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Another Highlight

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News items, features, and opinion pieces posted on this site from sources outside NAICU do not necessarily reflect the position of the association and its members.  Rather, this content reflects the diversity of issues and opinions that are shaping American higher education.


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National Higher Education News


Financial chaos threatens to besiege universities

Boston Globe

October 3, 2008

Administrators at small colleges and large universities across the state huddled in tense meetings this week to discuss worst-case contingency plans and appraise their financial status after the market meltdown. While colleges stopped short of adopting new policies as Boston University did Tuesday when it froze hiring and halted new construction projects, they are scrutinizing everything from budgets and building plans, to how they and their students borrow money.

Another Fund Heavily Used by Schools Is Frozen

Wall Street Journal

October 3, 2008

A second investment fund offered by investment adviser Commonfund froze most withdrawals this week, posing possible financial strains for the 200 colleges and schools invested in the fund.  The Commonfund Intermediate Term Fund held $1 billion in assets for the schools. Commonfund told clients they could withdraw only 30% of their money now, and said it will make the rest available "as quickly as possible," depending on market conditions.

As Credit Crisis Freezes Colleges, Worries Mount

Chronicle of Higher Education

October 3, 2008

Colleges have often considered themselves recession-proof. But last week's events compounded an already-difficult year for many institutions, which have suffered from declining state support, tightening credit, and losses on endowment earnings. As a result, the financial meltdown-with its promise of a prolonged economic downturn-prompted some institutions to take radical steps and wreaked havoc on the way colleges do business.

Tax breaks big and small sweeten financial bailout

Associated Press

October 2, 2008

Wind power developers, disaster victims, college students, teachers and millions of taxpayers and businesses stand to see substantial benefits from the tax relief package that lawmakers added to the huge financial rescue plan.  The measure has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy school supplies with their own money.

College Savings Down

Inc. Magazine

October 2, 2008

In a poll of 3,000 U.S. households with college-age children, financial services firm Fidelity Investments found most parents expected to meet only 21 percent of the total cost of their children’s college education, a three point decline from a similar survey last year.  Among other financial pressures, respondents blamed declining home equity values and tighter credit conditions for preventing them from paying a larger share of tuition fees.

Bethany, Elon Tap Accounts to Offset Wachovia Curbs

Bloomberg News

October 2, 2008

Elon University, Bethany College and Oberlin College rushed to find alternative sources of cash after Wachovia Corp. curbed access to a $9.3 billion investment fund used by more than 900 colleges to hold money needed for salaries, maintenance and other expenses.  Wachovia's move prompted college officials to tap other accounts and raised concern that schools may not have enough cash to pay bills.

Bank Limits Fund Access by Colleges, Inciting Fears

New York Times

October 2, 2008

In a move suggesting how the credit crisis could disrupt American higher education, Wachovia Bank has limited the access of nearly 1,000 colleges to $9.3 billion the bank has held for them in a short-term investment fund, raising worries on some campuses about meeting payrolls and other obligations.

Colleges Scramble as Fund Is Frozen

Wall Street Journal

October 2, 2008

For 34 years, colleges and schools parked cash in the now $9.3 billion fund, which offered returns slightly above U.S. Treasury bills. That it now might take years for the institutions to get all of their money back shows how widely credit-market woes are reverberating beyond Wall Street.

Wachovia Limits Access to $9.3 Billion Fund for 900 Colleges

Bloomberg News

October 2, 2008

Colleges can only redeem 34 percent of their investments in the short-term Commonfund because of the ``liquidity squeeze,'' said Laura Fay, a spokeswoman for Charlotte, North Carolina-based Wachovia, in an interview. Earlier this week, Wachovia had capped availability at 10 percent.  Fay said the ``unprecedented environment'' in the market contributed to Wachovia's decision to curtail the fund and plan its closure by Dec. 31.

IRS Releases Tax Questionnaire That Asks Colleges to Disclose More

Chronicle of Higher Education

October 2, 2008

The questionnaire is meant to take an in-depth look at potential discrepancies between the way institutions operate and how they report their activities to the IRS. While the IRS will not publicly report the data from individual institutions, the information could trigger audits and even penalties for the colleges, as well as more-minor actions alerting the institutions to their errors.
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