Wealth and Want Part 1: Multi-Billion Dollar Endowments

US higher education reflects and reinforces a world of increasing inequality, injustice, and inhumanity. This system (or some would call it an industry) should function as a conduit between good K-12 education, good jobs, and the wellness of all its citizens, whether they attend or not. But increasingly, it does not. 

The first installments of the Wealth and Want series examine the concentration of wealth in the US higher education system.  And this article focuses on loosely regulated university endowments. While many American schools struggle to provide basic amenities and academic resources, elite universities boast endowments that rival the GDPs of small nations. And they pay little in taxes. 

The Endowment Elite and Ill-Gotten Gains

At the pinnacle of higher education wealth are Harvard ($49B), The University of Texas System ($44B), Yale ($40B), Stanford ($36B), and Princeton ($34B). These institutions have amassed endowments that provide a steady stream of income for investments, scholarships, and research initiatives. How their money is invested is rarely known.  

Endowment managers at elite schools typically make more than a million dollars a year. The most elite schools pay their managers $5M-$10M a year, with compensation largely based on returns. But those managers still get hefty salaries even when they lose money.

There are more than 120 schools with endowments greater than a billion dollars. But the 20 richest university endowments together hold more wealth than the other 5000 or so other higher education institutions combined. 

Elite endowments are often the result of centuries of fundraising, donations, and strategic (sometimes shady) investments. For many of the most prestigious schools, it began with land theft and generations of forced labor. 

For other wealthy schools, it was the result of philanthropic robber barons like Johns Hopkins (who also held captives), Andrew Carnegie, Leland Stanford, John D. Rockefeller, Cornelius Vanderbilt, and James Buchanan Duke who made their wealth through mass exploitation of people and the planet. 

For wealthy flagship state universities, it also came from land theft. In the case of the University of Texas, its wealth largely came from, and to some degree still comes from the exploitation of fossil fuels that jeopardize the planet.

Historical Context and Structural Inequality

• Land Theft and the Founding of Institutions: The establishment of many American universities, including Ivy League institutions and those founded under the Morrill Act, was often intertwined with land theft from Native American tribes. This practice, often referred to as "land dispossession" or "Indian removal," was a key component of Manifest Destiny and the expansion of European settlement across the continent.
• Ivy League Universities: Institutions like Harvard, Yale, and Columbia were granted land by colonial governments, which often acquired these lands through treaties that were coerced or violated. They also used enslaved labor to build and maintain their wealth.  
• Funding Models: The funding models for public higher education often favor larger, research-intensive universities. This can lead to underfunding for smaller, less prestigious institutions, particularly those serving marginalized communities.
• Endowment Inequality and Profits Over People and Planet: Endowments are a powerful tool for wealth accumulation and institutional advantage. The concentration of endowments in a few elite universities can exacerbate existing inequalities and create a self-perpetuating cycle of privilege.  These endowments have also engaged in shady investments that perpetuated worker oppression, genocide, and environmental destruction. 

Related links:

Pay and Chief Investment Officers: Good Money while It Lasts

Tax Wealthy Private Universities Now (Paul Prescod, Jacobin)

Have Revenues Peaked For US Public Higher Education?

Student higher education enrollment has been headed in a downward trajectory for about 14 years. So, at some point we should have expected revenues to drop. This revenue decline, according to the US Department of Education statistics, finally happened in 2022, the last year reported.  

But until ED updates higher ed revenue numbers, we won't know if we are seeing a statistical blip or something bigger and more long-term. These are numbers that some in the higher ed business may deny, hide, or rationalize for years to come. 

Alabama, Michigan, Missouri, Texas, Vermont, Virginia, Washington, West Virginia, and Wyoming had similar looking revenue drops in 2022. States with years of consistent declining enrollment, and there are many of them, are difficult to assess without more data.  Some states, like Pennsylvania, have long flat line revenue trajectories that show obvious trends of stagnation. States with growing populations (aside from Texas) appear to have upward revenue trends.

Did federal money received during the Covid crisis artificially lift revenues, leading to an eventual short-term correction, or is there something more to look at?  Saying it's a short-term correction would be a simple answer that higher ed industry proponents could use on the front stage, whether or not it's completely true. But it may be too simple. 

In the future, we will drill down into these numbers and examine revenues in subsets of public higher education, to include community colleges, HBCUs and other minority serving institutions, state universities, and flagship universities in various regions of the US. Private schools (which we will discuss later) may be in a deeper revenue decline. There are few apparent patterns, other than that the rich have gotten richer and the poor poorer (this too we will discuss in another article).

If higher education revenues continue to decline, as they appear to be doing for 2024-2025, what will we see on the ground level? Will there be budget cuts and layoffs?  The California State University System is already bracing for a $1 Billion shortfall, and they are not alone. 

What happens with higher education revenues as the enrollment cliff approaches and states are considering higher education budget cuts?  What happens to schools that rely mostly on tuition and fees with few other sources of revenues? Should institutions expect to receive more federal funds again in the next (inevitable) economic downturn?

 

Related link:

State Budgets Are Downsizing (Pew)

College Meltdown 3.0 Could Start Earlier (And End Worse) Than Planned

Baby Boomers Turning 80: The Flip Side of the 2026 Enrollment Cliff

When will US higher ed revenues peak?

State Universities and the College Meltdown

"20-20": Many US States Have Seen Enrollment Drops of More Than 20 Percent 

Interview with Dahn Shaulis - Higher Education Inquirer (College Viability)

"Let's all pretend we couldn't see it coming" (The US Working-Class Depression)