Princeton and other wealthy universities getting richer, report says

By Kelly Heyboer | NJ Advance Media for NJ.com

The nation’s wealthiest universities, including Princeton, are getting richer while the rest of higher education is trailing further and further behind, according to a new report.

The top 10 richest colleges and universities hold nearly one third of the wealth in higher education, according to an analysis by Moody’s that looked at the schools’ cash and investments.

The list of wealthiest universities includes Harvard, Stanford, Yale, Princeton, the University of Texas System and the University of California.

Because they have disproportionately huge endowments, worth tens of billions of dollars, the wealthy colleges were able to quickly recover from the financial downturn, the report said. They are also able to take on riskier investments, yielding bigger returns.

“This group of financially leading universities is differentiated from the rest of the sector by long-term highly diversified investment strategies, exceptionally strong philanthropic support and healthy cash flows. Combined, these will contribute to ongoing wealth concentration in the higher education sector,” said Moody’s Analyst Pranav Sharma.

The study found the top 40 wealthiest universities hold about two-thirds of all the money in higher education. Hundreds of other colleges and universities make up the bottom third of the list.

Schools with larger endowments tend to attract the most donations, the study said. With more money in the bank, they are also able to offer more financial aid and hold down tuition increases.

Wealthy university have also been criticized by students and parents for holding too much money in reserve while students struggle to pay rising tuition and fees.

Last year, the top 40 universities had a median of $6.3 billion in cash and investments compared with a median of $272 million for the rest of the nation’s colleges and universities, the report said.

The study ranked universities based on total cash and investments during fiscal year 2014. The top private universities are: Harvard ($42.8 billion); Stanford ($31.6 billion); Yale ($25.4 billion); Princeton ($21.3 billion) and Massachusetts Institute of Technology ($15.2 billion).

The top public universities are: the University of Texas System ($36.7 billion); University of California ($28.6 billion); University of Michigan ($11.5 billion); State University System of Florida ($9.7 billion) and the University of Virginia ($8.1 billion).

Rutgers, New Jersey’s state university, was not among the schools listed in the Moody’s report. Though Rutgers is one of the oldest universities in the nation, it has been slow to amass a large endowment.

A Star-Ledger analysis last year found Rutgers’ $783 million endowment at the time ranked last among the 14 schools in the Big Ten athletic conference.

However, Rutgers announce in January it had surpassed its goal of raising more than $1 billion in its latest fundraising campaign.

About $300 million of that money went toward Rutgers’ endowment, school officials said. Most of the rest will be spent on research and athletics.

[Source]: NJ.com