The 10 wealthiest colleges and universities hold nearly a third of all the cash and investments of 503 public and private schools in the United States, and Princeton University is among the top dogs.
Princeton University ranks fourth among private universities, and sixth overall, according to new report by Moody’s Investor Service that is based on cash and investments for the 2014 fiscal year.
The top 40 private and public schools hold almost two-thirds of the total wealth. Moody’s reported that the top schools are poised to further widen their balance sheet advantage.
“This group of financially leading universities is differentiated from the rest of the sector by long-term highly diversified investment strategies, exceptionally strong philanthropic support and healthy cash flows. Combined, these will contribute to ongoing wealth concentration in the higher education sector,” Moody’s Analyst Pranav Sharma said in the report.
Moody’s says their diverse investment strategies and access to the best performing managers at these top institutions played a pivotal role in a quick recovery since the financial crisis. By investing in less-liquid, higher-yielding assets, the group has stronger long-term investment returns. With very strong financial reserves relative to debt and operations, the universities can manage the volatility associated with these strategies.
For the 2014 fiscal year, the top 40 universities had median cash and investments of $6.3 billion, compared with $272 million for the remainder of the schools.
The majority of the financially leading universities also attract a disproportionate share of philanthropic support, contributing to their ongoing performance. Gift revenue is used to further their strong brand recognition by funding investments in academics, research, and facilities – widening their competitive gains, according to the report.
Nearly 60 percent of gifts last year to the schools that Moody’s analyzed went to the top 40 schools.
“These financially strong universities benefit from diverse revenue sources, which underpin greater operating stability and cash flow generation,” according to the report. “Despite revenue diversity, financial performance of public universities is expected to moderate as state governments reduce operating appropriations while placing constraints on tuition growth.”
The 10 wealthiest private schools are:
1. Harvard University – $42.8 billion
2. Stanford University – $31.6 billion
3. Yale University – $25.4 billion
4. Princeton University – $21.3 billion
5. Massachusetts Institute of Technology – $15.2 billion
6. University of Pennsylvania – $11.9 billion
7. Duke University – $11.4 billion
8. Northwestern University – $10.4 billion
9. Columbia University – $9.9 billion
10. University of Notre Dame – $9.5 billion
The 10 wealthiest public schools are:
1. University of Texas system – $36.7 billion
2. University of California with $28.6 billion
3. University of Michigan – $11.5 billion
4. State University System of Florida – $9.7 billion
5. University of Virginia – $8.1 billion
6. Pennsylvania State University – $6.7 billion
7. California State University – $5.7 billion
8. Texas A&M University system – $5.0 billion
9. University of Washington – $4.9 billion
10. Ohio State University – $4.8 billion