Changes Made To College Endowments

Colleges like Harvard, MIT and Stanford had no problem spending down their endowments when the markets were booming. Money was spent mostly on faculty, buildings and scholarships. Now, with the economy and the markets down, these colleges understand the disadvantages of relying on one source. They are seeing how the economy is threatening them to make the biggest budget cuts in history.

The biggest challenge that colleges will face with endowment funds down is that financial aid demand is increasing. With more students in need of financial aid, schools have been increasing their budgets for financial aid. Dartmouth College in New Hampshire is one example of a college who spent $1 billion on new facilities and more than doubled its financial aid budget. $60 million will need to be cut from Dartmouth's $700 million budget for next year.

Stanford and Yale, two elite schools noted that their endowment spending is reduced due to the economy. The problem is that they were committed to increasing financial aid during the booming economy and will try to keep their aid programs where they are. Some schools who are less well-endowed will have to cut back on programs such as these.

At Stanford, forty-nine employees have been laid off and senior administrators have taken salary cuts. Stanford's faculty senate was recently briefed on projected endowment losses that could be as high as 30%.

NICCP