Instructional Technology

Yesterday started with a special presentation by the president of the college.  In addition to being the first staff meeting I’ve been at that started with a prayer (I’m not surprised, I did choose to start working at a Catholic college), it was also a very sobering look at our financial situation.  Investors are to blame for there being a new hiring freeze on campus.

Huh?

Ok, that’s stretching to a logical extreme, but there’s truth in it.  Here’s the piece in the middle; the current credit crisis affects everyone.  (If you’re unclear as to how investments lead to credit crisis, check out this recent episode of This American Life; it will take you from mortgage investors through to today.)  Suddenly, financial institutions are less able to lend money to students.  Homeowners have less home equity to leverage for educational expenses.  Colleges and universities are less able to take favorable loans for capital projects and plant improvements (the physical facilities).  There are other factors compounding things, such as:

• The government stopped subsidizing educational loans.  Previously the government would pay lenders to lend money, essentially.  Usually in the form of paying off the interest of the loan while the student was a student.  With less money coming in from that guaranteed source, the lenders are less willing to take risk in lending to students.  This leads back to the old saw about you needing to have money before the banks will lend you money.
• The rising costs of energy and food, and the unfortunate reality that the cost of higher ed has been rising at about twice the rate of inflation (more on that in another post), have led to major shifts amongst price conscious families and individuals as to where they are putting education dollars.
• People struggling to meet potentially mounting debt levels (due in many cases to sub-prime mortgages) are having to draw off money from funds set aside for college education, or are deferring education while moving directly to the workforce.

These factors, and many others, have led to a ‘perfect storm’ that is sweeping across higher education everywhere, and the result is this: enrollments are way down for the upcoming academic year (as measured by deposits received).  Some institutions are seeing numbers 30% or more below their projected goals.  Many institutions are having to dig deep into their waitlists to make up for this.  Even Harvard, apparently, has had to go back to the waitlist, much later in the year than they would normally.  And the qualities that lead to being selected off the waitlist are having less to do with academic rigor and more with one simple question: Can you afford to attend?

For some institutions, this is devastating timing, as they may only recently have recovered their endowments from the tech stock bubble burst earlier in the decade.  Now that they are no longer spending money faster than they were making it, suddenly, they may be making money a lot slower than they are spending it.  (You might argue that those are the same thing, but it’s a big perspective difference, especially if you’re the one having to manage the money)

At my own college, belts are being tightened even further.  They’ve been tight for a while, as they struggled to get back in the black (originally projected for 2009, now that has been pushed back to at least 2010), but now they’re having to trim off some of the meat, and not just the fat.  No new staff or faculty will be hired for the time being, replacement positions will be examined critically, salary increases, even cost of living increases, are on hold until at least September, when they know where things stand.  Tenure will still be granted as promised, which will prevent an outright riot from the faculty.  Investments in the physical plant will move forward cautiously, for a few simple reasons; namely that they are long overdue, and that they directly affect the ability to recruit students, who respond favorably to improved infrastructures.

Am I worried?  Not so much.  It will be tight and tough, but unlikely to impact me strongly given how cost conscious my department already is, and our already minimal staff levels.  I may not see a raise, which I was looking forward to offsetting some of the salary loss when I moved from my last position, but I think I’ll be ok for the time being.  My biggest thoughts on this are sympathies for the thousands of students out there who want to go to college, but find themselves unable to afford it now, despite having been accepted.  It can only add to the feeling that the middle class is being squeezed from all sides, and I hope for every-one’s sake that it turns around quickly.