Growth in colleges' endowments is not bringing lower tuitions

Published: Sunday, Sept. 23 2012 9:00 p.m. MDT

Although some public schools have large endowments, many have little or no money in endowment funds. There are 2,719 four-year colleges in the U.S. and another 1,690 two-year colleges, and most have no endowment, said Time magazine, citing NACUBO statistics. Elite schools with multiple billions drive the conversation about lowering tuition through endowments, but the idea isn't feasible for most schools, the report said.

The median endowment size of the 823 U.S. colleges and universities surveyed by NACUBO was $90 million, a size that generates about $4.5 million spendable dollars per year. That's not enough to significantly reduce student debt at most schools, if it were available for that purpose. Typically, from 4 to 4.5 percent of a college endowment's total is available for spending in a given year. In many cases, though, endowment funds are restricted by their donors for particular uses such as endowed chairs and scholarships, or buildings.

Local focus

The University of Utah's endowment grew from $601,469,000 to $668,683,000 between 2007 and 2011 — a 9.5 percent increase fed by increased giving as the economy improved. Annual undergraduate tuition at the U. is $6,200 for 2012-13.

"Endowments are gifts to the university, and the donors place restrictions on their gifts which mandate how and for what the earnings are to be expended," said U. communications director Keith Sterling. "Approximately 28 percent of endowment earnings is used for student aid/scholarships."

The situation is similar at Utah State University, where the endowment stood at $187,415,000 in 2007 and grew to $208,986,000 by 2011. The majority of the school's endowment is restricted by donors. USU's endowment isn't applied to overall tuition, but it helps many students, said USU communications director Tim Vitale. "There is a very direct tuition break for a lot of our students," Vitale said. "As the endowment grows, so does the number of scholarships we give to students. There are definitely scholarships directed toward students who have financial need, but most have an academic component, and are open to any student."

Brigham Young University, sponsored by The Church of Jesus Christ of Latter-day Saints, has never released an endowment figure and does not discuss financial matters publicly.

Around the nation

University of Texas leads the list of wealthy public schools, with more than $16 billion in its coffers. The University of Montana saw its endowment rise from $123,528,000 in 2007 to $136,310,000 in 2011. The school spends 4.25 percent of its endowment each year on buildings, faculty salaries and students support. As at other schools, criteria for spending endowment funds is established by donors.

Georgia State University's endowment increased from $98,634,000 in 2008 to $113,199,000 in 2011, a 14,8 percent increase. In addition to scholarships, the fund provides retention funds to help students who have been dropped form classes for lack of payment, and programs to reduce costs for first-generation and Latino college students.

Endowed scholarships often connect recipients and donors in powerful ways. Phelps said he has long admired the Warshaw Foundation's financial support of organizations that help people with disabilities, in his home state of Utah, and around the globe.

"I'm honored to be spoken of in the same sentence as those people," he said.

Phelps plans to work in government administration to affect policy in the social work arena after he completes his two master's degrees.

Email: cbaker@desnews.com

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