By Donald Gilpin

Princeton University’s endowment, ranked fourth highest of all United States universities at $23.8 billion, has reported a 12.5 percent investment gain for the fiscal year ending June 30, 2017, up $1.6 billion over the past year.

“The University relies on earnings from the endowment to cover more than half of its operating budget, as well as to help fund its highest priority strategic initiatives,“ said Provost Deborah Prentice. Last year, spending distributions from the endowment contributed about $875 million to the University’s budget.

According to the Princeton University Investment Company (PRINCO), which manages the endowment and will certify the results during a meeting of its directors on October 19, consistently strong investment returns have allowed the University to initiate and expand its pioneering financial aid program.

The average annual return on the endowment over the past decade has been 7.1 percent, placing Princeton’s endowment among the top percentile of 458 institutions listed by the Wilshire Trust Universe Comparison Service.

College endowments and foundations overall returned 12.7 percent in the fiscal year ending June 30, according to Cambridge Associates, as reported by Bloomberg, with large allocations to U.S. and international equities helping some smaller institutions to outpace larger funds that are more likely to hold hedge fund and other alternative investments.

Dartmouth led the Ivy League in endowment returns for the fiscal year ending June 30 at 14.6 percent, University of Pennsylvania was up 14.3 percent, Cornell 12.5 percent, Yale 11.3 percent, and Harvard 8.1 percent, according to Bloomberg.

Prentice pointed out the significant impact of the endowment returns. “These earnings,” she said, “enable the University to provide generous financial aid that makes it possible for any student who is admitted to attend, regardless of ability to pay and without the need for students to take out loans.”

The University trustees recently approved an 8.7 percent increase in undergraduate financial aid to $161.2 million in the University’s operating budget for the current year, with endowment funds
covering well over 80 percent of the undergraduate aid budget.

Princeton University’s efforts to increase the socioeconomic diversity of its student body resulted in Pell Grant recipients representing 22 percent of the freshman class, up from 7.2 percent for the class of 2008.

Princeton students from families with incomes up to $160,000 pay no tuition. Grant support covers about 91 percent of tuition for an average family with income around $180,000, and students from families with incomes above $250,000 may also qualify for some aid, the University press release reported.