How Universities Are Suffering in the Recession & What IT Means to You

The recession has had an impact on more than the job market--it's also affecting higher education. Since the downturn, major cuts have been made to research funding, education, endowments and aid programs. Find out how these cuts affect you.


The economic downturn has affected every sector of the economy, including higher education. Resources are becoming scarce at many of the nation's colleges and universities. This is especially true of tuition-driven schools and schools that depend on significant endowments.

A recent survey of nearly 800 public and private schools found that endowments have dropped 23 percent on average. Even the most financially sound private schools are reporting significant declines. Cornell University is suffering a 10 percent budget shortfall resulting from falling endowments and Dartmouth has had to lay off faculty members.

The outlook at state institutions isn't much better. These schools are experiencing a reduction in state support in addition to a drop in endowments. The average public school saw endowments fall 24 percent--the biggest drop since the mid-1970s.

Declining endowments aren't the only challenge public and private schools face as a result of this recession. Many institutions have also seen student revenue fall. Student revenue, which includes tuition, room and board and other fees, cannot be raised significantly at this time because many students and families are already maxed out.

According to a report from the National Center for Public Policy and Higher Education, working class families are already allocating 33 percent of their income to education (after aid) to pay the costs at two-year colleges. Asking these families to contribute even more money is simply unrealistic.

What This Means for You

To combat revenue problems, many colleges and universities are belt-tightening. They are putting construction plans on hold, cutting staff, and eliminating student resources. A number have also chosen to deemphasize research programs, liberal arts programs and other programs that are not considered work related.

Although most are trying to avoid raising tuition costs and cutting financial aid packages, some schools simply don't have the luxury to do so at this point They need revenue now. This has, of course, had an impact on both the number of U.S. students and the number of foreign students who can afford to attend specific programs.

But the news isn't all bad. There are some schools, such as Stanford and Harvard, that are increasing aid packages and filling in the difference for families and students who have seen their financial situation deteriorate. Of courses, there is a flip side to this: the money schools need to cover increased financial aid bills must come from somewhere, which means more cuts in other places.

Three Tips to Combat the Tight Financial Outlook

Like many of the nation's colleges and universities, students are facing tough choices as a result of the economic downturn. Some have even been forced to put their plans for higher education on hold until money is more plentiful.

If you're worried about your academic future, here are three tips to help you combat the tight financial outlook:

Search for Scholarships.

You should begin actively searching for scholarships as soon as you decide to go to school. If you are already in school, plan ahead for next year. Competition for awards is tight when more students are in need of aid.

Ask Questions.

Now that schools are being forced to slash programs and research funding at every turn, it has become more important than ever for students to ask questions about the resources that will be available to them throughout the academic year and after graduation. Do your best to stay posted on the news at your school. If your reasons for choosing the school are cut, you may need to consider a transfer to get the education you desire.

Develop a Back-Up Plan.

Students who have never paid anything for their education are suddenly being forced to come up with last minute cash to cover tuition and other expenses. Coming up with thousands of dollars at the last minute is no easy feat. To avoid this situation, you should develop your back-up plan now. Decide where you'll go if you need money at the last minute. A bank? Your grandma? Your school's honors department?

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