in the last 20 years, no endowment has grown as rapidly as Michigan’s. It is not even close. Michigan’s endowment grew from under $250 million in 1988 to over $6.5 billion as of the last official report in June of 2010. Duke had the second largest growth in endowment, from over $300 million in 1988 to 4.8 billion as of the last official report in June of 2010. Last fiscal year, Michigan’s endowment grew by 9.4% while Duke’s grew by 8.8%.</p>

<p>“It also has no School of Art & Design, School of Music, School of Theater & Dance, Dentistry School, School of Architecture and Design, Pharmacy School, School of Kinesiology, etc. etc etc. to fund either.”</p>

<p>Those schools are nowhere nearly as expensive to run as schools of Business, Engineering, Law and Medicine. Combined, those minor programs you mentioned enroll fewer than 20% of Michigan’s undergraduate student population and costs the University less than 5% of the total cost of operation. </p>

<p>The key thing to remember when comparing endowment per student (a useless exercise if you ask me) at private universities to those at public universities is that major public universities, such as Cal, Michigan, UCLA, UNC, UT-Austin, Wisconsin etc… receive hundreds of millions of dollars in state appropriations annually. Those are the equivallent of billions of dollars in endowment (approximately 20 times the value of the annual state appropriation) and must be factored in.</p>

22

<p>“USNWR’s Financial Resources rating is flawed. They do not separate graduate research from the expenditures. This gives preference to universities with medical schools. Take UCLA and Cal…Cal has a bigger endowment and fewer students. The only difference is UCLA’s medical school expenditures are included.”</p>

<p>Excellent point UCB. UCSD and UCLA both include medical school spending in their calculation, as do most universities ranked in the top 20 for Financial Resources. Schools like Brown, Cornell, Michigan etc… do not include medical school spending in their figures, which explains why they perform relatively poorly. Schools with no medical schools, such as Cal, Rice and UT-Austin also suffer as a result. Yet another way in which universities use the very flawed USNWR formula to their advantage.</p>

<p>“The metric also rewards wasteful spending.”</p>

<p>Again an excellent point. Public universities have been very responsible with their fiscal policies while private universities have been spending unwisely. This explains why many private universities have been forced to borrow lately, causing them to be downgraded by S&P and Moodey’s.</p>

23

<p>

An interesting choice that leaves out several unusual schools. A few omissions:</p>

<p>$1,895,607 – Princeton – $14,391,450 – 7,592
$1,436,384 – Yale – $16,652,000 – 11,593
$1,419,680 – Harvard – $27,557,404 – 19,411
~$1,380,000 – Bryn Athyn – ~$300,000 – 218
~$1,000,000 – Olin – $335,558 – 334
$941,274 – Pomona – $1,458,974 – 1,550
$819,183 – Swarthmore – $1,249,254 – 1,525
$800,975 – MIT – $8,317,321 – 10,384
$794,579 – Amherst – $1,385,745 – 1,744
$749,309 – Grinnell – $1,264,834 – 1,688
$748,952 – Stanford – $13,854,115 – 18,498
$725,554 – Caltech – $1,545,429 – 2,130
$719,063 – Williams – $1,526,571 – 2,123
$668,647 – Rice – $3,786,548 – 5,663
~$596,000 – Deep Springs – $15,500 – 26
$562,305 – Wellesley – $1,306,796 – 2,324
~$530,000 – Cooper Union – $577,278 – 1,090
$500,802 – Dartmouth – $2,998,302 – 5,987</p>

24

<p>I can’t speak for other research universities, but in Harvard’s case, lumping its various elements together is a misleading way to look at its financial resources. Most of the endowment belongs to individual faculties, not the university. The business school is rich beyond your wildest imaginings; the Kennedy, Divinity, and Education schools occupy a different planet from the B-school as far as funding is concerned. If you’re looking at this from an undergraduate perspective, it’s the Faculty of Arts & Sciences that matters.</p>

25

<p>Financial Resource rankings count for a full 10% of the overall USNWR rankings. </p>

<p>This is significant. For example, it appears that Wake Forest’s 7th place ranking in this category is what pushed it into 25th overall ranking from the 30ish place it was in the last few years. Princeton’s 12th ranking could very well be the reason that it was dropped to #2 behind Harvard in the latest overall ranking (Harvard has a 3rd place ranking in Financial Resources this past year).</p>

26

<p>None of these metrics are useful–the “financial resources” of US News, the aggregate growth of endowments (which favors those who didn’t have large endowments in the first place), etc. The endowment per capita data is even more useless when it comes to the above figures; for example, Bryn Athyn college has a high per capita, but the spending power of $300m is far, far less than that of a multi-billion dollar endowment, since the former must build it up more in order to provide more expensive services and amenities (e.g. building a dorm). In the end, these metrics tell you about as much as the amounts of endowments themselves, on their own.</p>

27

<p>There is another thread on the Parents Forum “Endowment Woes and Liquidity Issues at Top Colleges” that correctly notes that endowments are more meaningful when viewed net of debt.</p>