says he is not comfortable supporting the school.

- Are you still supporting Harvard financially?

- No.

- [Speaker] These are just some of the many wealthy donors

who have threatened to pull support from universities

over mounting pro-Palestinian protests

in the last several months.

[Protesters] Let them go!

But those large donations

aren't the only thing keeping schools running.

- This idea that university trustees

and university administrators are gonna say, oh my god,

I'm gonna change my strategic vision

'cause I'm worried about a $25 million gift

when you have $50 billion in the bank, it's ludicrous.

- [Speaker] To explain how colleges stay afloat,

we asked former university president Morton Schapiro

to break down the finances of three schools

with different revenue sources

and what changes mean for the future of higher ed.

- Having a large endowment really helps,

and I've been really fortunate to be president

of two institutions with very large endowments.

- [Speaker] Endowments are big funds typically collected

through donations and invested.

- You only take enough of it so that you can support

what the donor wants, but you leave it

to be invest and invested.

So the endowment is an investment in the future.

- [Speaker] In 2023, Northwestern took about 674 million

from its endowment, or about 5%,

which is the standard amount schools take

from their endowments every year.

- There's nothing magical about the 5%.

You know, if you go much above that,

you're probably gonna erode the real value of the endowment.

If you go much below it, then it's unfair

to the current generation of faculty, students, and staff.

When things are really bad,

I think you should take a higher percentage.

- [Speaker] That standard 5%

of Northwestern's endowment made up more than a fifth

of the school's operating revenue in 2023.

- When you have the kind of wealth that Northwestern

and its peers have, that gives you a lot of flexibility.

- [Speaker] Schools with large endowments

depend less on other slices of the revenue pie,

like tuition or private gifts.

- You can support study abroad activities

and you can support all kinds of internships.

Endowment per student speaks powerfully

to what the life experience

is gonna be once you're on campus.

- [Speaker] It also speaks to the range of students

who are likely to be on that campus.

- The socioeconomic diversity

of the undergrads at at Northwestern

and like many peer institutions, much greater than it was.

Even while I was president, I started in 2009.

- [Speaker] In 2020, only about 16%

of students at private nonprofit universities

paid full price.

That's down from 29% in 1996.

That's partly due to those ballooning endowment funds.

Northwestern's has grown more than six times since 2001.

- The endowment grows

because of equity markets, you know, stocks

and also private equity investments in the returns

have been spectacular,

- [Speaker] But a lot of that wealth is concentrated

in just a few schools in the US.

- If you don't have a large endowment,

you're gonna be much more conscious

about attracting students, in many cases,

undergrads who can pay the sticker price.

Private colleges, they are not getting state support.

So where are they getting their money?

The rest is mainly tuition.

- [Speaker] Like at Hamilton College in upstate New York

where tuition made up almost 60%

of operating revenues in 2023,

despite Hamilton's large $1.3 billion endowment,

that high percentage.

- Makes it a little bit more vulnerable

to changes in the market.

You better make sure you're gonna continue to be able

to get the students and you know, fill the dorms

and get a substantial proportion

of them paying at least close to the sticker price.

- [Speaker] Hamilton said in a statement

that the school admits students without regard

to financial need and that the school is fortunate

to support need blind admission.

But there are plenty of schools

even more dependent on tuition than Hamilton.

- Small schools that really are almost completely relying

on net tuition revenues from undergrads

are increasingly in need aware.

You know, they're not gonna admit a lot of students

from needy families

because they're not gonna give enough need-based aid

to make it possible for them

to come so they don't admit 'em.

'Cause if you admit 'em, their yield is low

and your admit rate is very high

and you don't look and select them,

- [Speaker] And there's also a looming threat.

- They look at the demographic cliff that's about to hit,

and the number of high school graduates

is gonna go down substantially.

We expect over the next couple of decades.

- This enrollment cliff is in part

because of a decline in birth rate

since The Great Recession.

- The vast majority of undergrads in this country

go to a campus within 50 miles

of where they graduate high school.

There's no cliff in a lot of the Sunbelt,

but there's a really precipitous cliff in other places.

Rust Belt, New England, et cetera.

You know, Hamilton again has a international draw

that's gonna protect it,

but there are a lot of other liberal arts colleges

who draw much more locally,

and it's gonna be a real struggle

for them once this cliff is realized.

When you talk about being tuition dependent,

it's always said in a negative way.

Is there anything positive?

I think you're focused more

on your undergraduate experience.

- [Speaker] Smaller private schools

aren't the only ones increasingly dependent

on their students to pay the bills.

- State operating subsidies or state appropriations,

the publics, has really plummeted as a share

of their operating budgets,

so that's really been devastating.

- [Speaker] The University of California system,

which consists of 10 schools throughout the state,

got more than 4 billion of state funding in 2023.

In 2001, state funding made up nearly 20%

of revenues in the University of California system.

By 2023, it was less than 10%.

- They still get some chunk of change from the state,

but boy have they taken a hit.

Now it's been pretty flat in the last 12 years or so,

14 years, but they haven't made up

for this precipitous decline.

Why?

Because states have had a lot of financial troubles.

It's not that universe.

The state of California is not really proud

to have the greatest higher education system

in the history of the world.

They just can't afford to fund it the way they used to.

- [Speaker] But schools need to make up

for that loss in funding.

- A lot of publics have tried to go into

what the privates have long done,

generate money from your undergrads.

- Since 2001, average undergraduate tuition

for its in-state students has increased more than four times

at the University of California,

and it is more than tripled for out-of-state students.

- It also means that a lot of these public universities need

to fill their seats in the classrooms

and beds in the dorms with people of out of state

where they can charge full price.

- [Speaker] The estimated average total cost

to attend the University

of California is about 38,000 in 2024

if you're a resident of the state.

If not, the cost nearly doubles to around 72,000.

But as seats become more competitive,

California approved a plan to cap the number

of out-of-state students UC schools can admit

and compensate them for the lost income.

Now, tuition and fees make up about 11%

of the UC system's revenue compared to around 6% in 2001.

In a statement, the University of California said

that its world-class college degree is also one

of the nation's most affordable.

Adding that the system has kept attendance costs

relatively low and stable, and added

more than 26,000 additional California undergraduates

since fall 2015.

- They say privatize the publics.

But you know what that means?

It means raising undergraduate tuition levels

without accompanying levels of financial aid

so that it makes publics increasingly bastions a privilege.

- It's an inflection point

for many schools across the country.

- I think the widening gap in wealth at public

and private colleges university means that, you know,

if you're able to get into one of those schools

with tremendous resources,

the sky's the limit for how it's been on you.