Tuesday, November 18, 2008

Credit Crunch - College Challenge

Over the last few weeks there have been several reports of the negative effects of the economic crisis on the financial health of US colleges and universities. The picture is not a rosy one. From Harvard, the prince king of endowments, to Florida Community College resources have taken flight. Endowment fund managers like most investors participate in the stock market and with the topsy turvy nature of the market nowadays, educational institutions are in a state of flux. Here are some examples:

1. Oberlin College endowment of nearly $750 million shrunk by about 15% in the past four months.
2. Dartmouth College's endowment lost $220 million.
3. Harvard's President indicated that they should expect a 30 % reduction in endowments this fiscal year.
4. University of Northern Florida's endowment decreased from $96.8 million in June to $81 million by the end of September.

Of course prospective and continuing students are concerned because there are indications that in order to survive schools are going to take steps to reduce spending and increase earnings. They will therefore exercise options like hiring freezes, layoffs, tuition increases and financial aid decreases. The last option is one that students are especially worried about. The New York Times alerts us to this possibility at Tufts University which previously enjoyed the status of being "need blind". Tufts' president Lawrence Bacow lamented “.. with what’s happening in the larger economy, we expect that the incoming class is going to be needier. That’s the real uncertainty.”

This is not a problem which affects private institutions only as the government is also concerned with slashing expenses, thus state universities may also be seeking to increase fees, but in general these tuition costs will still be comparatively lower.

All is not doom and gloom however. Vassar will remain need blind and is said to be looking at increasing financial aid - $1 million more to be exact - for the upcoming year. Boston University will be granting scholarships to Boston public schools graduates. Harvard will continue to grant financial assistance on the basis of need charging nothing to those whose income amounts to less than US$60,000.00. On the government side the LATimes quoted the Secretary of Education who said,

"I want to reassure students and their families that federal student aid -- both grants and loans -- remains available to eligible students."

Nevertheless everyone must be prepared to bite the bullet and explore alternatives to financing their education.

• Remember some colleges also offer merit based aid. There is the well known Jefferson Scholarship available at the University of Virginia, the Robertson Scholarship at Duke University and the Honor and University Scholarships at the University of Chicago but check out some more which may not be so well known along with government grants at Scholarships.com

• There are federal loans available such as the Stafford loans and Perkins loans but there have been a diminution in the number of financial institutions in the student loan business and the remaining ones have tightened their standards.

• Some colleges also encourage students to participate in campus employment to supplement their income and to contribute to their tuition. At Swarthmore for example with a student population of approximately 1500, there are 1,100 students working part-time on campus.

No doubt everyone will be required to tighten his belt but hopefully this will not be at the expense of young people whose desire to maximize their potential and contribute to society in a positive way includes getting a college education.

Sources: Jacksonville.Com
New York Times

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