Freshman Fund Blogs…

The New York Times recently looked at how some of the nation’s wealthiest colleges are spending their endowments.

They cite Berea College, a Kentucky school that only accepts students from low-income families and provides a small, private-college education without the small, private-college cost. Students pay no tuition, earning their bachelor’s degree without incurring dollar one in student debt.

What makes this possible? One reason is that Berea is an exceptionally wealthy school, with an endowment of more than $1 billion.

In much the same way that a very small number of “super-celebrity” movie stars, or #1 athletes, grab all the headlines in their respective fields, the wealthiest colleges get the most media attention here in the U.S. And while wealth alone does not determine a school’s prestige, the wealthiest schools can do things that most schools, in fact the vast majority of schools, simply cannot do. It is the collegiate equivalent of George Clooney’s penchant for Italian villas, or Jerry Seinfeld’s Porsche habit.

There are 72 U.S. colleges with endowments in excess of $1 billion, altogether they can access a staggering $290 billion to build new dorms, expand academic and athletic programs, and, in the case of Harvard, Yale, Princeton and Stanford, experiment with low-to-no tuition for all but the wealthiest of their students.

But there are over 4,200 public and private colleges in the U.S. and these “ultra-rich” schools represent less than 2% of the total.

Now the subject of where your child might go to college can be a sensitive one at any age, but it’s sensible to consider that their college choice might fall among the other 98%.

From this perspective, a college fund is bit like insurance, you don’t know if you’re going to be in a car accident or face a health emergency, but you pay out each month so that you’re prepared if something happens. Likewise, you don’t know exactly where your child will be attending college, but a monthly investment in their college fund can give them the widest possible range of options.

And don’t worry, if they DO make it into one of the low/no-cost 2% schools, chances are good that their bachelor’s degree won’t be the end of the line, and their college fund can go towards that graduate degree, for which even the wealthiest schools are still charging full sticker price.