the Sam Jackson College Experience

CollegeScholarships.org kindly sent along this really nice graphic about students loans today and the way their costs accrue to students over time. It just scratches the surface of some of the issues about student loans, but it’s a valuable quick-look-tool. I wish it included information about financial aid, which I think is a very important counterpoint to consider when looking at student loan sizes and tuition prices, but still quite interesting all the same.

I haven’t written about loans or financial aid in some time… big, scary numbers like the ones in this graphic make me want to revisit the issue. Especially when I start thinking about grad school. (!)

student loans by the numbers

(via www.collegescholarships.org)

To:    The Faculty and Staff of Yale University

From:  Richard Levin and Peter Salovey

We write to apprise you of the University’s financial condition as we continue to work through the effects of the economic downturn.  We have been greatly impressed with the response of the Yale community.  Rather than wait to reduce expenditures until the current fiscal year began on July 1, many units achieved significant savings in the first half of this calendar year. Budget reductions were achieved with a spirit of cooperation and common purpose.

We explained in our messages to the community last December and February that we did not want to overreact to the downturn in financial markets by making reductions that might later prove unnecessary if markets recovered quickly.  Thus, the budget reductions we undertook eliminated most, but not all, of the deficits previously forecast for the years ahead. These forecasts assumed that the June 30, 2009, value of our endowment would be $17 billion.  Although the publicly traded portion of our endowment declined no further in value between December and June 30, we continued to incur losses in the value of our illiquid investments in private equity and real estate.  The precise final results for the 2008-09 fiscal year are still being compiled and will be announced later this month, but it is clear that we will report a June 30 value of the endowment of approximately $16 billion.  Only a small fraction of our endowment is invested in publicly traded securities, so the recent stock market rebound has not had a substantial effect on that number.  The bulk of our endowment remains invested in illiquid assets, which have not begun to recover their value.

Because we did not make a full adjustment to the initial decline in our endowment and because it has declined further since last December, we are now projecting a general appropriations deficit in the range of $150 million each year from 2010-11 through 2013-14.  Thanks to the work undertaken last year, these deficits are only half as large as the projections we faced last December, but they are still substantial and will require further budget adjustments.

Units of the University heavily dependent on endowment income will be especially affected. Because our spending rule spreads the impact of dramatic changes in the market value over time, the endowment payout for the current academic year declined only 6.7% from last year’s level.  But the payout will decline by approximately an additional 13% in 2010-11 and remain at that level for the next several years.  This estimate reflects our assumption that the endowment will remain flat during the current year and begin to grow after June 30, 2010, at the rate we have historically used in our budget modeling.

We will provide full details of the budget adjustments required for 2010-11 later in the year, but we want to alert you to the fact that another round of reductions will be necessary.  We also want to describe some of the actions we are undertaking now; other measures, still under consideration, will be outlined later.  We will not retreat from our important commitments to financial aid in Yale College and the Graduate School.  But with the exception of financial aid, no area of expenditure will be immune from close scrutiny.

As you know, construction projects that were already underway last December are being carried forward to completion.  Apart from the renovation of Morse and Ezra Stiles Colleges, urgently needed maintenance projects such as Harkness Tower, and essential cost-saving utilities projects, no major construction will proceed until funding is available from donor support or financial markets recover.  We have secured donor support to continue the design of the new residential colleges and to undertake site clearance, the first phase of which will occur this fall.  We also have secured full funding from donors for completing the renovation of the Yale University Art Gallery.  All other projects remain on hold.

Progress toward other important University priorities will be slowed as well. We will continue to recruit faculty to develop exciting new programs on the West Campus, because outstanding laboratory facilities are in place.  But we have set a pace that will trim our originally planned expenditures by more than 25% in the years immediately ahead.  We are also curbing our expenditure on the redesign and implementation of new administrative systems (the YaleNext project), by reducing the use of outside consultants, narrowing the scope, and slowing the pace of implementation.

Faculty recruitment will continue, but at a significantly reduced pace in the Faculty of Arts and Sciences, where more than 50 ladder faculty have been added over the past four years (an 8% increase) and about 100 ladder faculty members have been added over the past decade (a 17% increase).  As we move forward, we believe it would be imprudent to reduce the size of the faculty, only to increase it again to accommodate increased undergraduate enrollment when the new colleges open.  Some authorized searches and all new requests for searches to fill vacancies will be scrutinized carefully, however, and many will be deferred for a year or two.

Last winter we asked units to reduce both their staff and non-salary expenditures by 7.5% for the 2009-10 academic year, and we signaled that a further 5% reduction in non-salary expenditures would be called for in 2010-11.  To accelerate our movement toward budget balance, we are now asking units to achieve this additional 5% reduction in non-salary expenses during the current year.  We are counting on faculty, department managers, and others who control resources to curb nonessential expenditures on travel, entertainment, equipment, and supplies to the extent needed to achieve this target.

We are truly grateful for the support and cooperation that we have received in making these difficult adjustments.  We know that we can count on you in the year ahead to make tough choices among competing priorities, to identify non-essential activities that can be curtailed, and to seek ways to work across departmental lines to lower costs. We are attempting to negotiate these trying times without compromising the University’s commitment to maintaining the extraordinary quality and reputation of our teaching and research. Even as we defer some of our most important long-term investments, we will keep in focus our goals of maintaining the strength of Yale’s superb faculty, student body, and staff, and improving for everyone the experience of working in a community that contributes so much to the well-being of our city, the nation, and the world.

E-mail we received this afternoon enclosed below. The bloodletting at Yale looks like it will really not be so bad; while market declines were comparable to Harvard, they were looking to freeze things more aggressively, while Yale is forging ahead (relatively speaking). We all knew that the downturn would affect Yale, the question was by how much. The answer: So far, about 25% of the market value of the endowment has gone down with the markets. This means there is a fairly significant budget shortfall next year, growing again the year after. But, relax – the endowment is now in the same place it was in 2006, and long-term, everything will be peachy. Right, President Levin? “17 billion is still a very large endowment.”

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Today I am very excited to announce that the college admissions scholarship I originally outlined and later updated is finally off the ground: myUsearch has stepped up to the plate and is offering $1000 to the best student essay answering the following questions: What has been the most frustrating part of your college admissions process? Why is it important for colleges and universities to change this? What suggestions do you have for colleges and universities to try to relieve your frustration and the frustration of your fellow students?

The program I originally envisioned would be specifically linked to an effort to promote the development of new resources for students in the college admissions / higher ed marketing spaces. I remember how frustrating and painful college admissions was–that’s why I started this blog, and why I continue to work to try to make things better. With my younger sister (now 15) just gearing up to apply to college, and the demographics and admissions figures ever-worsening, there is no better time for a scholarship like this one which will hopefully bring us all some really great new ideas. I am going to work to make sure that the best of these suggestions received get heard by schools.

The scholarship is open to fall ‘08 freshman and those students applying for 2009 (important update as of 5/22!). pursuing an associate or bachelor degree at an accredited U.S. postsecondary institution with a combined household income of $100,000 or less. If that describes you, apply today! If it doesn’t, tell a friend for whom it might be applicable. More rules and instructions after the break in this post.

I will be involved in the judging, and personally I would encourage participants to write about ways that new technology (especially the internet and new media) could help improve the college admissions / higher education process — basically, I’m hoping to see some really great stories and ideas which will then be put into action convincing colleges to make these reforms happen!

I originally wanted to organize a scholarship from the ground up myself, but it turns out that this is quite tricky! Having myUsearch administer the scholarship proved to be a good alternative. I do want to thank all of my friends and colleagues who were ready to put money on the table for my proposed scholarship, and I would say that I hope to be able to do more in this direction, long term. This is going to be a great start.

More details in the days ahead! Complete Press Release and instructions below.

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As a Yale student, it’s a nice reaffirmation of the resources available when I load the New York Times webpage and find a nice photo of the squash courts in an article about schools with massive endowments. Only in late January, when that happened, it wasn’t Yale at all–it was my high school, Phillips Exeter Academy. I could even spot some of my friends in the photo (not featured here).

The article begins by profiling Curtis Thomas, a student made able to attend Exeter thanks to its generous financial aid. Curtis is really cool, I don’t know him especially well but did work with him on the Martin Luther King Day committee; in any event, I can certainly say that I’m very glad Exeter has the enormous pile of money to bring him and people in similar positions to Exeter.

Despite Exeter’s expanding commitments, which include a new promise to pay the full cost for any student whose family income is less than $75,000, the school’s endowment keeps growing. Last year — fueled by gifts from wealthy alumni and its own successful investments — it crossed the $1 billion mark, up from just over $500 million in 2002.

Exeter may be a particularly successful example, but its ballooning endowment also reflects a broader trend. In the 10 years through the 2005-6 academic year, the number of students at independent schools, which does not count parochial schools, rose just 11.6 percent, according to the National Association of Independent Schools. Over the same period, the average endowment per student, adjusted for inflation, increased by 93.5 percent.

So the rich are getting richer, both individuals and institutionally–independent school spending per student is up 40% between 1999 and 2004, versus 28% for public schools; at the high end of things, Exeter-style, things

Over a recent breakfast in Exeter’s cafeteria, Tyler C. Tingley, Exeter’s principal, said the school had commissioned a report showing that in 1980, 40 percent of American families could afford to pay tuition at Phillips Exeter, but by 2004 that number had declined to just 6 percent.

The ability of Exeter and other wealthy institutions to underwrite students helps explain why they may enjoy an advantage over other independent schools in competing for the best students. [...]

“If your selection pool is only 6 percent of the population,” Mr. Tingley, the principal, said, “that is a small percent to draw from. We are trying to create a level playing field. It used to be that we gave financial aid to 34 percent of the student body. Now it is 46 percent. We anticipate it will increase further as a result of the changes.”

Now, it’s striking to see that Exeter is in the top 25 endowments for ALL private schools–including colleges. I knew many friends who were sad to realize how much they might end up lacking for resources after they left high school. Here at Yale, I’m better off, but it can still be mind-boggling. Looking at this story about rich old schools doling out big bucks for financial aid sounds positively heart-warming: for whatever income disparity there might be, and whatever wealth gap, at least attempts are being made to mitigate the difference… right?

Not so fast. At the high end of things, Exeter type schools have that flexibility. But for schools that don’t run capital campaigns in the hundreds of millions of dollars range, they still want to compete for the dollars that students from rich families bring, as well as searching for the best students. Even Exeter does this. It says it looks for “students from every quarter” and it makes sure that it doesn’t overlook the “extremely wealthy” quarter (not that that’s 25%). For schools which don’t have the same resources, what can this mean?

“Private school is a luxury, and rich families want the best facilities,” said Michael Gary, director of admissions at Exeter. “All too often fund-raising is about the buildings and the sports facilities. The schools need them to attract the wealthy families. They don’t have high on their priorities providing access to kids who can’t afford it.”

The schools that want to attract students have to choose to spend on aid or facilities if they can’t compete on both–and in a financial bind, they often choose facilities. Something to remember about all of those bulging endowments. Exeter had lots of its endowment tied up only for athletic or other restricted purposes. The best of all RIDICULOUS endowed things? There is a prize, given out on prize day, to any student who receives the same prize that their mother or father received when they were a student. To my great delight, in recent years it has garnered some booing and hissing. Its recipients still shrug, and go and collect their money for being both talented at whatever achievement they’re receiving… and being legacies… and the cycle continues.