BOSTON—College endowments grew by an average of only 2.4 percent last school year, a sharp drop following two years of strong gains, a new study found.
The downturn is troubling news for some universities, which use their endowments to pay for student scholarships and other costs, adding to the list of financial constraints that many schools face amid declining enrollments and long-term drops in state funding. At almost 300 colleges in the study, endowments shrank last year.
The report, released Wednesday, is based on an annual survey of more than 800 colleges by the nonprofit Commonfund Institute and the National Association of College and University Business Officers. It covers the 12 months ending in June 30, 2015.
That period was the worst year for endowments since they averaged a loss of 0.3 percent in 2012. They rebounded with following gains of 12 and 15 percent.
Swings in certain markets were responsible for some of the heaviest losses. Investments in energy and natural resources, for example, led to average losses of 13 percent, a year after they averaged gains of 15 percent. But even the strongest types of investments last year fell compared to their performance a year earlier.
“This was a year in which we saw reversals,” said William Jarvis, executive director of the Commonfund Institute, adding that all categories of investments fell in performance.
