The rich are getting richer in U.S. higher education, a new report shows.
The assets of the 40 wealthiest institutions, led by Harvard University, have increased 50 percent over the past five years, according to research being released Thursday by Moody’s Investors Service, the New York bond-rating company.
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.
“This growing gap will pose increasing competitive challenges for less-endowed institutions that do not have the resources to invest in facilities, financial aid and strategic initiatives,” Moody’s said in the report.
Moody’s said the wealthiest 40 schools account for almost two-thirds of the total assets of the 503 schools it rates.
The company offers a broader tally of wealth than most reports. Harvard, for example, has a $36.4 billion endowment, the largest in higher education. Moody’s report features a chart that adds in cash and other funds. Harvard had $42.8 billion as of June.
The richest include such public institutions as the University of Texas, with $36.7 billion in cash and investments. Still, state universities have far larger enrollments, so they are poorer than private colleges on a per-student basis.
The favored few raise more money from alumni and earn more on their investments. The 40 richest schools collected 60 percent of total gifts in higher education in the year ended June 30. They also kept less cash on hand and more of their money invested in stocks and other high-return investments, Moody’s said.
Because of this riskier strategy, schools with large endowments posted some of the steepest investment losses in 2009 due to the credit crisis. They were also among the quickest to recover, Moody’s said.