Moody’s: The Richest Colleges Are Getting Richer


Harvard, the University of Texas, Stanford, the University of California, and Yale have been reported as the top 5 wealthiest universities in the country — and they make up the bulk of higher ed wealth.

A recent Moody’s Investor service report revealed that the 10 richest colleges hold one-third of cash and assets and the top 40 institutions the two-thirds, Melissa Korn for the Wall Street Journal reports.

Harvard comes at the top with $42.8 billion, followed by the public University of Texas with assets evaluated at $36.7 billion. The top 3 institution is Stanford with $31.6 billion in estimated cash and investments.

The richest are getting richer, Pranav Sharma, lead analyst for the Moody’s report says.

“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,”  Sharma explains.

Despite suffering the greatest losses during the 2008 financial collapse, the wealthiest universities have managed to recover quickly. The top 40 schools witnessed 50 percent growth between 2009 and 2014 according to Moody’s Investor Service.

A flourishing economy and the rise of the stock market were among the key factors favoring the repair of the blow these universities had taken.

Wealthy schools have multiple sources of income, which makes it easier for them to become even more wealthy.  Income from returns on investments, gifts, research grants and state support for state colleges paint a diversified income resource for the wealthiest schools,  John W. Shoen for CNBC says.

The median cash and investments worth for the top 40 institutions is estimated at $6.3 billion. On the other end of the scales, many schools are struggling to get new students and keep their campuses open.

While have-nots rely more on tuition and student fees, top-tier colleges get most of their revenue from investments and donations, so even if their student enrollment is small, this doesn’t affect their bottomline:

“The median level of revenue generated from student-related charges for all private colleges is 75 percent; at the top 20 private schools, the median was just 15 percent.”

Schools like Howard University are laying off faculty while other colleges struggling with financial challenges choose to close such as Sweet Briar College in Virginia.

Big institutions attract big donations, too. Harvard, which in 2014 received $1.16 billion, topped the charts of donations for the year. A $350 million donation from the family of  investor Gerald Chan from Hong Kong is the biggest ever received by Harvard.

All colleges are not on the same financial playing field, which is highlighted in Moody’s report, Nick Anderson for The Washington Post says.

“The 40 wealthiest public and private schools had a median $6.3 billion in cash and investments in fiscal 2014, compared with $273 million for the rest of group Moody’s rates,“ the Wall Street Journal says.