At Princeton, alumni pride aids No. 1 rank

"We are pleased that our commitment to providing the highest quality undergraduate education continues to be recognized," said Princeton spokeswoman Cass Cliatt. "Still, we feel it's important to note that no formulaic ranking can capture an institution's individual distinctiveness."

But there's no denying that universities benefit from sitting atop the list.

A high ranking generates more applicants to the school, allowing it to be more selective. It bolsters the school's reputation, another factor in the U.S. News list.

"There's a halo effect," says Richard Richardson, a professor of higher education at New York University. "That is, once you are identified as No. 1, people tend to associate you at that level."

And it generates more alumni giving, a key asset for Princeton.