Last Friday, the University announced that the endowment has ballooned to $37.7 billion, an almost 50 percent rate of return. This growth is a significant outlier from previous years which made us in the Opinion section wonder how might Princeton react. Will we see improvements on campus? Can Princeton afford to be more ethical in its investments? Should tuition be abolished?
We asked ‘Prince’ columnists for their Reactions to this week’s endowment windfall.
Spend more of the endowment
By Windsor Nguyễn, Contributing Columnist
I wasn’t surprised by the announcement that Princeton’s endowment had grown by 46.9 percent. The easy money policy of the COVID-19 era skyrocketed the valuation of equities which prompted the greatest bull market in history. Consider that in the last 365 days, the S&P 500 has appreciated by around 40 percent. Our endowment was sure to follow.
What will surprise me, though, is if we do not capitalize on this hand-wrapped gift from the COVID-19 monetary policy. I don’t deny that this fiscal year’s return was an anomaly, but that gives Princeton all the more reason to actually utilize the endowment to address the wants and needs of those on campus.
Every meteoric bull market is followed by a stagnant bear market, and we are nearing the sun. I understand that “long term is the mantra” for the endowment, but to not liquidate at least some portion of the endowment is equivalent to maintaining our holdings and facing the wrath of the upcoming bear market.
Over the past ten years, Princeton has allocated an average of $1.1 billion from its endowment to the annual operating budget, amounting to about three to five percent of the endowment. With our newly increased endowment, an at-least-proportional increase in endowment allocation only makes sense. For instance, increasing the allocation towards annual operating expenses by one billion dollars, from $1.1 billion to $2.1 billion, would still only represent 5.5 percent of the endowment.
What could we see improved at Princeton if we liquidated just a tiny portion of our increased endowment? Well for starters, let’s try installing air conditioning in our residential colleges that desperately need them. Craving Late Meal on Friday, Saturday, or Sunday? You’re in luck! Late Meal is now open seven days a week. Most importantly, the endowment growth likely provided easier exit points for our fossil fuel positions as well as increased generosity in our financial aid program, as we’ve already seen at Yale.
Though one could say that money will be “lost” in either of the aforementioned cases, only in one of the cases will our community be the beneficiary. The ball is in your court, Princeton.
Windsor Nguyễn is a freshman from Appleton, Wis. He can be reached at mn4560@princeton.edu.
Princeton should abolish tuition
By Abigail Rabieh, Contributing Columnist
$37.7 billion. The amount of money making up our endowment is too large for me to wrap my head around. I was finally able to understand this figure when a fellow ‘Prince’ writer told me that “if they gave every undergraduate student an equal slice, we would get over $7 million.”
I am so grateful for the education I am receiving at Princeton and I’m loving the experience, but if I was given $7 million … I would not be living in First anymore.
Perhaps it’s unreasonable to even fantasize that Princeton would allot the entire endowment to students. Let’s just look at this year’s returns. In the 2020–21 fiscal year, the endowment grew over $10 billion. There are 5,267 undergraduates enrolled at Princeton. That means that if Princeton split the endowment’s earnings from just this one year among undergraduates, each of us would get $1,898,614.
If Princeton made this much money in one year, why on earth does it need $51,870 in tuition fees from each of us? The tuition we pay is nothing but a tiny drop in the ocean of Princeton’s money.
I don’t mean to be ungrateful for the strong financial aid program. It is more generous than most other schools in the country, with over 61 percent of undergraduates receiving aid. For me, attending Princeton was the cheapest option. But after Friday’s announcement, the fact that the University asks for any money at all feels ridiculous.
It’s time to abolish tuition. There is no reason for families to have to save money from the moment their child is born when Princeton made more than 192,789 times the price of tuition this year. If Princeton has to take away the Forbes chocolate fountain in order to pinch their pennies to account for the loss of funds, I think we’ll live.
Abigail Rabieh is a first-year from Cambridge, Mass. She can be reached at ar5732@princeton.edu.
Use the money to expand the Princeton education
By Rohit Narayanan, Columnist
“Intergenerational equity.” That’s the term that Andy Golden, president of Princeton University Investment Company (PRINCO), used to justify keeping the endowment more or less whole, so that it could continue to gain interest and serve the needs of future Princeton students. Equity is important, of course. But the type of equity we should be worried about isn’t whether present Princeton students or future Princeton students spend the money. Instead, we should focus on those who never get a chance to go to Princeton.
Princeton’s impressive gain is reflective of the fact that corporate profits soared during the pandemic while the real economy — jobs, specifically — suffered. The endowment ought to do more than serve as a trust fund for hypothetical future Princetonians, already set up for a brilliant future.
Therefore, Princeton, as a civic institution, should liquidate most of its $10 billion worth of gains and invest it in expansion — offering the benefits of a Princeton education to more people. The new residential colleges are a laudable step towards this goal, but Princeton can think bigger.
We can use the online learning tools we discovered during the pandemic to create a one-of-a-kind rigorous virtual program, expanding Princeton courses to thousands of people over the years. The type of Massive Open-source Online Courses (MOOC) that many colleges offer are interesting, but certainly not a substitute for an in-person course. With an investment in focused faculty and staff for online education, Princeton could change that — make genuinely comparable open-access courses that reach more people.
While it would be more profitable in the long run to just let the money keep gaining interest year after year, this is a unique opportunity to make sure the money actually serves the people who generated it — and Princeton can do that without compromising its mission.
Rohit Narayanan is a sophomore from McLean, Va. He can be reached at rohitan@princeton.edu.
The growth demands fossil fuel divestment more than ever
By Hannah Reynolds, Senior Columnist
In a year of astronomical growth for Princeton’s endowment, one might be inclined to assume that PRINCO must have had a particularly successful investment strategy. In fact, one might suppose that PRINCO’s decision not to divest from fossil fuels is the cause for Princeton’s gains, which made it the second highest returner in the Ivy League.
But the number one earner this year was Brown University, which divested its endowment from fossil fuels in March 2020. Therefore, divestment from fossil fuels, rather than hindering Princeton’s financial performance, might have actually helped it, had PRINCO had the foresight and leadership to take climate change seriously.
Further, the high returns themselves are not necessarily indicative of PRINCO’s success in endowment management, but are reflective of broader trends within the market itself over the past year. In other words, investment in fossil fuels is not necessarily responsible for the endowment’s gains, but it is responsible for threatening our future.
While it still has the ability to take urgent action on climate, Princeton must act in the service of humanity with its newly inflated endowment and divest. Darren Walker, president of the Ford Foundation, recently put it well when describing the foundation’s own reasoning for divestment. “If we only do what we’ve always done, the worst may well sneak up on us while we’re safeguarding some old, rosy vision of economic perpetuity.”
Hannah Reynolds is a senior from Finger Lakes, N.Y. She can be reached at hannahr@princeton.edu.
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