The Washington Post - USA (2022-02-20)

SUNDAY, FEBRUARY 20 , 2022. THE WASHINGTON POST EZ RE A

Poor: How Elite Colleges Are Fail-

ing Disadvantaged Students.”

“There are students staying on

campus over spring break with no

access to food. Invest more in the

services that will help students

deal with these disparities.”

Some wealthy schools say they

are stepping up their recruitment

and support of students who are

the first in their families to attend

college and those with the greatest

financial need.

Johns Hopkins University in

Baltimore, with an endowment of

$9.3 billion, said it has expanded

support systems for its first-gener-

ation and low-income students,

ensuring equal access to research

opportunities, internships and

study abroad programs.

“We continue to work on inclu-

sion and experiential access issues

for limited income students to en-

sure that all of our students feel

part of the Johns Hopkins com-

munity,” university spokesperson

Jill Rosen said in an email.

Ending an admissions policy

that favored the relatives of alum-

ni in 2014 helped the university

create a more diverse student

body. As of October 2021, Johns

Hopkins said first-generation and

low-resource students make up

nearly 27 percent of the under-

graduate population, compared

with 16.1 percent in 2013.

Donors are showing greater in-

terest in philanthropy that sup-

ports racial and economic equality

on campuses.

Sixty-five percent of respon-

dents to the NACUBO survey said

they received gifts for their en-

dowments specifically earmarked

for diversity, equity and inclusion

initiatives in fiscal 2021. Such gift-

ing was especially common

among the smallest endowments,

80 percent of which reported DEI-

related gifts. In contrast, 36 per-

cent of the largest endowments

reported those gifts.

Institutions have held the line

in the last two years on drawing

down their returns. The average

annual spend rate remained at 4.

percent in 2021, despite hefty

yields on endowment invest-

ments. That approach is sure to

fuel long-standing criticism from

lawmakers and activists that

wealthy schools hoard cash while

families struggle to cover the cost

of attendance.

Susan Whealler Johnston, pres-

ident and chief executive officer of

NACUBO, argues that universities

are being wise with the manage-

ment of their endowments to

maintain them in perpetuity.

BY DANIELLE

DOUGLAS-GABRIEL

Wealthy universities are under
pressure to use more of their dol-
lars to increase access for the
neediest students. Although near-
ly half of endowment spending
funds financial aid, some experts
say elite institutions can dedicate
more of their investment returns
to boost racial and economic equi-
ty on their campuses.
University endowments have
experienced volatility in the last
decade but were on a tear in 2021.
Average annual returns at 720 col-
leges and universities soared 30.
percent in the 12 months ending
June 30, up from 1.8 percent the
prior year, according to a survey
released Friday by TIAA and the
National Association of College
and University Business Officers
(NACUBO). Meanwhile, their
spending rate has remained
roughly the same.
While endowments of all sizes
recorded returns of more than 20
percent, those with more than
$1 billion in assets posted the
strongest results.
Harvard, with an endowment
of $51.9 billion, held the top spot,
followed by the University of Texas
System with $42.9 billion. Private
universities dominated the top 20
largest endowments, but a hand-
ful of public institutions rounded
out the list, including the Univer-
sity of Virginia with a $10.5 billion
endowment.
Universities maintain endow-
ments, a collection of tax-exempt
donations and investments, to pay
for salaries, research, financial aid
and other expenses. Portions of
endowments are restricted to uses
that donors stipulate. The money
also helps colleges weather ups
and downs in economic cycles.
Record annual yields and 10-
year returns nearing double digits
for the biggest endowments
proves the wealthiest schools can
afford to loosen their purse
strings, said Charlie Eaton, a soci-
ology professor at the University
of California, Merced, who studies
endowments.
“A lot of these schools have
room to spend more from their
endowments,” said Eaton, author
of “Bankers in the Ivory Tower.” “If
they enrolled more students from
low-income backgrounds, they
could make a further contribution
to equity.”

Undergraduates at the most se-

lective schools can graduate virtu-

ally debt-free, Eaton said, but so

few students with financial need

are admitted that generous aid

policies have limited reach.

And it’s not just grants and

scholarships that matter, said An-

thony Abraham Jack, an assistant

professor at Harvard University’s

Graduate School of Education.

Elite schools, he said, must look

beyond financial aid to holistically

support students from low- and

middle-income families, making

sure they are not going hungry or

missing out on collegiate experi-

ences that wealthier peers can af-

ford.

“The problem with a number of

elite places is they presume that

their students don’t have to worry

about the most basic things,” said

Jack, author of “The Privileged

“The pandemic suggests that

endowments will continue to take

a conservative approach to man-

aging their spending,” Johnston

said on a call with reporters

Thursday. “Endowments are man-

aged with an eye on the very long

term and to ensure intergenera-

tional equity, not privileging to-

day’s students or today’s institu-

tional needs over those of the fu-

ture.”

At Princeton University, with

the fifth-largest endowment, at

$37.6 billion, endowment funds

cover over 80 percent of the un-

dergraduate financial aid budget,

which supports efforts to increase

socioeconomic diversity, said uni-

versity spokesman Ben Chang.

Among the students offered ad-

mission to Princeton’s Class of

2025, 22 percent hail from low-in-

come households, compared with

6.2 percent in 2001. The Ivy

League school’s no-loan policy, ad-

opted in 2001, was made possible

by the long-term growth of the

endowment, Chang said.

Eaton at UC Merced said up-

ping the spend rate poses little risk

to the long-term growth of endow-

ments at the richest schools. The

connections that big elite schools

have with top private equity and

hedge funds help them net higher

returns, he said. Between that and

their size, Eaton said their endow-

ments are going to keep growing.

It is not unprecedented for

schools to increase their endow-

ment spending, he said. Harvard

did in 2009 during the Great Re-

cession and Princeton upped its

spend rate to 6 percent at the start

of the coronavirus pandemic, but

even then Princeton President

Christopher L. Eisgruber said it

was not a sustainable move. “We

therefore need to reduce the Uni-

versity’s operating expenditures,

especially because there is a sub-

stantial risk that greater economic

distress may lie ahead,” Eisgruber

wrote the Princeton community in

May 2020.

Jack, at Harvard, said while

elite privates must earmark more

funding to foster equality, wealthy

public systems also need to do

their share.

“Think about how many public

school systems are on the [top

endowment] list. And think about

how much inequality exists within

those system. If you are not at the

flagship, it’s a very different ex-

perience,” Jack said.

Elite institutions are pressed to loosen purse strings to boost equity

SETH WENIG/ASSOCIATED PRESS

At $37.6 billion, Princeton University’s endowment is fifth-largest in the nation. Average annual returns at hundreds of colleges and

universities have soared, but their spending rate has remained roughly the same, according to a survey released Friday.

Save more for your future

with a better rate today.

7x

2

the national average Just $1,000 to get started

PenFed.org/Certificates

Get started at

Federally Insured by NCUA. To receive any advertised product, you must become a member of PenFed Credit Union. 1. APY = Annual Percentage Yield. Rates are accurate as of February 1, 2022. Rates are subject

to change and are fixed for the term of the certificate. Certificates dividends compound daily and credited monthly. The minimum balance to open a certificate is $1,000. Penalty will be imposed for early withdrawal. This will reduce

earnings on the account. For all certificates funded by ACH, funds cannot but withdrawn within the first 60 days of the account opening. 2. The rate for the 24-month certificate is more than 7x the national average of 0.17% APY and

was sourced directly from http://www.fdic.gov/regulations/resources/rates as of January 18, 2022. © 2022 Pentagon Federal Credit Union.

APY

1

for 15 months

1.00%1.15%

APY

1

for 18 months

1.25%

APY

1

for 24 months

Limited-time Money Market Certificate special