WASHINGTON — Universities with the largest endowments were slammed as “playgrounds for the children of the wealthiest” in a new Education Trust report today that says the institutions should tap their endowments at a higher rate to benefit more low-income students.
However, a representative from a college and university business officer association says the report “ignores fundamental basics” about college finance and endowment management.
The report — titled “A Glimpse Inside the Coffers: Endowment Spending at Wealthy Colleges and Universities” — takes aim at 138 institutions it dubs the “$500 million club” because each has more than $500 million in endowment assets.
“Nearly half of the members of the $500 million club enroll so few Pell Grant recipients that they are in the bottom 5 percent nationally,” the report states. “And nearly 4 in 5 of these wealthy institutions have an annual net price for low-income students that exceeds 60 percent of their annual family income.
“This effectively prices out many low-income students, funneling them to institutions that are less selective and have far fewer resources,” the report states.
The authors — Andrew Nichols, director of higher education research and data analytics at The Education Trust and José Luis Santos, vice president of higher education policy and practice at the organization — looked more closely at a select group of these institutions and suggest that they spend a full 5 percent of their endowments (instead of the current 4.6 to 4.9 percent) to enroll more low-income students or lower the price of attendance. The 5 percent figure is in line with what other tax-exempt organizations are legally required to spend from their endowments.
