Effect of endowment on prestige and peer schools

College Search & Selection
21

<p>I would still rather have the resources available. The fact is they're simply not at the same level at the smaller institution, regardless of endowment per student. Again, the 100 person lecture example you gave does nothing to discount the multi-million volume libraries with collections across all disciplines, or $billion humanities resource center full of primary source material, or assortment of performing arts spaces from initimate <100 seats to concert halls for over 2000, or vast art collections, etc. The so-called overwhelming importance of per student endowment is quite underwelming, actually.</p>

<p>And unfortunately, it's generally not true that prestigious grad schools translate into prestigious undergrad. This is especially true with top publics outside of Berkeley and Michigan. Back to UT-Austin as an example. In Texas it is by far the strongest university, ranked #1 in the state in just about every academic discipline it has per the NRC, USNWR grad rankings, etc. Rice's programs are generally not ranked in the same league as UT... yet since Rice is the smaller, more selective private, it is more "prestigious". Rice of course also has the higher per capita endowment that UT. But again, UT is ranked higher in nearly every academic field, has better libraries, museums, computing resources, and even higher ranked faculty. (They also have the same undergrad peer reputation score per USNWR - 4.1, yet that doesn't translate into prestige for UT since it's easier to get into as an undergrad.) This is why I can't buy the endowment per capita number being more important.</p>

22

<p>
[quote]
Again, the 100 person lecture example you gave does nothing to discount the multi-million volume libraries with collections across all disciplines, or $billion humanities resource center full of primary source material, or assortment of performing arts spaces from initimate <100 seats to concert halls for over 2000, or vast art collections, etc. The so-called overwhelming importance of per student endowment is quite underwelming, actually.

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<p>Citing stuff like library collections must be done in the context of undergrad studies. The fact that somebody writing a PhD disseration can find 1000 titles on the mating habits of the Japanese beetle is not terribly revelant. You have to look at resources that undergrads actually use.</p>

<p>For example, the Tri-Co Library consortium serving the 4000 students of Swarthmore, Haverford, and Bryn Mawr has 1.4 million books (not counting periodicals, monographs, etc.). </p>

<p>In statistics compiled for a Mellon Foundation study, 57% of these books (798,000) had not been checked out once in the last 11 years. An additional 17% (238,000) had only been checked out once in the last 11 years. Thus, three of the best undergrad schools in the country had only checked out 364,000 books two times or more in the last 11 years.</p>

<p>BTW, Swarthmore currently spends $1200 per student per year in library acquisitions. I doubt that UT spends $1200 per student per year adding to their library collection.</p>

<hr>

<p>BTW #2 regarding the University of Texas. As I noted above, endowment is not a complete picture for a state university. You would also need to factor legislative appropriations, which are -- in effect -- funds available for operating expenses, just like endowment return.</p>

23

<p>
[quote]
That Endowment per Student list is outdated. Comparing Stanford's current per-student endowment and Pomona's current per-student endowment, for instance, shows that Stanford pulls ahead.

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<p>Feel free to post the 2006 list!</p>

<p>Stanford's per student endowment at the end of 2006 was approximately $946,000. Swarthmore's was $844,258, so Stanford jumped up a few spots. I'm too lazy to track down Pomona's. </p>

<p>Be that as it may, I wouldn't look at per student endowment as making the difference between #3 and #5. That would be just stupid, kind of like worrying about the difference between #3 and #5 on the USNEWS list. All of these statistical measures are useful only for broad-brush tiers.</p>

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<p>Well, how many times a book was checked out is different from how often it was used. In fact, many reference and rare books cannot be checked out at all, only used in the library. So check out numbers can be highly misleading.</p>

<p>I took courses at my university's medical school while an undergrad. I knew where it was, and used the classrooms and library extensively. This was hardly a unique experience. I knew plenty of people who did their undergrad research at the medical school. No question it is a valuable resource.</p>

<p>Big universities are great for those students who want to go into depth in areas that would be difficult to pursue at LAC's. Not everyone wants to do this, but at the elite universities many people take advantage of the opportunities.</p>

<p>I agree that one should interpret endowment per student figures with caution. Colleges and universities generally have quite a bit of leeway in whether to include certain funds in the endowment. By keeping funds reserved outside of endowment the college avoids the restrictions on spending capital usually associated with endowment funds. Therefore many institutions have substantial resources that support their programs but which are not counted in endowment. This depends in part on mid term plans for construction and expansion (easier to do this without removing capital from endowment), and need have nothing to do with the vibrancy of the undergraduate experience.</p>

<p>More money is always better, but it would take an extensive review of accounting practices and institutional plans to make a meaningful comparison of any two colleges by this measure.</p>

25

<p>hmm .. would it be possible to seperate the endowment of the grad school/undergrad school in each college, and find two different per-capita endowments based on those numbers? that could be a more accurate measure of the quality of the undergrad school (assuming that more $=better quality).</p>

26

<p>wouldn't that list be more of a circumstantial evidence for the importance of overall endowment over per-student? </p>

<p>i haven't read the article you posted yet, but a rank of overall endowment reads much more like a who's who of top schools than that per student endowment, which includes schools like berea, wabash, and earlham over schools like dartmouth, washu, middlebury, notre dame, northwestern, duke, and columbia?</p>

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<p>According to Pomona's web site <a href="http://www.pomona.edu/ADWR/Admissions/Forms/2010fullprofile.pdf%5B/url%5D"&gt;http://www.pomona.edu/ADWR/Admissions/Forms/2010fullprofile.pdf&lt;/a>, their endowment on June 30th, 2006 was $1,459,036,000. With 1,533 students, that comes out to $951,752 per student, higher than the value given to Stanford above. Plus the endowment is likely higher now given the bull market...</p>

28

<p>mj93,
You're asking the right question. This would definitely eliminate a lot of the guesswork about some schools and their high endowments and how it is being spent. Some of the large public universities have large endowments, but their graduate programs likely eat up a large chunk of that. Clearly the amount of money to support some graduate programs-medical, sciences, engineering-is substantially more than it takes to support something like an undergraduate psychology major.</p>

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<p>Hawkette, graduate programs at al universities, private or public, eat up a chunk of their endowments.</p>

30

<p>
[quote]
which includes schools like berea, wabash, and earlham

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<p>Sometimes you have to dig a little below the surface. For example, Berea is tuition-free for all of its students and has a mission of educating low-income students, primarily from Appalachian area. Historically, it is a very interesting and important college and one that most kids on CC couldn't get into.</p>

<p>Earlham is incredibly strong academically. It produces more PhDs per graduate than any of the schools you mention: dartmouth, washu, middlebury, notre dame, northwestern, duke, and columbia. Having said that, its endowment is a little hard to compare. For many years, its endowment has included monies from the Lily family earmarked for the college and for Conner Prairie (an historic working farmstead/museum) near Indianapolis. After years of trying to manange this part of endowment (the Lily will specified that Earlham had to fund Conner Prairie and then use any extra endowment return for Earlham), Earlham has finally spun off Conner Prairie with its own endowment. Conner Prairie got a chunk of endowment. Earlham got a chunk plus 500 acres of former Conner Prairie land north of Indianapolis. I'm not sure that this change is fully reflected in Earlham's endowment yet. Either way, Earlham is a solidly endowed small college.</p>

31

<p>I suppose the larger question is whether the college spends its money on things a particular student finds valuable. If it devotes lots of resources to the engineering labs, and you are an English major, this may not enhance your experience at all. At a big university the English majors may not even know where the engineering labs are. If you are an engineer, you might not care how many ancient illuminated texts they have in the library. For both students, looking at the actual offerings will be far more meaningful than some overall figure that tells you nothing about institutional strengths.</p>

<p>If a college spends lots of money on financial aid, that is great, but how much does it enrich the lives of students, including those on grants? They are very happy about their scholarships, but, depending on their goals and interests, individual students might be better off if the college otherwise spent more money on hiring faculty, or improving the football practice facilities.</p>

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<p>These are all great points. Clearly, no ranking system is perfect. My original intent of the post was that using total endowment and endowment per student as a ranking system gives you something similar to all the other ranking out there. It also has the advantage in that it does not change year to year based on different weighting of measured values.</p>

<p>Even US News seperates universities from liberal arts colleges in their rankings, so the same should be done in this situation. A composite score of total endowment and endowment per student may give a better picture. For example assign a point to each billion in total endowment and a point for each 100,000 in endowment per student. (I'll round for simplicity)</p>

<p>Harvard 29+14 = 43
Yale 18+17 = 35
Princeton 13+19 = 32
Stanford 14+9 = 23
MIT 8+8 = 16
Columbia 6+3 = 9
Penn 5+3 = 8
Swarthmore 1+8 = 9
Amherst 1+8 = 9
etc.</p>

<p>Like any other ranking, it's only useful for generalization and not for arguing which school should be ranked 8th or 9th, etc. Also, I have no affiliation with Harvard and couldn't give a rat's a** if it came out number one :)</p>

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<p>
[quote]
If a college spends lots of money on financial aid, that is great, but how much does it enrich the lives of students, including those on grants?

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</p>

<p>Just for informational purposes:</p>

<p>Current college accounting practices no longer treat financial aid as an expense item. It is viewed as a discount or a reduction in student revenues. Thus, when looking at college finanicial reports, you look at net per student student revenue (after discounts) and net per student spending.</p>

<p>The highest figures I've seen for net per student revenues are in the $30,000 per year range. The highest I've seen for per student spending is in the $70,000 range.</p>

<p>There's a knee in the net per student revenues list. The colleges with the highest per student endowments can afford more financial aid discounting to achieve diversity. Thus, places like Harvard, Yale, Pomona, Swarthmore, etc. are not the most expensive schools to attend in terms of per student net revenues -- although they are close.</p>

<p>Just below these big money schools you find excellent schools whose slightly smaller endowments require them to maximize per student revenues. These schools tend to have the highest per student revenues, which they achieve by enrolling a higher percentage of full fare customers.</p>

<p>Continuing down the endowment pecking order, you come to schools that need to maximize per student revenues but lack the prestige to enroll more full-fare customers, thus their net per student revenues tend to fall off as you go down the list as they need to extend more discounts (need or merit based) to enroll a full class.</p>

<p>I know it means a lot to an individual student, but sticker prices mean nothing when comparing college financial reports. You have to look at the average net price.</p>

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<p>
[quote]
Clearly, no ranking system is perfect. My original intent of the post was that using total endowment and endowment per student as a ranking system gives you something similar to all the other ranking out there.

[/quote]
</p>

<p>That's because all the ranking systems are, in effect, a measure of where rich white customers from the Northeast have prefered to send their kids to college. This, of course, correlates closely with how much money the colleges have. "Prestige" was largely established during the first half of the 20th century. The only real changes are the rise of big money regional schools into national prominence: Stanford, Duke, Emory, etc.</p>

<p>Looking at per student endowment is one of the most important criteria you should consider in trying to understand a school. But, it's folly to use it as some absolute ranking, just as it is folly to use USNEWS as an absolute ranking.</p>

<p>You want to consider your priorities and then start to winnow the 4000+ schools down to manageable list of schools that fit your priorities, starting with the big picture stuff like size, location, etc. Then, start diving into the statistical measures (per student endowment, diversity, grad school rates, financial aid...whatever floats your boat) to start understanding the differences between the schools on your list.</p>

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<p>^ "That's because all the ranking systems are, in effect, a measure of where rich white customers from the Northeast have prefered to send their kids to college. This, of course, correlates closely with how much money the colleges have. "Prestige" was largely established during the first half of the 20th century. The only real changes are the rise of big money regional schools into national prominence: Stanford, Duke, Emory, etc."</p>

<p>My point exactly and the whole point of the thread. </p>

<p>"You want to consider your priorities and then start to winnow the 4000+ schools down to manageable list of schools that fit your priorities, starting with the big picture stuff like size, location, etc. Then, start diving into the statistical measures (per student endowment, diversity, grad school rates, financial aid...whatever floats your boat) to start understanding the differences between the schools on your list."</p>

<p>I agree, but this is not a thread about what is the best school for you ...</p>

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<p>I made this thread hoping for some fun exchanges (thank you all) about the idea of money and prestige. All threads kind of fall apart when people get defensive about their favorite school or turn it into a guidance counselor session. OF COURSE endowment is not the only factor when selecting a school. Now, let us all breathe ... :)</p>

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<p>Russ456:</p>

<p>I feel like I am arguing against myself a little bit because I do happen to believe that per student endowment or per undergad spending is the single biggest clue to understanding a college or university. However, as strongly as I feel about that, it's important to offer the caveat that no single criteria can be used to adequately rank colleges and no ranking is valid unless it takes into account personal priorities.</p>

<p>For example, suppose that I wanted a college with huge per student resources, diversity, and an academic focus? Then, I would need to look at three different lists (per student endowment, percentage of non-white US students, and percentage of PhDs per graduate). </p>

<p>There is an unbelievable amount of statistical data available that is useful in devising a personal ranking. But, it all starts with an individual definition of priorities. No single "ranking" tells a complete story. Take the Rice versus UTexas choice presented earlier. How can anyone say that UTexas is better than Rice or vice versa without first defining the size of the school you are looking for? If you want a small university, UTexas would be awful. If you want 30,000 undergrads, Rice would be a terrible choice. None of which has anything to do with endowment.</p>

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<p>
[quote]
Per student endowment is the #1 indicator that people in higher education finance look at.

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<p>This kind of 'definitive' statement pops up occasionally, and they always pique my curiosity. Can you elaborate? Who are the "people in higher education finance," exactly? You mean people who work at colleges and universities in the financial area? Or outsiders who are looking into higher ed finances (say, for bond ratings, for one example, or accreditation?)</p>

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<p>I mean people in the finance offices of collleges and universties when they consider whether or not their schools are in equilibrium or not, how to improve the financial position of the school, and how their school stacks up against competitors.</p>

<p>Actually, I would say that they look at two key revenue indictors: net per student revenues (after discounts) and the per student spending contribition of the endowment and one key expense indicator (per student spending).</p>

<p>The danger sign that a college is not in "equilibrium" is spending from the endowment each year to balance the budget at a rate does not allow the endowment to keep pace with inflation. Being "not in equilibrium" usually triggers corrective action in a "strategic plan". A common corrective action I've seen in several strategic plans recently is to decrease enrollment to improve the school's financial position.</p>

<p>Anyway, "per student endowment" is cited in nearly every discussion section of every college financial report I've ever read for a private college. Public universities are somewhat different because the funding mechanisms are different (legislative appropriation).</p>

40

<p>You talk about spending-per-student as if it is the fixed metric. It's not. The fixed metric is the spending %, as this is something that is generally decided by the board as a guideline they'll follow year in, year out. Spending per student is figured from (and driven by) that, not the other way around. </p>

<p>Can you give me examples of colleges that decreased enrollment to fix their equilibrium? This seems a convoluted way to fix an endowment spending problem. A far more straightforward to simply SPEND LESS. Some school may also decide to enroll fewer students, so as to keep their 'expenditure per student' steady, but the fact remains that simply spending less of the endowment is the first step. Frankly I thought the more common "strategic" plan was to cut back on tuition discounting (instead of decreasing enrollment), as a way to accommodate this lower spending.</p>