40 wealthiest schools had a median $6.3 billion in cash, investments.
By Raif Karerat
WASHINGTON, DC: Higher education is not bereft of the wealth gaps that have always affected the overarching U.S. economy, according to a report published by Moody’s Investor Service.
The divide is only growing, with the nation’s 40 wealthiest universities — including Harvard, Stanford, and the University of Michigan — gaining momentum with their funding at a much faster rate than other schools.
The 10 richest institutions held nearly one-third of total cash and investments at four-year schools in fiscal 2014, while the top 40 accounted for two-thirds.
The 40 wealthiest public and private schools had a median $6.3 billion in cash and investments in fiscal 2014, compared with $273 million for the rest of the group, Moody’s assessed: “Those large endowments draw the top investment advisers and provide access to less-liquid, but potentially higher-yielding, investments,” a report said.
As a result, said Pranav Sharma, a Moody’s analyst and the report’s lead author, it is unlikely that schools not already in the top bracket can catch up, “unless financial leaders make some big mistakes.”
The snowballing effect is due to particularly strong investment performances and generous donors, reported the Wall Street Journal.
Traditionally wealthy institutions also have a leg up when it comes to collecting charitable donations, with the 40 financial leaders of academia capturing 59 percent of all gift revenue in fiscal 2014. Those with weaker balance sheets, with debt rated Baa and below, brought in just 3% of the gifts.
Schools with debt appraised by Moody at the Baa rating or below account for just 3 percent of the gifts.
Harvard secured a $350 million gift from the family of Hong Kong investor Gerald Chan last year that was its most sizable ever, and topped WSJ’s list of higher education donations in fiscal 2014 with $1.16 billion in total gifts.
“Those schools with the brightest prospects generally rely little on tuition revenue. Rather, their income streams are diverse, including philanthropic gifts, investments, research funds and, for public schools, state support,” according to the financial publication.
Meanwhile, the average amount of student loan debt again crept up for the Class of 2013, and is approaching $30,000, reported U.S. News & World Report late last year.
In its ninth annual report on student loan debt, the Institute for College Access and Success found nearly 7 in 10 graduating seniors in 2013 – 69 percent – left school with an average of $28,400 in student loan debt, an increase of 2 percent from 2012.