The National Association of College and University Business Officers reports that college endowments lost a substantial part of their value in 2009. A Wall Street Journal analysis of the report says that “American colleges and universities’ endowment funds fell 18.7% on average in the 2009 fiscal year. The data is from 842 universities and colleges with total endowments of $306 billion.
The study ranked the Harvard endowment as the largest at $25.7 billion, down 30% for the prior fiscal year. Yale was second with a fund of $16.3 billion, down 29%.
Colleges and universities have begun to borrow money to fund some of their operations.
To show how severe the problem is even at “rich” universities, Harvard no longer serves hot breakfast to its students. The college has almost been shut down for the month of January to save money on heating and other maintenance necessary when dormitories and classrooms are occupied daily.
Institutions of higher education are faced with a dilemma that they may not be able to escape. Universities could raise tuition, but during a recession that would mean that even scholarship students would face higher costs. Some of these students cannot afford that.
The other choice that universities and college have it to cut costs of faculty and infrastructure. That will mean more students per teacher and a moratorium on the building of new living and learning facilities.
Academia gets to join the rest of the world as it has to do more with less capital.
Douglas A. McIntyre