Financial Crisis and College

By JieYing Peng

When the economy was booming, billionaire colleges such as Harvard and MIT use their large endowments and spent binges on faculty, buildings, and scholarships. Now, they are experiencing the sharpest budget cuts. The college endowments fell 23 percent in 2008 and they are expecting to lose more in 2009. The decline is almost twice as big as any year since 1974. The challenge for colleges with declining endowments is that many of the faculty they hired now have tenure, all those new buildings still need heating, and financial aid demand is rising. College staff cuts are inevitable because of the shortage of funding.

The current economic crisis that affected investments, pensions, and savings plummeting has also put a dent in college tuition funds. High school seniors not only have to worry about getting into the dream universities, but also have to worry about how their family will afford it if they get in. Many parents are worried that they would not have enough money for their children to go to college because of the sudden decline in investments and the college savings plan has shrunk dramatically. The volatility of the stock market has impacted all 529 plans. Parents may be forced to take out loans.

Resources:
http://www.king5.com/localnews/stories/NW_100208EDB_student_loans_KS.d4aa4f03.html

http://www.detnews.com/apps/pbcs.dll/article?AID=/20090127/SCHOOLS/901270367/1026/rss06

http://www.dallasnews.com/sharedcontent/dws/dn/education/stories/101108dnmetcollegesave.3e643d8.html