While it is too early to tell whether the uncertain economy is cutting into applications for private colleges in the Hudson Valley, at least one institution is warning that some 10 percent of its endowment has dissolved in recent months and it is taking steps to cut costs next year, in case the country enters a lengthy economic downturn.
In a letter to the college community dated October 27, Vassar College President Catharine Bond Hill warned that the college”™s endowment fund valued at $845 million in July lost $80 million worth of value by Sept. 30 with “further substantial losses” occurring in October. She said the endowment is “the source of 33 percent of the college”™s operating support.”
But Hill also argued strongly in an op-ed piece Nov. 11 in Business Week magazine that parents should look beyond “sticker shock” from costs of private colleges and realize that with the growing financial aid packages they offer, such education is competitive or even cheaper than a public college education. She suggests families shop around and examine the “net price” of an education when financial aid is factored in, as opposed to merely being scared off by tuition costs.
 “Just don’t pass up on applying to privates, assuming they are beyond your budget, because they might in fact be your most affordable option,” Hill wrote in Business Week.
Vassar College charges $49, 500 for tuition, room and board and is an economic dynamo in the region with an annual operating budget of about $150 million, of which $91.6 million is paid for by tuition, room and board charges. Vassar employs about 1,000 people, of whom 280 are faculty members, accounting for $93.1 million in payroll expenses, or 62 percent of the operating budget.
Providing financial aid is a major part of a private collage”™s operating budget and the cost was growing even before the latest bout of bad news. Vassar College projected spending $34.5 million in scholarship grant funds for students for the 2008-09 academic year, more than a 50 percent increase over the amount spent for financial aid five years ago and more than double the amount spent a decade ago. This current commitment to financial aid represents more than 23 percent of the college”™s annual operating expenses.
Nearby Marist College charges $34,000 for tuition, room and board.
The annual budget at Marist is $127 million, of which, about 93 percent comes from tuition costs, according college figures. The college has 800 full-time employees (of whom 220 are full-time faculty) and an annual payroll of about $50 million.
Whether noticeably fewer students will be able to apply to private schools in particular and college in general is unclear. The most recent data on applications to local colleges, both public and private schools, showed little change from recent years. At Vassar, for example, the “early decision” application process ended Nov. 15 after receiving 350 applicants, about the same as last year, according to Vassar spokeswoman Emily Darrow. Â
“It”™s too soon to tell,” said Timothy Massie, a spokesman for Marist, adding that no hard data on applications have been tallied since the economic crisis kicked into high gear in recent months, because most of the current applications for admissions were received months ago.
He said the college will start to learn how much the economy is hurting its pool of students in coming months. “We really don”™t feel like we”™ll see much backlash from the economy until next spring and by then, we hope to see an economic upswing,” said Massie.
Marist, at 60 years old, has a relatively modest endowment of $21 million, compared with the current $765 million endowment enjoyed by Vassar, which was founded in 1861. How is Marist weathering the economic storm?
“Like everyone else watching their 401(k) plan dwindle, our endowment has been hit as well,” said Massie. “So there has been discussion at the board of trustee level, there is discussion about how to retool the endowment fund. But we know in this economy everyone is taking that hit.”
“In light of the current economic uncertainty, we will develop contingency plans for managing the College in the next few years,” Vassar”™s Hill wrote in her Oct. 27 president”™s letter to the college. She said that while the college will seek to reduce expenses, it will not change its policies on financial aid to students who require it, but will require department heads to “control or reduce operating costs” in 2008-09. And she cites the possibility of a hiring freeze in 2010, and a postponement of capital projects.
