The Fantastic Four (Billion!) . . . Important College Endowments
George Orwell’s famous novel “Animal Farm”, which offers a chilling indictment of communist society, contains a wonderful line. “All animals are equal but pigs are more equal.” I have good news and bad news. The same can be said about colleges, at least when it comes to the important issue of affordability!
The list of America’s top colleges contains dozens of outstanding institutions. Many of them share more similarities than differences. These choice schools offer outstanding faculties, accomplished students and tremendous facilities. Attend a few lectures, tour their libraries or eat in the dining halls and it’s hard to tell the difference between one great college and another. Take a quick look at the college’s endowment and the difference jumps out!
An endowment is the pool of money that a college has assembled from alumni donations, investments, gifts and other sources. Think of the endowment as a college’s household “savings account”. The money in the endowment ensures the college’s financial viability and security both in the present and well into the future. It can be used to weather a collegiate “rainy day” such as a turn down in the economy. It can also be used to counter inflation, strengthen faculties and maintain or improve facilities. But the most important impact of a large endowment at colleges today is on financial aid. Colleges with unusually strong endowments can generally afford to fund generous financial aid policies which are simply out of reach of their competitors.
No college ever wants to turn down a qualified student because of money and most of America’s top college have strong “need blind” admissions polices. However, there is a very big difference between not admitting a student because they can’t pay the tuition and guaranteeing that every student admitted will be able to afford to attend. There are only a few of these colleges remaining on the collegiate landscape today. Most are members of the collegiate “fantastic four”. These are colleges with endowments of at least $4 billion. There are only 15 private colleges which have earned membership in this exclusive club.
Just how dramatic a difference exists between the financial aid offered by these colleges and other similar schools? Let’s take a look. All of these 15 colleges essentially guarantee that they will provide whatever financial aid is determined by the FAFSA and College Board formulas. The FAFSA and College Board formulas are the generally accepted “last word” on determining exactly how much a student’s family should be expected to contribute to the cost of attending college. Not only do the “fantastic four” provide the recommended aid, many of these schools go well above and beyond in their commitment to make tuition, room and board affordable to every admitted student.
In the past few years, several of these schools have developed financial aid policies and programs which directly address the skyrocketing cost of attending college today. For instance, Emory recently introduced the “Emory Advantage” which requires no family contribution for those students who have a family income of $50,000 or less. Even if the family earns as much as $100,000 per year, their entire contribution for tuition, room and board is limited to a total of $15,000 . . . not per year . . . but for the student’s entire college career! Basically, no qualifying Emory student will graduate with more than $15,000 of student loans. Harvard has recently announced an even more aggressive financial aid policy. According to it’s web site, Harvard claims that, “Even families with annual incomes well above $160,000 may qualify for scholarship aid.” Such generous financial aid policies have become routine at the schools with enormous endowments.
Here is a ranking of the 15 colleges which are believed to possess endowments of at least $4 billion at the present time. It is believed that the value of the Rice University endowment, the smallest on the list is nearly $5 billion while Harvard’s endowment, the largest on the list is believed to approach $35 billion in today’s value. This list is by no means fixed or static. A college’s endowment might increase dramatically from a successful fund raising campaign or dip as the result of poor investments. The ranking of this list changes from year to year and occasionally a new member is added or drops off. But regardless of their ranking on this list, all of the colleges cited currently have the ability to fund extremely aggressive financial aid programs.
( 1) Harvard University (Massachusetts)
( 2) Yale University (Connecticut)
( 3) Stanford University (California)
( 4) Princeton University (New Jersey)
( 5) Massachusetts Institute of Technology (Massachusetts)
( 6) Columbia University (New York)
( 7) Northwestern University (Illinois)
( 8) University of Pennsylvania (Pennsylvania)
( 9) University of Notre Dame (Indiana)
(10) University of Chicago (Illinois)
(11) Duke University (North Carolina)
(12) Washington University in St Louis (Missouri)
(13) Emory University (Georgia)
(14) Cornell University (New York)
(15) Rice University (Texas)
There is one major footnote when considering or evaluating the impact of endowment on financial aid. Like the students who attend them, America’s top colleges vary in size and shape. As a result, a college with a slightly larger endowment but twice as many students might actually have less money to spend per student than the smaller school. In fact, as noted on the list of super rich schools above, Harvard has the largest endowment and Rice the smallest. However, because Harvard has a much larger student enrollment, Rice actually has slightly more endowment money available on a per student basis.
This factor is especially important for students considering a small college. Many outstanding small schools such as Williams and Amherst in Massachusetts or Cal Tech in California don’t make the list of the largest endowments. However, because of their small enrollments, these schools rank at the top of endowment dollars available per student. Many similar schools boast financial aid policies as aggressive and generous as their larger competition.
The good news for high school seniors across America is that in today’s difficult economic environment, there are still some two dozen top colleges with the ability and commitment to consider applications without regard for family income. In addition, their financial aid policies will make attending these schools possible and affordable for every student they accept. How many freshmen spaces are available at these schools? That’s the best news of all. More than 30,000 student spaces are available in the freshman class of these schools next year!