Archive for September 2009

Do Big Endowment Fund Losses and Extended Graduation Time Effect Scholarship Levels?

September 8, 2009

A resounding YES to that question.

College endowments have taken big hits this year. Harvard’s  funds and Princeton’s are down 30% and Yale is down 25% according the the “Communique’s” Alexander Green, Investment Director, The Oxford Club. He further stated that their real world returns were probably even worse because their investments are fairly illiquid. Therefore, it is very difficult to fix a fair value and maybe even find a buyer. If these three major  colleges and universities are doing so poorly perhaps no endowment fund is doing any better and most will probably be worse.

What does this portend for college applicants? Lower college endowment funded scholarships is the most likely scenario. If your capital was reduced by 30% you would also reduce your expenditures if you had a choice. Particularly in tough times like now. The last time we had a really bad depression or recession it took about 16 years to recover with the government intercessions. Are we going to do any better this time. The government’s involvement is much greater this time so maybe it will last longer. They seem to be following the policies of FDR which didn’t work until after about 1946 and WWII. Here are the results of a recent economic study that supports the assertion that Obama’ s plan doesn’t work  and is making the same mistake as FDR’s plans.

Not only will the endowment fund losses potentially effect the size of endowment financed scholarship. Another matter that effects your college and university costs that seems to be coming to the front is the time it takes to get a four year or bachelor’s degree. The American Enterprise Institute has published a report on diplomas and dropouts. This a fairly lengthly report and appears to cover most institutions and their record of graduating students with a four byear degree.