Several U.S. universities have moved away from fossil fuel company stocks in recent years after being pressured by environmental activists, but a recent report commissioned by the Independent Petroleum Association of America concluded that such a move takes a financial toll on the institutions.

Divesting leads to a 15.2 percent average reduction in endowment spending by private and public universities, according to report author Hendrik Bessembinder, a professor of finance at the Arizona State University. Given that endowments provide critical funding for many universities, campus administrators will need to either raise tuition or cut faculty to make up for the loss in revenue.

"Divestment would make a college degree even more expensive for students who are already graduating with record levels of debt," said Jeff Eshelman, senior vice president for operations and public affairs at IPAA. "Activists should not ask students to pick up the tab on this symbolic act which has no impact on the environment."

Nearly 40 educational institutions in the U.S have either partly or completely divested from fossil fuel stocks, according to the website GoFossilFree.org, a project of the environmental group 350.org. In recent years, environmental activists have pressured universities, philanthropic foundations, pensions and other organizations to get rid of fossil fuel stocks and, if possible, invest in green energy instead.

The IPAA report argues students and faculty pay a heavy price when universities engage in divestment. Private universities rely more heavily on endowments than public universities, which receive public money to offset their expenses. Bessembinder estimated private universities would be forced to raise annual tuition by approximately $1,043 to $3,265, depending how reliant each school is on its endowment. They could also make up for the lost endowment value by cutting faculty spending by 11.5 percent.

Public universities would need to raise annual tuition $123 to $385 on average or reduced faculty costs by 3.5 percent, according to the report. http://bit.ly/1EbqgfG

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