Yale University said it provides students with “extraordinary support” following criticism of how it spends and manages the school’s $23.9 billion endowment.
Yale, which has the third-largest endowment of any U.S. college, was reprimanded in an op-ed article in Wednesday’s New York Times for “hoarding money” and overpaying investment fund managers at the expense of students.
“The criticism, which rested on speculation about endowment management costs and inexplicably limited the resources spent on behalf of students only to financial aid and other grants, obscures how much support the endowment provides for Yale, and how affordable Yale is for students,” the New Haven, Connecticut university said in a statement Thursday night.
In the opinion article, author Victor Fleischer estimated Yale’s outlays for private equity fees were about $480 million last year based on financial statements and tax forms, and compared that to the $170 million spent on tuition assistance and fellowships. The endowment, which supports 33 percent of the university’s operating budget, doesn’t disclose how much it compensates investment managers.
The fund, led by David Swensen, last year reported a 10-year annualized return of 11 percent, tied with Columbia University for the highest in the Ivy League. Yale’s net price - - the total cost students pay after grant or scholarship aid -- was $16,528 in 2013, the second-lowest in the Ivy League after Harvard University, according to the U.S. Department of Education.
Fleischer, a law professor at the University of San Diego, suggested that endowments should spend at least 8 percent of assets annually -- nearly double the 4.4 percent average rate reported last year in a study of college endowments.
The piece led to criticism of the university online, including from author Malcolm Gladwell, who tweeted, “Why doesn’t Yale spin off its university division and concentrate on its core money management business?”