Endowment Levels at Universities – Pushed for Decades, Now Potentially Taxed
Let the debate begin…
Recent Congressional legislative proposals targeting university endowments have reignited debates about the financial structures of elite institutions. These discussions center on whether the substantial endowments held by some universities align with their educational missions, especially in light of rising tuition costs.
While institutions like Harvard and Yale often dominate discussions about large endowments (and would be included at the highest possible taxation rate), several lesser-known universities also possess significant endowment funds on a per-student basis:
Grinnell College: This liberal arts college in Iowa has an endowment of approximately $2.1 billion. With a student body of around 1,700, this equates to over $1.2 million per student.
Pomona College: Located in California, Pomona's endowment stands at about $2.25 billion. Serving roughly 1,700 students, the endowment per student exceeds $1.3 million.
Amherst College: In Massachusetts, Amherst boasts an endowment of approximately $2.6 billion. With around 1,800 students, this results in an endowment per student of over $1.4 million.
These figures underscore the considerable financial assets available to these institutions on a per-student basis.
The substantial size of these endowments has attracted legislative attention. For instance, recent proposals have considered taxing university endowments to address broader fiscal concerns. In response, institutions have highlighted that a significant portion of their endowments is restricted, limiting flexibility in reallocating funds.
Moreover, political actions have further complicated the financial landscape. In 2025, the federal government froze $2.26 billion in multiyear grants and contracts to certain universities, citing issues related to campus policies. This move raised questions about these universities' ability to offset such losses, despite their sizable endowments.
Despite these vast endowments, tuition fees at these institutions remain high. This juxtaposition prompts questions about the allocation of endowment funds and the commitment to affordability. If endowments are not significantly mitigating tuition costs, stakeholders might question their role in promoting accessible education.
Over the past several decades, best practice in university financial planning has emphasized the importance of building strong endowments through sustained philanthropic efforts. This strategy has been a hallmark of sound fiscal stewardship, enabling institutions to secure long-term financial stability, fund scholarships, attract top faculty, and weather economic fluctuations. Development offices, boards, and presidents have been rightly encouraged to grow these endowments as a way to protect and enhance the academic mission. Ironically, as federal proposals now consider taxing large endowments, some of the very universities that followed these practices most effectively are being penalized for their success—essentially punished for doing the right thing, very, very well. This tension highlights a growing disconnect between public policy pressures and the financial strategies that have historically underpinned institutional resilience.
The convergence of large endowments, high tuition fees, and legislative scrutiny invites a broader discussion on financial stewardship in higher education. As universities navigate these challenges, transparency in endowment management and a renewed focus on affordability could be pivotal in aligning institutional practices with educational missions while maintaining strong financial stability.
