Key Takeaways
- • Universities spent $33.4 billion from their endowments in FY25 (July 1, 2024 – June 30, 2025), an 11% increase from FY24, according to the NACUBO-Commonfund Study of Endowments.
- • Nearly half of endowment spending (47.4%) funded student financial aid, while 17.7% went to academic programs and research, 10.8% to endowed faculty positions, and 7.6% to facilities operation and maintenance.
- • Endowment returns fell 30 basis points, from an average of 11.2% to 10.9%, among the 657 participating institutions, while new charitable gifts declined 9.2% overall.
- • The H.R. 1 reconciliation bill passed in July 2025 raised the endowment tax on certain private institutions to as much as 8%, up from the 1.4% tax Congress created in 2017.
Summary
Colleges and universities withdrew $33.4 billion from their endowments in FY25, an 11% increase from FY24, despite weaker investment returns and fewer donations, according to the latest NACUBO-Commonfund Study of Endowments. The study surveyed 657 colleges, universities, and education-related foundations. Nearly half of the spending (47.4%) went to student financial aid, with the remainder directed to academic programs and research (17.7%), endowed faculty positions (10.8%), and campus facilities operation and maintenance (7.6%).
The study reported that average endowment returns among participating institutions declined by 30 basis points, from 11.2% in FY24 to 10.9% in FY25. New charitable donations fell 9.2% overall, with some institutions seeing declines of as much as 26.5%. NACUBO noted in a press release that declines in gift-giving are a concern for all institutions, particularly smaller ones with fewer resources.
Association of American Universities (AAU) members cited endowment-backed aid programs as examples of this spending. Rice University's Rice Investment provides full tuition, fees, and living expenses to students from families earning $75,000 or less, and full or half tuition to higher-income families up to $200,000. Emory University's Emory Advantage Plus program makes undergraduate tuition free for students from families with incomes up to $200,000, and the University of Texas System's Promise Plus Program provides tuition and fee waivers to Texas students from families earning less than $100,000. According to AAU, AAU members provide nearly $7 for every dollar the federal government provides in grants to incoming full-time students.
Tax policy is a further pressure. Congress created a 1.4% tax on endowment income at certain private institutions in 2017, and the H.R. 1 reconciliation bill passed in July 2025 raised that rate to as much as 8%, depending on tuition-paying enrollment and endowment size. AAU argues that endowment taxes reduce institutional aid and research funding, and that the proceeds go to the U.S. Treasury's general fund rather than education programs. Princeton University President Christopher Eisgruber, a former AAU Board Chair, wrote to his campus community that leadership asked units to make 5-7% budget cuts amid uncertainty over federal funding and endowment taxes.
The study reported that average endowment returns among participating institutions declined by 30 basis points, from 11.2% in FY24 to 10.9% in FY25. New charitable donations fell 9.2% overall, with some institutions seeing declines of as much as 26.5%. NACUBO noted in a press release that declines in gift-giving are a concern for all institutions, particularly smaller ones with fewer resources.
Association of American Universities (AAU) members cited endowment-backed aid programs as examples of this spending. Rice University's Rice Investment provides full tuition, fees, and living expenses to students from families earning $75,000 or less, and full or half tuition to higher-income families up to $200,000. Emory University's Emory Advantage Plus program makes undergraduate tuition free for students from families with incomes up to $200,000, and the University of Texas System's Promise Plus Program provides tuition and fee waivers to Texas students from families earning less than $100,000. According to AAU, AAU members provide nearly $7 for every dollar the federal government provides in grants to incoming full-time students.
Tax policy is a further pressure. Congress created a 1.4% tax on endowment income at certain private institutions in 2017, and the H.R. 1 reconciliation bill passed in July 2025 raised that rate to as much as 8%, depending on tuition-paying enrollment and endowment size. AAU argues that endowment taxes reduce institutional aid and research funding, and that the proceeds go to the U.S. Treasury's general fund rather than education programs. Princeton University President Christopher Eisgruber, a former AAU Board Chair, wrote to his campus community that leadership asked units to make 5-7% budget cuts amid uncertainty over federal funding and endowment taxes.
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