<p>Why does endowment matter? How does it affect a college's reputation?</p>
<p>I think endowment doesn’t matter as much as endowment per student. It allows the college to do things like give out greater financial aid to socially disadvantaged students, thus increasing diversity and opportunity. It also allows for powerful research opportunities and support of student organizations. It means hiring of better professors, possibly smaller class sizes, and other perks. Harvard College for instance is well known for its large endowment, perhaps contributing to its reputation, but more importantly it is known as the place of infinite opportunity, where if a student wanted to start an organization, perform a research on a project, or follow their virtually endless interests Harvard would be able to support them financially. It also allows them to fulfill 100% of need to attract students and therefore have a high yield rate.</p>
<p>The college firstly won’t go under any time soon most importantly. The college is able to invest into new infrastructure projects, invest in faculty, and provide better aid that is need-based, loan free, and need blind. Endowment does correlate with future rank fairly well.</p>
<p>shawnspencer, endowment per student on its own is not sufficient. Economies of scale, state appropriations (in the case of public universities) and existence of high-expense programs (like Medicine and university-owned hospitals) should all be taken into consideration. </p>
<p>Institutions with largely tuition-driven funding have to chase the market with their curricula. They will cut classes and programs that don’t make money right away, so anything that’s not popular or required will not be available. Students are treated like cash cows, because that’s exactly what they are at less wealthy schools. At a tuition-driven institution, you won’t get seminar-style instruction very often because it’s not cost-effective. You’ll be taught more frequently by underpaid part-timers instead of full-time faculty with appropriate terminal degrees in their fields. The reason? It’s cheaper.</p>