<p>Where did you get the $11 b cash call figure? Is this in one year or spread over many years?</p>
<p>Amherst is going to add more students. The endowment per student is going to decrease at Amherst because of this. They are not going to add more professors to keep up the student-faculty ratio. They are doing this to bring in a little more money.</p>
<p>So, endowment per student drops. The school brings in more money. The school’s finances are better.</p>
<p>Lower endowment per student in this case means healthier financial situation.</p>
<p>So the idea of a lower endowment per student doesn’t necessarily mean a school is in worse financial shape.</p>
<p>I’m not talking about quality of instruction.</p>
<p>"In the near term, endowment chiefs may be wrestling with how to handle commitments to private-equity and real-estate funds. At Harvard, investment commitments totaled $11 billion on June 30, 2008; at Yale, $8.7 billion, and Princeton, $6.1 billion. These commitments are especially large relative to shrunken endowments. Harvard’s endowment could end this month in the $25 billion range; Yale’s is about $17 billion, and Princeton’s, $11 billion, after investment declines, yearly contributions to university budgets and new gifts from alumni and others. </p>
<p>One closely watched endowment-liquidity barometer is the level of existing limited-partnership investments – including hedge funds, private equity and real estate – plus investment commitments as a percentage of the total endowment. Yale and Princeton are thought to have some of the highest – that is, worst – ratios. The risk is that these endowments could become even more illiquid in the coming year."</p>
<p>Beyond a certain point, endowment per student quickly hits a law of diminishing returns. There is only so much educational quality that can be gained from the arboretum, 18-hole golf course, new climbing wall, underground parking garage, more pool tables in the student union.</p>
<p>:)…</p>
<p>That 18-hole golf course is absolutely needed as a physics lab. Of course squeezing it in Cambridge would be a little tricky. One thing is for sure though: there wouldn’t be any expenses involved in watering it. At least for the rest of the year.</p>
<p>:)…</p>
<p>My alma mater has the 18-hole PGA golf course. (#1 LAC) And the way they’ve thrown around money over the years is, to my way of thinking, rather distasteful. Poor little darlings, having to endure nine other students in their classroom rather than eight. Oh, the disgrace of it. Of course if they charged every student who could afford it what they claim it costs per student to provide what they provide, they likely wouldn’t have to change a thing. (While they’re at it, they could end this ridiculous “no-loan” business for students and families who could perfectly well afford it - if a graduate from #1 LAC can’t afford to pay back $20k in loans after graduation, maybe there is something wrong with what the school is actually offering.)</p>
<p>Meanwhile, there are a billion people in the world going hungry tonight. I’d gladly take a billion or so from the top 60 colleges, universities, and prep schools worldwide and end hunger.</p>
<p>
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<p>But, that’s what we are talking about here. Any college can be “in better fianancial position” if they fire a quarter of their professors. The whole point of having a large per student endowment is that it subsidizes educational and residential quality. That’s the reason that schools with large per student endowments have 1 faculty member for every 8 students.</p>
<p>I agree with you on one point. By borrowing $100 million in operating cash, Amherst is really playing a shell game that conceals the fact that their effective endowment is really $100 million less than it says on paper. They are concealing that their per student endowment has declined. </p>
<p>As for diminishing returns, we’ll see over the next few years. If any big endowment schools can escape without cutting academic programs, then there was fat in the budgets. The jury is still out on that. I’m seeing real cuts in real academic programs at every LAC but two (or maybe three – I haven’t been able to get that much info about Pomona).</p>
<p>Your education was likely just fine when #1 LAC had an endowment a small fraction per student was a small fraction of what it is today; I doubt you suffered much.</p>
<p>90% of the value of your education (and mine) came from sitting around the table with a middle-aged or older man (in those days it was almost always a man), a $5 philosophy text or book of poems, and a pencil.</p>
<p>So, not to be too ghoulish, but will being able to fully pay for college be an advantage in next year’s applicant pool? At least for the schools where your stats are in the ballpark, would it give your app. just a little extra oomph?</p>
<p>“So, not to be too ghoulish, but will being able to fully pay for college be an advantage in next year’s applicant pool?”</p>
<p>Of course. This year was just the start. The employment picture looks to get worse in the second half from even the optimists. If we do bottom out at the end of the year, it will take employment a while to catch up as it is a lagging indicator. If consumers make a permanent to lower consumption, then the recovery should be sluggush.</p>
<p>Thanks for starting this thread, Barrons. Very informative.</p>
<p>In answer to post #31:</p>
<p>I would say definitely yes. My kids’ private school did exceptionally well with top schools this year…better than in the past few years. I think it definitely has to do with the fact that they are for the most part full-pay. So much for “need-blind.”</p>
<p>From today’s wsj [Ivy</a> League Endowments Finally ‘Dumb’ - WSJ.com](<a href=“http://online.wsj.com/article/SB124631834157970855.html]Ivy”>http://online.wsj.com/article/SB124631834157970855.html)
“The largest college endowments, long the envy of their smaller rivals for their sophisticated and profitable investment strategies, were left behind over the past year by the performance of smaller schools with far simpler approaches.”</p>
<p>OP’s article focuses primarly on HYP, how are the other Ivies doing? Anybody know about Penn, specifically?</p>
<p>Here is a more updated listing of the largest college endowments for FY2008:
[News:</a> Fortunes Falling - Inside Higher Ed](<a href=“http://www.insidehighered.com/news/2009/01/27/endowments]News:”>http://www.insidehighered.com/news/2009/01/27/endowments)</p>
<p>This is the top ten list:</p>
<ol>
<li> Harvard University $36,556,284,000 +5.5%</li>
<li> Yale University $22,869,700,000 +1.5%</li>
<li> Stanford University $17,200,000,000 +.2%</li>
<li> Princeton University $16,349,329,000 +3.6%</li>
<li> University of Texas System $16,111,184,000 +3.2%</li>
<li> Massachusetts Institute of Technology $10,068,800,000 +.9%</li>
<li> **University of Michigan ** $7,571,904,000 +6.8%</li>
<li> **Northwestern University ** $7,243,948,000 +11.4%</li>
<li> **Columbia University ** $7,146,806,000 0%</li>
<li> **Texas A&M System ** $6,659,352,000 +1%</li>
</ol>
<p>Liberal Arts Colleges
34. Williams College $1,808,280,000 -4.4%
35. Pomona College $1,794,453,000 +1.9%
40. **Amherst College ** $1,705,917,000 +2.6%
44. Wellesley College $1,611,319,000 -2.7%
47. Grinnell College $1,472,448,000 -14.3%
50 Swarthmore College $1,412,609,000 -2.0%
52. Smith College $1,365,792,000 +.4%
76. Berea College $1,023,255,000 -7.2%
83. Middlebury College $885,389,000 -5.4%
90. **Vassar College ** $848,717,000 -2.3% </p>
<p>I am expecting FY2009 will have some significant drops.</p>
<p>That’s like listing home prices from 2006. Fond memories but not relevant except to show potential of losses…</p>
<p>Williams’ estimate is currently around $1.1 billion.</p>
<p>[Princeton</a> U. sees $5B decline in endowment - NJ.com](<a href=“http://www.nj.com/news/index.ssf/2009/04/princeton_u_sees_5b_decline_in.html]Princeton”>Princeton U. sees $5B decline in endowment - nj.com)</p>
<p>Princeton uses their endowment.</p>
<p>“To make matters worse, while the average college depends on its endowment for 5% of its operating revenue, in the Ivy League that jumps to between 25% and 45%. Doesn’t get any worse than Princeton, where a whopping 45% of the annual operating budget comes from endowment funds.”</p>
<p><a href=“http://blogs.dailyprincetonian.com/2009/07/sad-suffering-ivy-league-and-their-dumb.html[/url]”>http://blogs.dailyprincetonian.com/2009/07/sad-suffering-ivy-league-and-their-dumb.html</a></p>