Endowments, so misunderstood and often misrepresented in media reports, are very important in keeping that rate of increase under control in the future. Income generated from our endowment is available to cover our costs and to support initiatives that are essential to our educational mission. Endowments are the life-blood of private colleges and universities. And it is precisely because we use endowment income to support our mission that an undergraduate paying full tuition at Penn really pays something substantially less than the true cost of his or her education. Higher education is a public good, creating enormous collective benefits to the nation.
College is also an extraordinarily productive personal and family investment.
The financial return to college-going is more than twice as great as it was twenty years ago. In 1975, a worker with a college degree earned about thirty percent more than a high school graduate. By 1995, the relative financial return to a college education grew to about seventy-five percent. Several economists have recently reported that the financial return to undergraduate students who attend premier private research universities like Penn exceeds substantially the individual returns on investment in higher education at other types of institutions.