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Princeton’s endowment grows to $37.7B, with second-highest yearly returns in the Ivy League

The endowment earned a 46.9% investment return

<h5>22 Chambers Street houses the Princeton University Investment Company (PRINCO).</h5>
<h6>Ben Ball / The Daily Princetonian</h6>
22 Chambers Street houses the Princeton University Investment Company (PRINCO).
Ben Ball / The Daily Princetonian

The University endowment has grown to $37.7 billion, a 46.9 percent year-over-year return according to an announcement Friday. The endowment earned more than $10 billion since the 2019–20 fiscal year, when it was reported at $26.6 billion.

This massive return is an outlier for Princeton. In the last three years, the University’s endowment earned returns of 5.6 percent, 6.2 percent, and 14.2 percent. Over the last 10 years, the endowment averaged a 12.7 percent return; over the last 20 years, 11.2 percent. 

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“This year’s exceptional returns reflect not only strong underlying markets but also the superb work of PRINCO’s outstanding investment team over many years,” President Christopher Eisgruber ’83 said in a press release.

PRINCO refers to the Princeton University Investment Company, which is responsible for managing and investing the University’s endowment.

Money allocated to private equity and venture capital played a significant role in the endowment’s historically high return rate, with venture capital returns in the triple digits and private equity returns at 99 percent.

The University’s endowment remains the third-largest in the Ivy League, with Harvard’s endowment rising 33.6 percent to $53.2 billion this year and Yale’s rising 40.2 percent to $42.3 billion. Princeton’s endowment remains the highest per student in the Ivy League, with roughly $4.6 million per student.

After ranking fifth in endowment returns among the eight Ivy League institutions during the last fiscal year, Princeton’s astronomical return this year checked in at second among Ivies. Only Brown had a stronger return, increasing the valuation of its holdings by 51.5 percent.

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Endowment distributions now cover 66 percent of the University’s operating income, while tuition covers just six percent. The remaining 28 percent comes from unspecified additional revenue sources.

In 2021, the University’s operating costs were $2.3 billion, of which the endowment payout covered $1.4 billion. Overall, Princeton’s endowment has been responsible for almost $11 billion of money spent on University operations over the past 10 years. 

Massive returns across the Ivy League have prompted some schools to change institutional policies. In the wake of its high return, Brown has decided to eliminate tuition for all students whose families make less than $125,000 a year. The University has not publicly reported any similar plans, though the endowment currently covers 80 percent of financial aid spending.

In 2001, strong endowment returns played a role in Princeton’s historic decision to become the first university in the U.S. to eliminate loans from its financial aid packages.

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“We understand the endowment is here to be spent, but we are trying to do it in a way that provides intergenerational equity,” Andy Golden, president of PRINCO, wrote in a recent article titled “Understanding Princeton’s endowment.” 

“Princeton is an immortal institution, not an individual investor. An individual may invest with the next 20 to 40 years in mind,” he wrote. “Princeton has to think about the next 200 to 400 years.”

Gabriel Robare is a news contributor, as well as the Co-Head Puzzles Editor, for the ‘Prince.’ He can be reached at grobare@princeton.edu or on social @gabrielrobare.

Aniket Mukherji is a staff writer for the ‘Prince.’ He can be reached at aniketm@princeton.edu.

This article is breaking and will be updated as additional information becomes available.

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