America’s richest college has enough money in the bank to pay four-year tuition fees for almost 150,000 students.
Latest figures show the endowments of the 10 richest colleges in America range from just under $9 billion to an eye-watering $37.6 billion.
The endowments represents the accumulated value of money and assets donated to the university, often by former alumni. Colleges typically earmark some of the funds to pay for running costs and scholarships, with the rest reinvested.
And with some endowments stretching back two hundred years or more, a select group of colleges have been able to build-up sizeable sums in their rainy day funds.
Now specialist North Carolina-based lending exchange LendingTree has analyzed the universities with the largest endowments to see how their funds are spent and how that affects students.
The richest college is Harvard. With almost 400 years to benefit from the largesse of its alumni it is perhaps not surprising that it has managed to accumulate a considerable fund, but even so the size of its endowment is staggering, at a massive $37.6 billion at the end of fiscal year 2015.
According to LendingTree, this is enough to pay four-year tuition costs for 147,723 students.
In reality, the fund pays for a third of Harvard’s operational costs, plus student aid.
The fund is managed by the Harvard Management Company, and its employees. In 2015 endowment managers benefited to the tune of $49.4 million, while portfolio managers received $28.8 million, according to LendingTree.
Second in the list is Yale with an endowment of $25.5 billion. This funds around a third of the school’s operational costs, as well as three quarters of the library’s budget. Its endowment manager earned $5.1 million in the fiscal year 2015.
Channeling the endowment towards students instead would cover four-year tuition for 93,591 students, or books and supplies for a year for more than seven million students, according to LendingTree.
Princeton is third on the list of richest colleges, with an endowment of $22.3 billion, enough to fund four-year tuition for its student body ten times over.
Instead, $9.2 million goes to endowment fund managers, including $3.9 million to the president of Princeton University Investment Company, which managers the endowment. But the endowment does support almost 80% of scholarships, as well as just over £205 million in student aid and $25 million towards athletic programs.
The complete top 10 richest colleges, with the value of their endowment funds at the end of fiscal year 2015, are:
1. Harvard University - $37.6 billion
2. Yale University - $25.5 billion
3. Princeton University - $22.3 billion
4. Stanford University - $22.2 billion
5. Massachusetts Institute of Technology - $13.5 billion
6. University of Pennsylvania - $10.1 billion
7. University of Michigan, Ann Arbor - $9.8 billion
8. Texas A&M University, College Station - $9.8 billion
9. Columbia University - $9.6 billion
10. University of Notre Dame - $8.8 billion
Source: LendingTree
With funds of this size, colleges should be able to support students from low income families. But Princeton is unusual in devoting a significant sum from its endowment towards scholarships.
According to a survey carried out by the Harvard Crimson newspaper, one in six of the Class of 2019 have one or more parent who also went to Harvard, and of those 83% have a family income of $125,000 or more.
But while 94% of first generation students are receiving financial aid, it’s not just about the students who are already there.
With American graduates in record levels of debt, almost $1.3 trillion total with the average Class of 2016 graduate owing an average of $37,172 in student loans, many are put off from applying to university in the first place.
In the face of this disincentive, colleges with a healthy bank balance must make sure they are doing all they can to encourage students from low income families to raise their sights.
