Endowment Losses From Harvard to Yale Leave Legacy of Poorer Universities

[marmar]

Endowment Losses From Harvard to Yale Leave Universities Poorer
By Gillian Wee


July 22 (Bloomberg) -- Harvard University and Yale University are preparing for an extended period of austerity as U.S. colleges are forced to cut spending next year and beyond to offset the biggest investment losses since 1974.

A payout formula based on prior years of endowment returns means Yale will have to do with less money even as markets rebound, President Richard Levin said in an interview last week. Schools including Harvard, Dartmouth College and the California Institute of Technology will be saddled by payments on debt they sold after getting caught short of cash.

Efforts to shrink budgets are being complicated by the unending competition for the best students, which is pushing colleges to boost financial aid and limit tuition hikes. After seven years of virtually uninterrupted growth following the dot- com bust, they have little choice except to further cut jobs, freeze salaries, scale back dormitory and laboratory projects, and jam more students into fewer classes.

“We can’t discount the fact that the universities are now poor,” said Robert Merton, a professor at Harvard Business School in Boston who won the Nobel prize for economics in 1997 with Myron Scholes for their work on pricing options. “If they’re going to be poor, they are going to make changes as a result.” ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=aQn_Cxyu99xY

[KharmaTrain]

1. It's Happening All Over...

We just got an urgent email from my son's college...a private liberal arts school...mentioning that more than 50% of their endowment had been lost (rumors are even higher)...many schools tried to milk the market bubble and got their clocks cleaned. It's hurting many on scholarships...which helps a majority of the students there. Many covered upwards of 50% of the tuition that others will now have to cover...translation: a year that would have cost $12gs a year now will cost upwards of 25g...not an easy amount for many to afford (and that doesn't cover room and board...another $5gs).

The ticking time bomb here is that the school is offering low interest loans for those who want to continue...adding more to already large student debts...throwing them into a world where there's no assurances of a job yet a way to pay back those huge loans.

State schools aren't much better...tuition increases continue that put them on the level of private schools and our local JC is overloaded...they had to put a limit on the number of people able to enroll this year.

Tis not a pretty picture in higher education...

[rfranklin]

2. Boo hoo hoo! Costs at universities have risen faster than health care costs

I don't know exactly where it's been going but some professors are paid like rock stars.

[corpseratemedia]

4. the majority of people who teach (at state) universities are paid shit

as more and more slots are now filled with p/t instructors.

You teach a full course load, no benefits, and earn a whopping 15k a year if you're lucky.

It's administrators that get the nice high 6 figure salaries.



When I was an undergrad and grad my tenured professors all had middle-income salaries. Stable, but middle.

[JerseygirlCT]

5. I would guess that's not usually going into professor's pockets

lots of capital expenses, I think - some of them ridiculously expensive. And bulky administrations.

[ejpoeta]

3. oh, poor ivy league universities..... how sad that they are 'poorer', which

compared to other schools is far from poor.

[izquierdista]

6. Serves Yale right

For foisting their nincompoop legacies onto the country instead of telling them they are too stupid to pour piss out of a boot.