As you get into college prep, you may come across the term “college endowment” quite a few times. But what exactly does it mean?
What is a college endowment?
An endowment refers to the amount of money a college receives in donations. This endowment is then used for a variety of things—scholarships, upgrading facilities, hiring professors, and more.
Endowment policies and restrictions
Donors can dictate just how they want their donation to be spent. This ensures that the money is used for worthwhile causes. So if an alumni who got into a college on scholarship wants to donate their money towards that scholarship program so other students can benefit, that donation will definitely go towards the scholarship fund. There are also spending limits and restrictions run by the university administrators.
Why are endowments so important?
Endowments allow universities to give out scholarship and set tuition amounts (among other things). Therefore, colleges with larger endowments can often give students bigger financial award packages. Donations from alumni and others creates a sort of pool of funding that the college can use, build, and get returns on.