What is college endowment and why does it matter?

College endowment refers to all of the funds a college, university, or institution receives from donations. The money can be earmarked for specific expenses or used towards anything the school deems necessary. Below, we've outlined some things you need to know about college endowment, explained why it's important, and highlighted some schools with the largest amounts.

What is college endowment?

College or university endowment is the money and financial assets the school receives from donations, either from businesses, organizations, government agencies, or individuals, such as alumni. The endowment is often placed into low-risk investments to generate income; a small percentage is used each year to fund college operations.

Schools have a total endowment, but that doesn't mean they can use the money for whatever they wish. Much of the money is broken up into smaller endowment funds, earmarked for specific purposes designated by the donors, such as hiring faculty, funding scholarships, or tending to campus.

Types of university endowment

There are four types of college endowment:

• Unrestricted endowments can be used however the school deems fit, which could include spending, investing, saving, or distributing.
• Restricted endowments need to be invested and stay invested. The school can only use the earnings from the investment according to the donor's specified intent.
• Term endowment principals must be invested for a set period of time. The school can use any earnings from the principal as well as the money after the time requirement has passed. The money may or may not come with donor stipulations.
• Quasi-endowment principals, also known as board-designated endowments, are invested for a fixed period of time but the school can use the earnings, and later the principal, as it sees fit.

Why is college endowment important?

College endowments help colleges and universities meet their long-term goals and current financial obligations. The money, depending on the type, can be used to cover a variety of needs, from campus maintenance to full ride scholarships.

Just about everyone benefits when colleges use endowments wisely. For instance:

• Students can receive scholarships while going to a well-cared for school.
• Research projects move forward.
• Professors and students have access to high-quality and advanced equipment.
• Faculty and staff are paid well. In turn, the school itself can attract top instructors and students.

College endowments also provide safety nets. In the event of a recession or other financial issue, the school can use unrestricted and quasi-endowments to cover costs.

Colleges with the largest endowments

Private colleges and universities tend to have higher total endowments compared to public schools, but it's not a hard-and-fast rule. For example, Texas A&M University, College Station and University of Michigan, Ann Arbor have much higher endowment totals than hundreds of private colleges and universities.

Here's a quick look at some of schools with the largest endowments:

1. Harvard University

• Location: Cambridge
• Total endowment: $50,748,594,000
• Sticker price: $86,366
• Type of school: Private not-for-profit

According to Harvard University, the school granted $749 million to students in financial aid and scholarships in 2024. 57% receive institutional grant aid to help cover the cost of attendance – $62,073 on average. In fact, all students who have a family income of $100,000 or lower receive a full financial aid package that covers all of their education-related costs.

2. Yale University

• Location: New Haven, CT
• Total endowment: $40,746,867,000
• Sticker price: $92,315
• Type of school: Private not-for-profit

In 2024, Yale University received $1.9 billion in endowment income. 25%, $475 million, was allocated to teaching and research. 18%, or $342 million, went towards financial aid. Students who have a family income below $75,000 receive a full ride to Yale. Only 6% have to take out loans to attend.

3. Stanford University

• Location: Stanford, CA
• Total endowment: $36,494,893,000
• Sticker price: $71,335
• Type of school: Private not-for-profit

In 2023-24, 5% of Stanford University's income from endowments covered about 22% of its operating expenses. The total endowment is made up of over 8,000 different funds, and most of its financial aid comes from its income. On our Middle Class Affordability Rankings, Stanford comes in at #2 in California.

4. Princeton University

• Location: Princeton, NJ
• Total endowment: $33,380,863,000
• Sticker price: $81,814
• Type of school: Private not-for-profit

Princeton University helps low-income students attend the school – most families who make $100,000 or less don't have to pay anything towards their child's education at the school. The university also covers full tuition and stipends to degree-seeking PH.D. candidates. In the fiscal year 2024, Princeton received $1.7 billion in earnings from their endowment.

5. Massachusetts Institute of Technology

• Location: Cambridge, MA
• Total endowment: $23,453,446,000
• Sticker price: $86,827
• Type of school: Private not-for-profit

At the end of the 2025 fiscal year, Massachusetts Institute of Technology's (MIT) total endowment totaled $27.4 billion. It's made up of over 4,500 separate endowment funds, with a majority going towards professorships, research, and scholarships. MIT recently stated that "88% of seniors who graduated in academic year 2025 graduated with no debt."

6. University of Pennsylvania

• Location: Philadelphia, PA
• Total endowment: $20,962,941,000
• Sticker price: $92,983
• Type of school: Private not-for-profit

Over 50% of University of Pennsylvania's endowment is dedicated towards instruction. In 2024, endowment income was nearly $1.1 billion, up from $90 million in 2023. Penn meets 100% of undergraduates' demonstrated need and offers graduates program-specific financial aid. 47% of students receive institutional grants from the school ($56,764 on average).

7. Texas A&M University - College Station

• Location: College Station, TX
• Total endowment: $18,128,516,595
• Sticker price: $56,081
• Type of school: Public

A majority of gifts during the fiscal year 2024 at Texas A&M University, College Station, were directed towards scholarships – around 41%. There are also several programs and events that benefit from endowment contributions, including Fish Camp, the incoming student orientation, and The Big Event, an annual project where students show appreciation to the community through service projects.

8. University of Michigan - Ann Arbor

• Location: Ann Arbor, MI
• Total endowment: $17,626,819,000
• Sticker price: $84,182
• Type of school: Public

University of Michigan, Ann Arbor's endowment is made up of over 13,000 separate funds, and they state endowments lower tuition rates by about $6,000 each year. 28% of the total is dedicated to student financial aid. A recent $20 million donation by Philip and Nicole Hadley was made to "support recreation, health, and wellbeing opportunities for students."

9. University of Notre Dame

• Location: Notre Dame, IN
• Total endowment: $16,960,542,000
• Sticker price: $86,108
• Type of school: Private not-for-profit

The University of Notre Dame has an endowment per student of $1,280,717. 58% of students receive institutional grants – just over $49,500 each on average. Much of the available endowment goes towards scholarships and fellowships, followed by program support for academics.

10. Columbia University in the City of New York

• Location: New York, NY
• Total endowment: $13,642,667,000
• Sticker price: $94,074
• Type of school: Private not-for-profit

In fiscal year 2024, 31% of the endowment distributions at Columbia University went towards faculty and research. 24% went to student support. One recent endowment, the Claire Li and Conan Gu Fellowship Fund, is dedicated to providing financial support to graduates in the Master of Science in Actuarial Science program.

Why can't endowments pay for all students' tuition?

A common question is, "If these endowments are so large, why do students need to pay so much in tuition?" While some schools, such as Harvard University, have very large endowment totals, this isn't the case across the board. In fact, just looking at the totals between Harvard at #1 and Columbia University at #10 in the list above is monumental – it's a more than $37 billion difference.

While endowment funds can help lower tuition and provide financial aid to many, the total amount isn't enough to cover all students' education costs and pay for other campus needs, such as research, salaries, and resources. The endowment provides income, but it also acts as a safety net in case the institution runs into financial trouble.

In addition, much of the money comes with restrictions or stipulations. As a result, schools simply can't use it how they see fit. They have to follow the donors' requests.

College endowments benefit everyone, including students, faculty, staff, communities, and the school itself. They provide sustainable income to the institution, lower tuition rates, fund research projects, maintain and grow campuses, increase financial aid packages, and more.

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