The financialization of US higher education

Charlie Eaton, Jacob Habinek, Adam Goldstein, Cyrus Dioun, Daniela Garda Santibanez Godoy, Robert Osley-Thomas

Research output: Contribution to journalArticlepeer-review

57 Scopus citations


Research on financialization has been constrained by limited suitable measures for cases outside of the for-profit sector. Using the case of US higher education, we con sider financialization as both increasing reliance on financial investment returns and increasing costs from transactions to acquire capital. We document returns and costs across four types of transactions: (i) revenues from endowment investments, (ii) inter est payments on institutional borrowing by colleges, (iii) profits extracted by investors in for-profit colleges and (iv) interest payments on student loan borrowing by house holds. Estimated annual funding from endowment investments grew from $16 billion in 2003 to $20 billion in 2012. Meanwhile financing costs grew from $21 billion in 2003 to $48 billion in 2012, or from 5 to 9% of the total higher education spending, even as interest rates declined. Increases in financial returns, however, were concentrated at wealthy colleges whereas increases in financing costs tended to outpace returns at poorer institutions. We discuss the implications of the findings for resource allocation, organizational governance and stratification among colleges and households.

Original languageEnglish (US)
Pages (from-to)507-535
Number of pages29
JournalSocio-Economic Review
Issue number3
StatePublished - Jul 1 2016
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • General Economics, Econometrics and Finance
  • Sociology and Political Science


  • Economic sociology
  • Education
  • Financialization
  • Institutional change
  • Welfare state


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