When it comes to American universities, the rich are getting richer.
In fact, the 40 wealthiest universities, including Harvard, Duke, Yale, MIT and the University of Michigan, now control nearly two-thirds of the total wealth of four-year colleges in the United States. That’s according to a new study from Moody’s Investors Service, which looked at 503 colleges.
Those 40 universities had a median of $6.3 billion in cash and investments in 2014, compared with $273 million for the remaining 463 schools.
Moody’s attributes the wealthy colleges’ financial success to strong investment performances, generous donors and healthy cash flows.
Karen Kedem, vice president and senior credit officer at Moody’s, told The Wall Street Journal:
“It’s really a tale of two college towns, if you will, or cities. Looking ahead, the expectation is that this [gap] will only widen.”
The assets of the 40 richest universities, led by Harvard, which has a $42.8 billion, jumped by 50 percent in the past five years, Bloomberg Business reports.
“That’s more than twice as fast as colleges with the lowest credit ratings, many of which have been struggling to fill their seats as the number of high school graduates declines,” Bloomberg noted.
The top 40 schools also snatched up more than 59 percent of all donations to universities during 2014.
While about 75 percent of private colleges’ revenue comes from student-related fees, and public universities get nearly half their revenue from students, the wealthiest universities don’t rely very heavily on tuition to make ends meet.
“Rather, their income streams are diverse, including philanthropic gifts, investments, research funds and, for public schools, state support,” the WSJ said.
The growing higher education wealth gap is expected to become more pronounced.
“This growing gap will pose increasing competitive challenges for institutions that do not have the resources to invest in facilities, financial aid, and other strategic initiatives at the same level as their wealthier counterparts,” the report said.
Of the 40 richest colleges, the top 10 control one-third of the total wealth.
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