College Endowments Are Down…Wait, What IS a College Endowment?

February 4th, 2010

During your college search or perhaps even during a campus visit, you might have heard the term “college endowment” come up in conversation. And since it is often mentioned as a point of pride for a college or university, you might have wondered, “What is a college endowment?”

A college endowment is a sum of money that is granted by an individual or a group of people to a school as a permanent funding source. Usually, the endowment is so great—we’re talking millions in many cases–that the school can use just the interest earned on the investment to support the department, program, scholarship, or whatever is being funded. But if that’s too much math for you to wrap your head around, just know that endowments are a BIG deal in the college world and that the more endowments a college or university has, the more great things they can offer their students.

So should you worry about college endowments when it comes to choosing a school? The short answer is no, which is a good thing, since the Council for Aid to Education has recently reported that college endowments are down because of—what else?—the economy. Endowments certainly add to a school’s prestige, but they are not used to determine college rankings. So instead of seeing how much coin a college has, consider things that will more directly affect you, like academic programs and campus life.

While endowments are suffering right now, they, along with everything else, will eventually rebound. It’s not like the Ivies are going to close their doors any time soon, and after all, there are plenty of colleges out there with very small endowments that are doing just fine. So don’t shed a tear for Stanford University, which only got $640 million in endowments. Somehow, I think they’ll get by.

–Barbara Bellesi

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