Study Shows Extent of Endowment Losses
College and university endowments plunged an average of 23 percent between July 1 and November 30 in 2008, with many sustaining further losses since then. While almost everyone who's been reading higher education news or attending college knows that endowments have dropped, the depth and the breadth of the damage has largely been left to the realm of speculation.
Endowment losses had become a hot topic at some schools, including the one my youngest sister attends, even before the release of this study. Undergraduate students previously unaware that colleges even have investments are worrying about the (admittedly slim) chance of their schools' investment funds disappearing, taking their scholarships, their degree programs, or their favorite instructors with them. While such drastic cuts have not been made, schools are facing very real struggles to preserve their staff, their services, and their endowments in the face of a still-deepening recession.
The extent of losses varies, as does the extent of reactions to losses. Several universities have instituted hiring freezes, while others have resorted to layoffs or mandatory unpaid furloughs. Brandeis University and the University of Pennsylvania have both made unpopular moves to cut budgets. Penn has done so by cutting 18 campus museum staff positions, and Brandeis has announced plans to close the institution's art museum entirely and sell its collection. Some state universities battling shrinking endowments and drastic cuts to state funds have been forced to look at double-digit tuition increases.
Still other schools are making almost opposite responses. Some institutions are looking into freezing tuition or increasing it by small amounts, such as Princeton University, which has announced a tuition increase of only 2.9 percent for 2009-2010. Others are hiring new faculty as planned or launching additional searches, hoping to attract stronger talent. Many schools are also increasing student financial aid to help families hit hard by the recession. Even schools making budget cuts are reluctant to touch financial aid, recognizing its importance. However, fears remain that students who need money for college may be unable to find it from their schools. Whether these fears are justified remains to be seen, though many hope that the proposed economic stimulus package will allow schools to continue to fully fund or even expand essential programs.