Is Endowment the First Factor to Consider when Picking a College Today - Student Research Foundation

Is Endowment the First Factor to Consider when Picking a College Today?

We are going to start today’s post by asking you a question.

Can you identify the following college, based on the information we provide below? This college:

  • Accepts more than 60% of all applicants
  • Has seen a dramatic reduction in the number of foreign students it has enrolled
  • Offers financial aid to more than 70% of the students it accepts
  • Has a shrinking endowment
  • Has a difficult time raising money from alumni
  • Is continuing to build costly new buildings and campus facilities in the hope of attracting more students

And the Answer Is . . .

The information above doesn’t describe just one American college. It describes a growing number of smaller institutions that are struggling, for lack of a better term, to survive. Many of these colleges have long and proud histories. Many have beautiful campuses. Some have successful and famous alumni. But those assets might not be enough to keep them alive in the years to come.

And we are about to make a statement that might seem callous, especially to people who love those colleges . . .

Endowment could be the most important thing you think about when you are selecting a college or university today

Why endowment? It’s simple. A college with a large endowment offers its graduates important assurances, including:

  • The institution will still be around, probably thriving, years after a student graduates
  • The degrees that students earned at those institutions will have a higher perceived value
  • The network of alumni associated with those institutions will be stronger and more committed and will do more to help fellow graduates find work and succeed

Some Advice to Consider

If you or a son or daughter is applying to college, you are already considering a number of factors. What is the likelihood of acceptance? How much financial aid could be available? What is life like on campus? What majors and degrees are offered?

But while you are asking those questions about colleges you are considering, be sure to ask about their endowments.

Are We Talking about Applying Only to Ivy League Schools?

No, we are not. Granted, the Ivies have huge endowments that help assure that they are not going to go out of business, and perhaps you should consider applying to one. Data reported on TheBestSchools.com reports that Harvard’s endowment is $38.3 billion (the biggest in America), Yale’s is $29.3 billion, and Princeton’s is $25.9 billion. (Note that with a bit of digging, you can find out the size of a school’s endowment on colleges’ websites or in their annual reports.)

But we are not talking only about Ivy League institutions. “The 100 Richest Universities in North America,” a list compiled by TheBestSchools.com, includes The University of Texas System schools ($30.9 billion),  MIT ($16.5 billion), Texas A&M ($13.5 billion), the University of Michigan ($11.9 billion), Northwestern ($11.08 billion), schools in the University of California System ($10.86 billion), Emory ($7.23 billion), Rice ($5.54 billion) and many others.

Plus, some publicly funded colleges and universities have futures that seem to be highly secure, including the schools in the SUNY system and Canadian universities.

Another troubling fact is that Historically Black institutions have endowments are generally smaller than those of competitive institutions. Among them, Howard University is the richest, at about $80 million. One bright spot, however, is that Howard and other historically black institutions have committed alumni who support them financially. About 40% of the graduates of Spelman College contribute, for example – a percentage that exceeds the level of giving at many small liberal arts colleges today.

The Bottom Line Is . . .

Because you don’t want to earn a degree from a college that will go out of business, be sure to check out the finances of the institutions you are considering.

We Invite You to Explore Your College & Career Options with Us. . .

Participate in the National Career & College Pathway Study to gain new insights about making educational decisions that align with your interests, passions, and aptitudes. Participants will receive information on college and career opportunities that match their interests.

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