updated 1/23/2006 12:20:08 AM ET 2006-01-23T05:20:08

The number of North American colleges with endowments topping $1 billion has jumped to 56, a new study says, with nine schools joining the elite club in what was an average year for university investments overall.

Harvard remained the richest, with $25.5 billion, followed by Yale with $15.2 billion.

The wealthiest per student was Rockefeller University in New York, which has no undergraduates, followed by Olin College, a small engineering school in Massachusetts that opened in 2002 and pays full tuition for all students.

The National Association of College and University Business Officers surveyed 746 institutions for the study. It found that those institutions earned an average of 9.3 percent on their investments in the year ending June 30, compared to 15.1 percent in fiscal 2004 and 3 percent in 2003.

Colleges typically spend about 5 percent of their endowment per year to support everything from scholarships to landscaping. Accounting for inflation and management fees, the investments generally need to earn about 9 percent to preserve their spending power. Last year’s 9.3 percent return precisely matched the 10-year average.

The NACUBO survey follows the release last week of a similar survey by the Commonfund Institute. That survey, which tracks endowments of 729 colleges, independent schools and educational foundations, reported average returns of 9.7 percent.

The surveys show once again that institutions that already have money find it easier to make more of it. Endowments with more than $1 billion earned 13.8 percent last year, NACUBO found, while institutions with under $100 million earned less than 9 percent.

Over the last decade, billionaire colleges have earned 12 percent per year, compared to 7.9 percent for colleges under $25 million.

The reason is that richer colleges can afford more sophisticated financial advice, and to make riskier bets. The billionaire colleges had 21.7 percent of their endowments invested in hedge funds last year, compared to 2.4 percent for the poorest schools. They also invested higher percentages in private equity, venture capital, real estate and natural resources.

Such investments generally have high minimum investments that only larger endowments can afford, said Jessica Shedd, NACUBO’s director of research and policy analysis. And larger endowments “just have a greater ability to tie up funds for a longer period of time. They can afford to have less liquidity than other schools need.”

The University of Toronto became the first Canadian institution to amass $1 billion in American dollars. Oxford and Cambridge Universities in England are believed to be the only other non-U.S. schools with endowments that size.

The other eight universities passing the $1 billion endowment mark were: University of Wisconsin Foundation, University of Nebraska and Foundation, University of Delaware, University of Cincinnati, Amherst College, Smith College, Southern Methodist University, and Baylor College of Medicine.

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