The Wall Street Journal reports in Harvard Hit by Loss as Crisis Spreads to Universities that higher education is beginning to feel the impact of the worldwide financial woes. For example, in the first four months of Harvard’s fiscal year, its endowment suffered investment losses of at least 22%. In a letter to Harvard deans explaining the financial loss, Harvard President Drew Gilpin Faust said that the loss has “major implications for our budgets and planning, especially since our other principal revenue streams also stand to be challenged by the economic crisis.”
Harvard is not the only Ivy to suffer from the current financial upheaval. Penn announced on Friday that its School of Arts and Sciences is freezing hiring, staff position reclassifications and salary adjustments. Furthermore, according to the Daily Pennsylvanian, Penn plans to “identify the most effective cost-cutting measures and to allocate remaining finances only to matters of the highest priority for the 2010 fiscal year.”
While many elite private institutions have been hard-hit by investment declines, public universities that rely on public funding are preparing for severe budget cuts as well. In their attempts to combat the financial crisis many universities are instituting hiring freezes, enrollment cuts, and tuition increases. Some examples from across the country:
- Florida’s state universities instituted a three-year cap on freshman enrollment.
- The mammoth California State University system plans to reduce enrollment by 10,000.
- The California, Tennessee and Washington State University systems are considering enrollment reductions.
- Rhode Island instituted mid-year tuition increases at three state universities.
To assist students struggling to pay for tuition, the federal government has already taken emergency steps to boost lending. However, many fear that would-be students will still be forced to forgo their educations or attend two-year colleges instead of four-year universities. “It’s going to be a remarkably challenging situation, “says economist Michael McPherson. “This is going to be bad, and it looks like the near-term impact on state budgets is going to be quite dramatic.”
Although financial analyst Michael Griffith says that the full impact on higher education is yet to be seen, some governors have already warned their public university systems to prepare for severe budget cuts.