<p>I was looking at some endowments of various small LACs. I quickly looked up 6 schools to compare. I just want to make sure that a school my son might consider will not close its doors b/c of financial problems. How much of an endowment is enough? The schools I looked at had a freshman class between 375 students and 530 students. The endowments of these 6 schools ranged from 44.8 million to 310 million. Is a school with an endowment of just 44.8 million, a school to stay away from attending?</p>
<p>this is a great question northeastmom. I, too, would be wary of the school with 45M endowment, for no specific reason other than many LACs have much more, leading to the speculation that those better endowed LACs must be providing something extra from their endowment income that the lesser endowed school could not.</p>
<p>Antioch just went belly up, perhaps for reasons other than endowment, but nevertheless, their endowment was relatively low...$32M....perhaps this was a symptom more than a cause:
<a href="http://www.spectator.org/dsp_article.asp?art_id=11749%5B/url%5D">http://www.spectator.org/dsp_article.asp?art_id=11749</a></p>
<p>Another way to analytically look at this is to find some schools that report their true cost relative to their tuition revenue & see how big of a gap endowment & other income sources provide....this to get a gauge on what some comparable institutions are subsidizing with larger endowments. I'd also look at the financials of your $45M endowment school to compare....assuming you can obtain those financials.</p>
<p>Don't know if this helps, but that's how I'd approach it.</p>
<p>try googling Liberal arts colleges endowments. i think i saw a list for the end of 2006. there are quite a few with healthy amounts.</p>
<p>that 42 mil endowment doesn't make for a lot of scholarship money. i'd be leery</p>
<p>what region of the country are you looking at? you might also try googling major gifts to endowments to lacs to get a picture on the donors this year.</p>
<p>musictoad, Yes there are many LACs that seem to have healthy endowments. I have a school on my son's list, that has a relatively small endowment. I see this as a red flag, along with some other things that I have read about the school (unrelated to academics, but more relating to finances). I must say that I am a bit apprehensive to send my son to a school like that. Are there pointed questions that I can directly ask the school, and what would they be?
What is a healthy endowment? Should it be 100, 150, 300 million for a school of 2-3000? I am clueless and am looking for answers. </p>
<p>Thanks musictoad and Papa Chicken. I can do better than googling. Petersons states endowments, and I have accumulated some information through that site. Papa, Antioch did go belly up, and I have read a piece about other institutions in financial trouble. I see no personal need to take a risk on a school that might close their doors within the next 10 years. Yikes! Here is another article about financial issues and a school losing accreditation. I believe that this school was a CTCL school in the older edition, but I might be mistaken:
<a href="http://www.wral.com/news/news_briefs/story/1534215/%5B/url%5D">http://www.wral.com/news/news_briefs/story/1534215/</a></p>
<p>This link has information on the top 25 LAC's based on their endowment per student.</p>
<p>Note that they left out Berea (which would be in the top 5) - likely because their students are too poor, and they spend too much of their endowment on scholarships, for it to ever be considered an "elite" college.</p>
<p>NJ113, Thank you. This gives me some perspective of what a healthy endowment might look like at an LAC.</p>
<p>Berea was left out because it wasn't ranked in the top 25 by USN&WR.
If its students were as strong "on paper" as the schools listed it would be ranked.
Nobody doesn't like Berea.
I understand that it became wealthy by convincing small town Christians to remember the school in their wills.</p>
<p>Berea students are EXTREMELY strong on paper. Because they can only select students from the bottom half of population in income, and then with a preference for Appalachia, they are actually more selective than any of the top 25 LACs (and likely any of the Ivies.) If you add the 200 points to the median SAT scores based on income status (as the CollegeBoard has consistently found), they are competitive across the board.</p>
<p>The major difference is that they choose to spend their endowment income on students rather than buildings and grounds (my alma mater maintains a PGA golf course.)</p>
<p>Talk about selective. What about my kid's soccer team? You have to be 10 or 11. And a girl!</p>
<p>Since colleges spend relatively little of their endowment (often in the 4-6% range), the amount of an annual operating budget that's coming from endowment can be very small, even if an institution is fiscally sound. Another good indicator is the bond ratings for a college. That will show if they do things like balance the budget and how much they borrow for capital improvements.</p>
<p>Even more up-to-date, overall endowment-wise, is the Wikipedia entry entitled "List of U.S. colleges and universities by endowment". Yes, I am loathe to mention it, since Wikipedia (while fantastic for random pop culture and trivia type things) is hardly the world's most reliable source, but this particular entry is well-referenced and seems pretty good (I checked many--not all, but many--of the references for myself). </p>
<p>I don't know that a school with a $45 million endowment is necessarily a school to stay away from...using your largest class size of 530, it's still a larger per student endowment than many (most?) public universities (of course, there are economic advantages to simply having a large total endowment, but I'm just sayin' that it probably isn't terrible). At least from my anecdotal observation, it does seem that larger per student endowments corresponds to better financial aid (I said better, not perfect!), which is certainly desirable. Plus, I back the "don't eliminate a school for financial concerns" theory. You shouldn't only apply to financially risky schools, of course, if finaid is a concern, but a couple is alright (as long as the applicant knows that finaid might preclude enrollment). </p>
<p>On a light note, your comment, Mini, reminded me of one of my favorite college-related Simpsons' jokes...when miserly Scrooge figure Mr. Burns' middle-age son pops up, the Billionaire attempts to bribe his way into Yale, Burns' alma mater (Class of 1914!). The admissions deans from Yale inform Burns that his son's test scores are so low that Burns would need to donate an International Airport. Quote: "Yale could USE an International Airport, Mr. Burn's". Williams NEEDS that PGA golf course, Mini. They need it! Hee.</p>
<p>I was able to download the entire list (765 schools) of 2006 college endowments from the National Association of College and University Business officers (NACUBO) website. I don't have the url, but it can certainly be 'googled'.</p>
<p>VERY interesting reading</p>
<p>"my alma mater maintains a PGA golf course"</p>
<p>"Williams NEEDS that PGA golf course"</p>
<p>Correction: The Taconic is a collegiate (and public) golf course -- not PGA -- established in the late 1800s. It costs students $165 per semester for unlimited play.</p>
<p>Thanks for the reference MADad.</p>
<p>Here's the url for the site: <a href="http://www.nacubo.org/x2376.xml%5B/url%5D">http://www.nacubo.org/x2376.xml</a></p>
<p>It's not just the size of the endowment, but how much the college relies on it to meet basic operating expenses. </p>
<p>That in itself isn't problematic--it's what the endowment if for. It's how much they're spending, and why.</p>
<p>I would be completely comfortable sending my child to a school with a moderate or even below-average endowment if the college's prospects were good (i.e. they were enjoying strong enrollment without indulging in a high tuition discount rate). Conversely, a school can have a large endowment for its size but still be one to be leery of. My alma mater, which boasted one of the largest LAC endowments for a school of its size in its region, got into financial problems because of endowment spending. It was having trouble with enrollment and was addressing them via steep tuition discounting. That, and other spending patterns, meant they were dipping into endowment far more than was healthy.</p>
<p>It seems that MarathonMan is right. It is a good idea to check the bond rating of a college.</p>
<p>hoedown, How would you know if a school is addressing enrollment by steep tuition discounting, and using its endowment pay for the difference.</p>
<ol>
<li><p>Do small LACs even HAVE a bond rating? I am unfamiliar with LACs issuing public or semi-public debt, and even if they did it would be pretty small potatos, infrequent, and not really marketable in any secondary market. Why would they pay to get and to maintain a bond rating?</p></li>
<li><p>That said, if the rating agencies do issue ratings on colleges, they would watch for and adjust the ratings for the kinds of factors hoedown identifies. (If a small LAC did issue rated debt, I would be surprised if there weren't covenants forbidding spending endowment principal on operations while the debt is outstanding.)</p></li>
<li><p>You ought to be able to tell from a college's financial statement whether it is spending endowment principal on scholarships.</p></li>
</ol>
<p>Well, THOSE were 2 interesting charts! (posts #5 and #15) showing endowment figures on 25 top LAC's and 765 Universities and Colleges.</p>
<p>I studied them against our direct experience with financial aid and 3 students.
I don't know what factors can be safely assumed from charts, as I'm not a statistician. </p>
<p>But if it helps you, Northeastmom, with your excellent question: From roughly the same income profile/EFC 3 times, we sent/will send 3 kids to 3 schools, 2 of which fall onto both lists, as follows: </p>
<p>Amherst (5/25 on LAC list and 44/765 on bigger list of per-student expenditure; note that second list included universities so it's really well-heeled). It has a $1.3 million dollar endowment and recent increase of 15%. </p>
<p>Oberlin (21/25 of LAC's and 89/765 on bigger list with universities) has a 694 thousand dollar endowment and recent increase of 9%.</p>
<p>Chapman (279/765 on the big list) has a 153 thousand dollar endowment, BUT I saw it boasts a 22.5% recent increase, among the spikiest increases on the entire chart. (Hold that thought...)</p>
<p>--
Without any significant change in our family's income profile in the past decade, our family's Amherst package awarded with the offer of admission was virtually the same as Oberlin's two years later (taking into account that 2 were in school together, and similar balances). The difference between the two schools is that when we appealed the initial package, Amherst came up with $2K more but Oberlin did not (mind you, we're both Oberlin alum and only the Oberlin was an ED app from here).</p>
<p>Chapman U's package was half of these other 2 LAC's, at first, very scary, but upon appeal it was increased mightily so it became affordable for us and equivalent to the other 2. </p>
<p>Now that I look at this chart, and see the standout figure of Chapman's 22.5% recent increase in endowment, it makes me wonder if perhaps that Percentage Increase in Per Pupil Endowment from the big list is also a figure to consider, or at least speculate about since nobody can really know for sure.</p>
<p>My speculation: If the culture or hope of an institution is on the upswing, they might hear out an appeal differently than if things are tight. </p>
<p>Who can ever know? </p>
<p>But it did cause me to scan the list for other big % increases, and I saw "Arizona State U and Arizona U Foundation" with a whopping 42.4% recent increase. </p>
<p>So, <em>maybe</em> as you scan these lists, also take note of a large % recent increase. Perhaps it means an institution <em>might</em> treat you more comfortably from the start, or hear out your appeal with softer ears as they did ours.</p>
<p>It's scary to make assumptions from one small family to comment, so please consider this just one family's story and make no assumptions that anything that happens to one family will necessarily happen to another. We're just thankful that the schools helped us and are making this possible.</p>
<p>Paying3tuitions, I am not looking at this from the standpoint of grant money (I am looking at that too by checking out % of need met and ratios of loans/grants). I am more concerned with sending my son to an LAC with a low endowment, fearing financial danger and doors closing (ie: Antioch). </p>
<p>Amherst's endowment is a healthy 1.3 billion, BTW. Chapman's is 210 million, and Oberlin has a 550 million endowment. These figures are from Petersons.</p>
<p>I am looking at a school with an endowment of just under 60 million, and it concerns me.</p>