NCPA - National Center for Policy Analysis

Bull Market Presents Windfalls To Colleges

March 4, 1999

Last year's raging bull market catapulted the endowments of six U.S. universities into the billionaire club -- boosting the total in that select circle to 31.

  • The six were Brown, Purdue, Minnesota, Rochester, the California Institute of Technology and Iowa's tiny Grinnel College -- the last of which achieved a 38 percent return on its portfolio.
  • The average return on all college and university endowments last year was 18.2 percent -- slightly less than 1997, but the fourth straight year of double digit returns, according to the National Association of College and University Business Officers.
  • According to figures developed by Harvard University economist George Borjas, only a 1.8 percent return on that university's $13 billion endowment would be sufficient to pay the tuition, room and board for all Harvard's 6,635 undergraduates.

Yet observers note that college and university officials prefer not to talk about their riches -- opting instead to argue their need for more government assistance. President Clinton has responded with a 2000 budget that calls for $52.1 billion in student aid -- which does not include the savings to families from two education tax credits which have just gone into effect.

Clearly, some analysts contend, many colleges and universities have the wherewithal to decrease the costs of tuition and fees -- rather than expecting taxpayers, including those who never had the opportunity to go to college, to cough up ever greater subsidies to the schools.

Source: Editorial, "The Old College Try," Wall Street Journal, March 4, 1999.


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