Ranking colleges by endowment
http://www.thebestschools.org/features/richest-universities-endowments-generosity-research/
It’s not just endowment but endowment per student. Sure, the University of Texas system has a $25 billion endowment, but they also have 141,000 undergraduates and over 50,000 graduate students spread across nine physical campuses. Yale has a slightly smaller $24 billion endowment but only has 5,500 undergrads and just under 7,000 graduate students on only one physical campus.
Still, yes, endowment does matter. It’s no coincidence that the schools with the biggest endowments tend to be the mores prestigious universities in the country - you can do a lot with money. But I don’t think parents need to consider the total endowment of the school necessarily. You can judge the impact of the endowment on undergraduate education by evaluation the indirects - the facilities, the quality of the faculty, the library holdings, the financial aid, etc. I’m not sure that the fact that Harvard has a $28 billion endowment while Columbia’s is “only” $8 billion will make a huge difference in either the undergrad experience or the post-college success of a student. The question is really - is there sufficient money to make important things happen?
Some of the most highly endowed colleges in the United States are highly leveraged to hospitals, and STEM research while others are not much more than hedge funds with a liberal arts college on the side. Bottom line: If the college offers a great education (small classes, great professors, an appealing campus) and its NPC indicates you can graduate without a huge amount of debt, don’t over analyse it.
Is the amount of aid a school generally provides related to the size of its endowment? When my D was applying last year, she applied to private colleges with the largest endowments figuring those would be the ones most likely to give aid (either need or merit). We also both assumed that large state public universities (like UCLA, UMich, UT-Austin, etc.) would give less merit aid than private schools. However, now I’m not sure if that thinking was correct, as the private school she got into had a relatively small endowment and yet gave her substantial aid. When looking at colleges, is the endowment size (overall or per student) a helpful indicator of potential aid? Do privates give more than publics?
“It’s not just endowment but endowment per student.”
While endowment per student should be taken into account, so should state funding and economies of scale. The former obviously favors smaller private universities, while the latter evens things out in favor of public universities.
Since a university can usually only spend 5% of the value of its endowment on an annual basis, it is fair to say that every dollar a public university receives from the state on a annual basis is equal to $20 from an endowment fund. Michigan, for example, receives $280 million from the state annually. It would take a $6 billion endowment to generate $280 million annually. So if you really wish to compare a public university’s endowment to that of a private university, you would add that value to its endowment; in the case of Michigan, its endowment, adjusted to include state funding, would be $16 billion. In the case of UT-Austin, its endowment, when factoring state funding, would also be in the $15 billion range.
Also, economies of scale should be considered. A university with fewer than 8,000 students will not enjoy the economies of scale of a university with 20,000+ students.
If we’re going to bring state funding into the picture, then we probably ought to be looking at total revenues and again adjust by school size. What are the total revenues (or expenditures) per full time equivalent student?
Total revenues include endowment income, and state/local appropriations, but also income from “auxiliary enterprises” (hospitals etc.), funds from federal/state/local grants or contracts, and net tuition revenue. According to DOE statistics, for FY 2011, total revenues per FTE student were about $40K on average for public research institutions but nearly $100K for private research institutions. (Source: http://www.deltacostproject.org/sites/default/files/products/Delta%20Cost_Trends%20College%20Spending%202001-2011_071414_rev.pdf)
Again according to DOE statistics, “In 2012–13, total expenses per full-time-equivalent (FTE) student were much higher at private nonprofit postsecondary institutions ($50,145) than at public institutions ($29,338) and private for-profit institutions ($15,745).” In the same year, private nonprofit institutions spent more than twice as much per student on instruction than public institutions did. (Source:https://nces.ed.gov/fastfacts/display.asp?id=75)
Are students at the higher-spending schools actually getting more from each additional dollar spent? Hard to say. However, I would think that absent evidence to the contrary, we should assume that higher revenues per FTE student (or higher spending per FTE student) do tend to pay off in higher quality (especially if we can see evidence in smaller classes, higher faculty salaries, better facilities, better financial aid, etc.)
I have not seen a good source of college-by-college comparisons of total revenue (or expenditures) per FTE student. Maybe these numbers are available somewhere on the IPEDS site.
It’s more an indication that A) they’re very expensive to begin with (how else do you think they got those big endowments?) and, B) are probably very aggressive in recruiting low-income students (partly because of their beliefs and partly to fend off critics that they are stockpiling funds.)
For the vast majority of middle-class families it means running the net price calculators for each choice. Even at schools that claim they are “no-loan” for everyone, you’ll find quite a few families taking out loans anyway.
And, yes, the more expensive the sticker price at a particular college, the more it will have to award in grant aid, if it wants a diverse, intellectually curious student body.
“If we’re going to bring state funding into the picture, then we probably ought to be looking at total revenues and again adjust by school size. What are the total revenues (or expenditures) per full time equivalent student?”
That makes sense too tk. I just think that lumping all public universities together doesn’t make sense. A public university that enrolls almost exclusively in-state residents (like Texas-Austin, or Florida) will have very different revenues from tuition than a public university where 40% of the students are from OOS (like Colorado or Michigan).
At any rate, here’s how much some universities raise from tuition (for the year 2014-2015):
University of Michigan: $1,100,000,000/43,000 students = $25,500
Cornell University: $550,000,000/21,500 students = $25,500
University of Chicago: $380,000,000/15,000 students = $25,500
Brown University: $275,000,000/8,600 students = $32,000
Dartmouth College: $200,000,000/6,300 = $32,000
http://obp.umich.edu/wp-content/uploads/almanac/Almanac_Ch10_Sep2015.pdf
https://dpb.cornell.edu/documents/1000520.pdf
http://annualreport.uchicago.edu/sites/annualreport2014.uchicago.edu/files/uploads/images/Consolidated%20Statement%202014%20EM%20v1.pdf
http://www.brown.edu/about/administration/controller/sites/brown.edu.about.administration.controller/files/uploads/FINAL_JUNE%2030%202015%20FS.pdf
http://www.dartmouth.edu/~control/docs/financialrept/2015-dcfinancialstmt.pdf
By the way, USNWR measures “financial resources” in terms of annual expenditures per full time equivalent student. IPEDS does have related data for individual institutions.
It has already been established that the USNWR financial resources rank is a joke tk, Imagine determining people’s financial worth and position by asking them to disclose their annual expenditures! Referencing it here is misleading. Best stick to facts, not to the realms of fantasy.
alexandre, i would be careful with financial reports, as well. reporting isnt particularly standard and as such you tend to see significant differences in how things like quasi-endowments and financial aid are reported. relevant to this discussion, it appears that michigan is not reporting aid to graduate students on the ‘financial aid’ line item. not a problem if their tuition isnt being reported, either, but that does not appear to be the case.
“alexandre, i would be careful with financial reports, as well.”
I agree erica. The only way to measure a university’s financial position fairly is by looking at the size of its endowment relative to the size of its student population. In the case of public universities, state funding should be taken into account.
“relevant to this discussion, it appears that michigan is not reporting aid to graduate students on the ‘financial aid’ line item.”
Relevant indeed. I do not know how Michigan (or any of the other four universities I listed in my post above) calculated the financial aid figure. Michigan will not give out as much aid as private universities, even on an absolute scale. Remember that 60% of Michigan undergraduate students are in-state, and their annual tuition is just $14,000, compared to tuition rates of $50,000 at private universities. As such, it only stands to reason that even far smaller private universities will give out more than Michigan in financial aid. It also stands to reason that comparing private universities to public universities in this domain is pointless since their approach to tuition and FA are completely different.
The Department of Education tracks college expenditures (including expenditures on instruction and research) in great detail. So evidently some people do find this kind of information interesting. Whether US News uses it appropriately in its rankings is another matter (but one that I should think is a matter of opinion not something that can be established with great finality as a matter of fact).
Anyway, I would agree that endowment alone, or endowment per student alone, does not necessarily present a clear, complete picture of a school’s resources. Looking at expenditures, too, still wouldn’t give you a perfect picture of the relative quality of resources available to undergraduates at schools that differ greatly in size, location, and governance.
The subject of the discussion is irrelevant.
Does anyone by a car based on how much cash the manufacturer has in the bank?
Dividing the amount of cash by the number of automobiles produced does not make it any more relevant.
I think what we’re after is some proxy for comparing the resources available to undergraduate students.
Analogies to car-buying or personal net worth measurements notwithstanding, IMHO it isn’t too unreasonable to suggest that revenue per student (or perhaps expenditures per student) ought to indicate (if only imprecisely) the amount of institutional wealth available to (or actually spent on) students, which may in turn have significant impact on classroom instructional quality or student quality of life.
However, there are at least two practical challenges. The first has to do with reporting methods and standards (see post #10) . I would think the best way around this problem is to draw all financial data from a single source (such as IPEDS, which indicates whether it follows GASB or FASB standards in the data it presents). The second problem has to do with interpreting the numbers. Both revenue per student and expenditures per student may be affected, to some hard-to-determine degree, by confounding factors related to school location, size, governance, etc. Twice as much revenue, or twice as much spending, surely does not necessarily result in twice as much quality.
It has been stated that looking solely at endowment per student misses the effects of state appropriations on public universities. If so, then I suggest looking at total revenues. IPEDS let’s us do that. Examples:
Revenue … FTE Students … Revenue per Student … School
$6.5B … 15,408 … $421,375 … Duke
$9.1B … 23,658 … $383,279 … Harvard
$4.1B … 13,591 … $299,589 … UChicago
$1.3B … 6,455 … $198,762 … Rice
$7.8B … 42,056 … $184,667 … Michigan
$3.4B … 22,433 … $150,539 … UVa
$2.7B … 36,269 … $74,320 … UC Berkeley
So if these examples are representative, it does not appear that state appropriations alone necessarily bring the top public institutions up to the levels of the top private institutions (although, again, it may be the case that big schools like Michigan are leveraging greater economies of scale in how they use these funds).
Size of endorsement only matters if the earnings get spent on the students/faculty instead of on fatter administrator salaries.
^ That’s one reason why I think per-student spending on instruction may be a better “financial resources” metric than endowment (or even total revenues) per student.
“Per-student spending” includes bloated administrator salaries and lazy rivers
Less so for state schools because they have their states to back them up.
Look at the Cal States…they have very small endowments but because of Cal Grants, many of their students get full tuition awards. A private would have to fund full tuition awards from endowments/donations.
IPEDS breaks out spending data into many sub-categories.
For example it covers 7 measurements of spending on “instruction”, another 7 measurements of spending on “academic support”, 7 on “student service”, etc. I’m not sure exactly where administrator salaries fall. Presumably they aren’t included in “instruction”, but even if they are, the same (or similar) accounting methods should be applied from college to college. So I don’t think per-student spending on instruction is a meaningless measurement (as long as one is alert to possible confounding factors).
Here are a few examples of spending levels per student on “instruction” at top colleges, using IPEDS data for 2014.
Instructional Spending … FTE Students … Spending per FTE … School
$1.1B … 13,591 … $84,229 … UChicago
$0.92B … 15,408 … $59,671 … Duke
$1.2B … 23,658 … $49,197 … Harvard
$0.27B … 6,455 … $41,893 … Rice
$0.09B … 2103 … $40,448 … Williams
$0.06B … 1.643 … $35,593 … Pomona
$1.0B … 42,056 … $24,093 … Michigan
$0.73B … 36,269 … $20,256 … Berkeley
$0.41B … 22,433 … $18,086 … UVa
Is there a lot of bloat in Chicago’s high number? Maybe.
I have seen one article praising UChicago for controlling administrative bloat, and another castigating UChicago for (among other expenses) the enormous salary it pays its president.
Does Berkeley’s relatively low number reflect great economies of scale (or other efficiencies)? Maybe.
On the other hand, I see a lot of anecdotal reports (on CC and in reports on a major college review site) about impacted majors, huge classes, and over-reliance on TAs with poor English language skills (as well as run-down facilities, which would be in another category besides “instruction”).
The LAC numbers may be a little surprising if one expects them to spend a lot per capita on classroom instruction.
LAC class sizes are small, but their average professor salaries seem to be much lower than you’d see at the T20 research universities. You’ll find many good teachers at LACs, but not so many rock star professors with Nobels and Macarthurs.