The richest schools are getting richer at a faster pace than their less wealthy peers, according to a new report from Moody's Investors Service.
Moody's analysts reviewed not only endowments but also cash and additional funds of 503 institutions, which analysts said allowed them to get a rounded understanding of the financial landscape.
The 40 wealthiest institutions' assets grew at 50% over the last five years—nearly twice as fast as the assets at the schools with the lowest credit scores. They also held almost two-thirds of the total assets counted—in addition to collecting 60% of all higher education gifts in fiscal year 2014. The top 10 institutions held about one-third of the total wealth.
"This growing gap will pose increasing competitive challenges for less-endowed institutions that do not have the resources to invest in facilities, financial aid and strategic initiatives," reads the report.
The top 40 also kept more of their funds in stocks rather than cash. While this resulted in steeper losses when the market crashed in 2009, it also led to their rapid recovery, according to the report.
In fiscal 2014, the five richest private schools were:
1. Harvard University, $42.8 billion;
2. Stanford University, $31.6 billion;
3. Yale University, $25.4 billion;
4. Princeton University, $21.3 billion, and:
5. Massachusetts Institute of Technology, $15.2 billion.
Even fundraising is bigger in Texas: UT's endowment now No. 2 in the nation
And the wealthiest public institutions were:
1. University of Texas System, $36.7 billion;
2. University of California, $28.6 billion;
3. University of Michigan, $11.5 billion;
4. State University System of Florida, $9.7 billion; and
5. University of Virginia, $8.1 billion.
However, the public schools enroll much larger numbers of students, so their total wealth per student is lower than that of private colleges and universities (Anderson, "Grade Point," Washington Post, 4/16; McDonald, BloombergBusiness, 4/16).
Next in Today's Briefing
Around the industry: Corinthian Colleges fined $30M for job placement data