Everyone knows that I spend a lot of time on this blog talking about how colleges and college students are being affected by the downturn of the economy. There was last week’s article about how students are paying for more of their college costs. Then there was the article from last month which talked about how colleges are making money from their relationships with the credit card companies. You can go back on this blog and find more information about what’s going on if you’re interested (or read on).
The latest in this miniseries talks about how the colleges themselves are losing their actual monetary value in this market. In other words, college endowments are taking a hit. The New York Times put this article up two weeks ago and it’s an interesting read which I recommend if you get a chance. This struck me from the article:
They found that while endowments gained in value by about 0.5 percent in the old fiscal year, they lost nearly a quarter of their worth in the subsequent five months, a period in which the financial markets sank.
“It’s a rolling contagion that hit us,” Mr. Griswold said.
The pain was spread among institutions large and small, private and public. When endowments were categorized by size, even the least affected — those worth more than $1 billion — were found to have lost an average of 20 percent. Those of $500 million to $1 billion saw the biggest decline, about 25 percent. Public institutions lost an average of 24 percent, private institutions 22 percent.
I have two thoughts about this blurb. First, that’s horrible for the universities and colleges. Losses of that magnitude create real problems for nonprofits and I expect that we’ll see the biggest impact of these declines in September 2009 unless the economy roars back and some of this lost value returns.
Second, for some of the richer colleges I can’t help but think that they got what was coming to them. Come on – you can’t sit on $1 billion (or more) dollars and only offer the most piddling of scholarships and merit awards to your students who really need it. That’s not right. On the same point, I do feel somewhat bad for the major ivy league schools like Harvard who have now all but eliminated undergraduate tuition due to the recent backlash against colleges hording money instead of spending it on their students.
I went to Monmouth University and various places on the internet report that they have an endowment between $41.6 million and $50 million. I’m going to assume that they were at $50 million. If they took the same 25% hit that the Times article is talking about, then they’re down at $37.5 million. Online sources also report an annual tuition of about $35,000 (which has been rounded up from $33,464 to include the cost of books and other random fees). Wikipedia suggests that there are 4,744 undergraduates at Monmouth University right now.
What’s amazing to me is that if you do the math, Monmouth makes some $158.7 million in tuition and fees each year. Wow! For an institution that has been around since 1933, you’d think that they’d be able to raise more than $50 million in their endowment at this point. What is going on/wrong at Monmouth University that their endowment is so small, you ask? Look at the damn tuition!
It seems somewhat interesting to me that the tuition is so high for this school and that the endowment is so low. You would think that those who can afford to go to such a school (by straight payments or student loans like me) would be able to donate back to the school. Is there something going on at Monmouth that is prohibiting its alumni from wanting to donate? Speaking from experience I can tell you that after racking up such a gigantic debt attending the school, I haven’t donated back to it. I have donated back to Rutgers University, though, since they rewarded my good grades with essentially free tuition in my graduate program.
Monmouth might have to revisit its policy towards rewarding those students who are performing well in their classes. Their endowment might depend on it.