US colleges likely to feel the pinch - November 14, 2008
The estimable Chronicle of Higher Education in the US held a shindig earlier this week with Moody’s Investors Service, a well-respected financial analyst company, to discuss the economic future of higher education establishments in the US. (Story here, login required)
The financial health of academic institutions in the US is somewhat bolstered by their private funding structure (see Nature’s in-depth coverage of how the financial crisis is affecting academics worldwide here).
This feeling is shared by Moody’s chief economist Mark Zandi, who said that because the higher education sector is one with still increasing numbers of jobs, it might be able to weather the recession.
But all is not good. The problem with the mess we’re in at the moment, said a Moody’s report, is that it isn’t going to go away anytime soon. And the longer the recession continues, the harder US colleges will be bitten. “The potential impacts of the combined credit freeze and recession on some colleges and universities will be significant if current trends persist,” the report says.
According to the Chronicle, “those effects could include less availability of private student loans, a shrinking pool of people who can afford to go to college, and more difficulty in borrowing funds for the colleges' operations and growth.”
But perhaps good times are ahead – the Obama administration could be good news for higher education institutes, suggested Moody’s director for higher education ratings John Nelson. “I don’t think that he’s going to lead an administration that’s hostile to universities… If anything, the opposite.”
Comments
Certainly the blog is accurate and many smaller institutions definitely feel the economic challenges. My problem with soaring tuition costs and dorm fees is that most older, well-established higher education centers are "sitting on" large endowment "nest eggs." I'm not familiar with the legal ramifications. I do know many or all foundations are prevented from "dipping into" reserves to fund research grants or distribute to charity. Are universities and colleges legally prevented from accessing those endowment funds to stave off economic woes. If so then laws need to be revisited. If not I see another bail-out on the horizon. If well-funded and technically solvent centers could access these funds and refuse to do so then shame on them.
Posted by: David Deal | December 1, 2008 08:08 PM