The value of university and college endowments fell almost 19 percent on average during that period in what report authors described as the worst decline since the Great Depression.
While the downturn hit all types of universities, elite schools such as Harvard, Yale and Stanford absorbed some of the deepest losses. Some of the richest private schools, which rely heavily on endowments to operate and flourished in boom times, have resorted to cutting staff and shelving construction projects.
“What last year demonstrated is that what goes up does come down — and that’s what happened to college and university endowments,” said Terry Hartle, senior vice president of government and public affairs for the American Council on Education.
However, things appear to be headed up again, mirroring trends in the stock market and most other investments.
The swings are part of what has been a volatile decade for endowments, which are managed as permanent assets and are especially crucial for large private schools that don’t rely on state funding.
The average rate of return on endowments soared as high as 17 percent as recently as 2006-2007; endowments on average posted annual gains of 4 percent during the up-and-down 2000s.
During flush years, colleges and universities have come under pressure to increase spending from their endowments to lessen the burden on students struggling with rising tuition and costs.
Schools spend 4 to 5 percent of their endowments annually on student aid, faculty, research and other costs. ( AP)
