What Top American Private High Schools Look Like

At Elite Prep Schools, College-Size Endowments

By GERALDINE FABRIKANT

Published: January 26, 2008, NY Times

EXETER, N.H. — When Curtis Thomas, a 14-year-old from a poor family living in St. Rose, La., arrived here two years ago to attend Phillips Exeter Academy, he brought little more than a pair of jeans and two shirts. That would hardly do at a 227-year-old prep school where ties are still required for boys in class.

So Curtis’s history teacher, armed with Exeter funds, took him shopping for a new wardrobe.

That outlay was just a tiny fraction of what Exeter spends on its students. With its small classes, computers for students receiving financial aid, lavish sports facilities and more, Exeter devotes an average of $63,500 annually to house and educate each of its 1,000 students. That is far more than the Thomas family could ever afford and well above even the $36,500 in tuition, room and board Exeter charges those paying full price.

As a result, like the best universities to which most of its students aspire, Exeter is relying more and more on its lush endowment to fill the gap.

Despite Exeter’s expanding commitments, which include a new promise to pay the full cost for any student whose family income is less than $75,000, the school’s endowment (dotation) keeps growing. Last year — fueled by gifts from wealthy alumni and its own successful investments — it crossed the $1 billion mark, up from just over $500 million in 2002.

At the nation’s richest colleges and universities, endowments are now coming under increased scrutiny. On Thursday, the Senate Finance Committee, concerned about the rising cost of higher education, requested data from the nation’s wealthiest colleges on several issues, including how they spend their endowments.

Endowments have soared because “there has been a lot of easy money,” said Thomas Hudnut, president of Harvard-Westlake School, an independent day school in Los Angeles. Even as many private schools have done more to provide scholarships to poor and middle-income students, the advantages they enjoy over public schools have widened. To some experts, it is but another indication of America’s growing wealth disparity.

“Having a big endowment permits all the wonderful touches: computers in the classroom, trips, enriched curriculum,” said Susan Fuhrman, president of the Teachers College of Columbia University. Students at many private schools “get a much richer array of opportunities than most public schools can afford.”

Average expenditures per student for public schools, not adjusted for inflation, rose 28 percent, to $8,809, between the 1999 and 2004 fiscal years, according to the National Center for Education Statistics.

The independent schools may be well financed, but even middle-class families today often cannot afford the tuition.

Over a recent breakfast in Exeter’s cafeteria, Tyler C. Tingley, Exeter’s principal, said the school had commissioned a report showing that in 1980, 40 percent of American families could afford to pay tuition at Phillips Exeter, but by 2004 that number had declined to just 6 percent.

The ability of Exeter and other wealthy institutions to underwrite students helps explain why they may enjoy an advantage over other independent schools in competing for the best students.

“There is so much money out there and the schools want to take advantage,” said Sandra Bass, editor of Private School Insider, which tracks New York private schools. “Every private school is looking for a competitive edge so they can attract the top tier of kids.”

Exeter now has nearly $1 million in endowment assets for each of its students. Stunningly, that is about 60 percent of what Harvard, with its $34.9 billion endowment, holds for each of its 20,000 undergraduate and graduate students.

According to the most recent statistics, Exeter, which a year ago held $800,000 per student, was already among the 25 richest private schools in endowment per student, measured not just against other prep schools but also against universities and colleges. A growing number of endowments at the nation’s independent schools have become so big that trustees have hired full-time money managers, sometimes alumni, to manage their money.

Generally the older, best-known schools have the largest endowments. Phillips Exeter, founded in 1781, is the nation’s third-oldest school after Governor’s Academy in Byfield, Mass., and Phillips Academy in Andover, Mass., which now has $800 million. Choate’s endowment has reached $267 million.

Indeed, fund-raisers at both day and boarding schools find that graduates feel more loyalty toward their secondary schools than to their colleges.

“I always tell people I was educated at Exeter and went to Yale,” said James H. Ottaway Jr., a former board member of Dow Jones & Company, whose most recent gift to Exeter was $10 million for its scholarship fund. “I have always given more money to Exeter because I felt it was the most educational experience and character-forming experience of my life.”

Most private schools, of course, are not so rich. Of the 179 independent schools for which Commonfund, an investment group, manages money, 73 percent have endowments under $50 million.

But some prep schools can seem as luxurious as the nation’s top universities. Exeter’s 619-acre campus boasts two swimming pools, two hockey rinks, the largest secondary school library in the world, a cafeteria with made-to-order omelets for breakfast and classes with a typical student-teacher ratio of no more than 12 to one.

Andover has a world-class art gallery; Lawrenceville, near Princeton, N.J., has its own nine-hole golf course.

Through scholarships and a greater effort to diversify student bodies, independent schools are sharing their wealth more widely. But access to the best schools remains limited to a relatively tiny group that qualifies on the basis of educational attainment, which is still largely shaped by family background.

A little more than half of the students at Exeter, for example, pay the full tuition and other charges. And roughly 13 percent of the students are “legacies,” the children or grandchildren of alumni.

Exeter’s effort to broaden the economic diversity of its classes was partly prompted by its research showing that the middle class was being squeezed out of private education.

“If your selection pool is only 6 percent of the population,” Mr. Tingley, the principal, said, “that is a small percent to draw from. We are trying to create a level playing field. It used to be that we gave financial aid to 34 percent of the student body. Now it is 46 percent. We anticipate it will increase further as a result of the changes.”

Less-wealthy schools are trying to keep up. Sarah Daignault, chairwoman of the investment committee at the Madeira School, a girls’ prep school in McLean, Va., said her school allocates 11 percent of its $18 million operating budget to financial aid, which she feels is too little. “It is important that our student body be diverse because today’s kid is going to function in a very diverse world,” she said.

“Private school is a luxury, and rich families want the best facilities,” said Michael Gary, director of admissions at Exeter. “All too often fund-raising is about the buildings and the sports facilities. The schools need them to attract the wealthy families. They don’t have high on their priorities providing access to kids who can’t afford it.”