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> There was a joke at Princeton back in the 90s that if the board of directors ever allowed the university to spend down the endowment, they could fund ever-inc

> There was a joke at Princeton back in the 90s that if the board of directors ever allowed the university to spend down the endowment, they could fund ever-increasing tuition for all students for the next thousand years. Back of envelope: Princeton endowment ~22B. Enrollment ~8200. Current tuition ~$45K/yr. 22 * 10^9/(8200 * 45000) = 59.6. So in ~60 years, without even adding in inflation or the "ever-increasing tuition" or allowing more students as population increases, they'd empty the endowment.

ckuhl 8y ago
That’s assuming the rest of the endowment isn’t reinvested. You’d need less than a 2% annual return on that $22B to fund the tuition in perpetuity.
- ChrisLomont 8y ago
  Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate. The current endowment growth is already being spent to fund the university to the tune of ~4-6% [1]. So, if you take that source away, tuition would likely have to pick up the slack. Care to rerun your numbers adding this all in? [1] https://www.princeton.edu/news/2013/10/18/princeton-endowment-earns-117-percent-return-10-year-average-grows https://www.princeton.edu/news/2013/10/18/princeton-endowmen...
deleted 8y ago
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nshelly 8y ago
Princeton's current 2018 size is $25.9B. In 2001 it was $8.4B, so a annual growth rate of over 6% per year. So Princeton would have to spend 1.6% of their endowment every year to offer free tuition to their students. Assuming their rate of return on the endowment (including alumni contributions) can grow faster than the cost of tuition growth, they can provide free tuition for their students indefinitely.
- ChrisLomont 8y ago
  Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate. The current growth is already being spent to fund the university to the tune of ~4-6% [1]. So, if you take that source away, tuition would likely have to pick up the slack. Care to rerun your numbers adding this all in? [1] https://www.princeton.edu/news/2013/10/18/princeton-endowment-earns-117-percent-return-10-year-average-grows https://www.princeton.edu/news/2013/10/18/princeton-endowmen...

ckuhl 8y ago

That’s assuming the rest of the endowment isn’t reinvested. You’d need less than a 2% annual return on that $22B to fund the tuition in perpetuity.

ChrisLomont 8y ago
Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate. The current endowment growth is already being spent to fund the university to the tune of ~4-6% [1]. So, if you take that source away, tuition would likely have to pick up the slack. Care to rerun your numbers adding this all in? [1] https://www.princeton.edu/news/2013/10/18/princeton-endowment-earns-117-percent-return-10-year-average-grows https://www.princeton.edu/news/2013/10/18/princeton-endowmen...

deleted 8y ago

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nshelly 8y ago

Princeton's current 2018 size is $25.9B. In 2001 it was $8.4B, so a annual growth rate of over 6% per year. So Princeton would have to spend 1.6% of their endowment every year to offer free tuition to their students. Assuming their rate of return on the endowment (including alumni contributions) can grow faster than the cost of tuition growth, they can provide free tuition for their students indefinitely.

ChrisLomont 8y ago
Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate. The current growth is already being spent to fund the university to the tune of ~4-6% [1]. So, if you take that source away, tuition would likely have to pick up the slack. Care to rerun your numbers adding this all in? [1] https://www.princeton.edu/news/2013/10/18/princeton-endowment-earns-117-percent-return-10-year-average-grows https://www.princeton.edu/news/2013/10/18/princeton-endowmen...