How the Ivy League stays so rich: College endowments

How colleges manage and spend their money
How colleges manage and spend their money

College is expensive, but there is one place in higher education where there's no shortage of money — endowments. There's more than $616 billion worth of endowments assets in the U.S. Most of that endowment wealth lies with a few affluent schools, such as Harvard with its $39.2 billion.

Lawmakers are starting to question why tuition is still rising if some schools have billions of dollars. Most schools only spend about 5 percent of their endowment every year. The rest is invested to grow the endowment even larger. And that's where things get complicated.

Universities with big endowments have a lot of power, and that power draws the eyes of both investors and activists. Investors look to endowments as inspiration for their strategies, and activists have gone after multimillion- and sometimes billion-dollar investments in things like fossil fuel companies, Puerto Rico debt and private prisons.

In 2017, Trump's tax bill started to chip away at those universities' tax-exempt status, adding a 1.4 percent tax on endowment income at schools with more than 500 students and $500,00 per student.

Watch the video above to learn how college endowments helped fuel the rise of wealth in American higher education.