Largest University Endowments Afford Their Schools Competitive Advantage
A recent article by CNBC economics reporter John W. Schoen provides an in-depth look into reasons behind the rising cost of higher education in the U.S. It’s a complicated issue, with many moving parts. The after-effects of the 2008 recession, expanding student services, required budgetary expansion in state budgets, such as pensions, healthcare and Medicaid, and other issues have forced schools to increase the student tuition costs.
The improved economy and recovering markets have helped private institutions repair the losses to their endowments caused by the Great Recession. However, the wealthiest schools with the largest endowments are more successful in fund raising and are receiving an increasingly greater share of donations.The top 40 richest schools received nearly 60 percent of all gift revenue last year, according to Moody’s. Comparatively, most schools have far less money to help subsidize the cost of higher education. The median endowment size for the largest 50 schools is $3.5 billion, while the median college endowment for the entire endowment universe was just $113 million.
That leaves schools with smaller endowments at a disadvantage competing for the best and brightest applicants. For example, at wealthier schools, the share of tuition paid by students is about 15 percent, while the average share of tuition paid for at all private colleges is 75%.
The entire article can be read at: http://www.cnbc.com/id/102746071
