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NAICU Survey Examines the Economic Concerns of Private College and University Leaders

NAICU Press Release

December 18, 2008

NAICU Research Explores Presidential Perspectives on the Impact of the Economy on Private Colleges, Institutional Responses, and How the Federal Government Can Help 

For Immediate Release
December 18, 2008

Contact
Tony Pals, tony@naicu.edu
Office: 202-739-0474
Cell: 202-288-9333 

WASHINGTON, D.C., Dec. 18 – A new survey of private college and university presidents finds that fund raising, endowments, the availability of student aid, institutional debt, and student enrollment lead the list of campus economic concerns as the fall 2008 semester comes to an end.  The survey was conducted from Nov. 18 to Dec. 12 by the National Association of Independent Colleges and Universities (NAICU).

NAICU President David L. Warren provided the following comment:

"It is clear that there is much on the minds of college presidents this holiday season.  Presidents are wary about the potential fallout from the continuing economic turmoil, and are closely monitoring the impact on students, families, and their institutions.  Faced with a near perfect storm of financial challenges, private college and university presidents are moving proactively to protect the financial health of their institutions and ensure they remain affordable options in the higher education marketplace.

"No student should rule out a private college or university before checking into student aid options. Our institutions are well aware of the financial pressures facing families, and are doing what they can to help.  Private colleges are redoubling their efforts to offer a quality education at an affordable price to students from all backgrounds.  The federal government also has made extraordinary efforts recently to increase Pell Grant funding, provide access to more low-cost federal student loans, and stabilize the student and parent loan markets.  So, aid is available."

Most Pressing Concerns of Private College Presidents

Nearly all respondents rated fund raising, endowments, and student enrollment among their most pressing concerns.  Securing student loan availability and reducing the cost of institutional debt also rated highly.   

• 97 percent of respondents were greatly or moderately concerned about preventing a decline in fund raising
• 96 percent were greatly or moderately concerned about protecting endowment value
• 93 percent were greatly or moderately concerned about preventing a decline in student enrollment
• 87 percent were greatly or moderately concerned about securing student loan availability
• 62 percent were greatly or moderately concerned about reducing the cost of institutional debt

Impact of the Economic Downturn on Institutional Financial Health

Survey responses indicated that institutions have been hit broadly by the economic downturn.   

• 97 percent of respondents reported that endowments had been affected or significantly affected.
• 90 percent reported that fund raising had been affected or significantly affected.
• 82 percent indicated that demand for student aid had been affected or significantly affected.
• 69 percent indicated that student/parent loan availability had been affected or significantly affected.
• 53 percent reported that institutional debt/cost of debt had been affected or significantly affected.
• 52 percent indicated that student enrollment had been affected or significantly affected. 

Nearly half (49 percent) of responding presidents were anticipating a one percent to 10 percent decline in enrollment for the spring 2009 semester.  Seven percent expected to see a decline of 11 percent or more.  While institutions often experience a second-semester drop in enrollment during a typical academic year, many reported these anticipated drops were larger than normal.  Thirty-one percent of respondents projected no change in enrollment, while 13 percent anticipated an increase. 

Institutional Responses: Cost-Cutting

Responding presidents reported that the leading areas targeted for cost savings were staff hiring; construction, renovation, and maintenance; travel; and salaries.   

• 50 percent have frozen new hiring, or plan to
• 49 percent have slowed down current construction/renovation projects, or plan to
• 49 percent have restricted staff travel, or plan to
• 42 percent have given smaller than usual salary increases, or plan to
• 39 percent have delayed maintenance, or plan to
• 22 percent have frozen salaries, or plan to
• 22 percent have cancelled planned construction/renovation projects, or plan to
• 16 percent have laid off non-faculty staff, or plan to
• 11 percent have laid off faculty, or plan to
• 10 percent have cut student services, or plan to
• 8 percent have cut or frozen institutional student aid budgets, or plan to
• 8 percent have cut academic programs, or plan to
• 7 percent have cut salaries/benefits, or plan to

Institutional Responses: Revenue Generators

Slightly more than two-thirds (69 percent) of respondents said they were planning to increase tuition for 2009-10.  (Five percent reported that they have frozen, or were considering freezing tuition levels, for the coming year.)  Two-thirds (65 percent) of respondents said they are focused on increasing enrollment, while 42 percent created, or were planning to create, new academic/extension programs or continuing education options.  Less than 10 percent of respondents have borrowed funds or sold off assets (or have plans to do so). 

How Can the Federal Government Help?

Respondents widely supported a number of proposed steps that the federal government could take to assist students and institutions struggling during the economic turmoil.

• 98 percent said increasing the Pell Grant by $500 would be helpful or extremely helpful
• 98 percent said increasing federal student loan limits would be helpful or extremely helpful
• 98 percent said making PLUS loans easier to borrow would be helpful or extremely helpful
• 96 percent said extending the student loan grace period for new graduates from six months to 12 months would be helpful or extremely helpful
• 95 percent said providing liquidity (i.e., financing, guarantees) or other mechanisms to support private student loans would be helpful or extremely helpful
• 76 percent said funding current or “ready-to-go” construction or renovation projects would be helpful or extremely helpful.
• 70 percent said refinancing institutional debt at a low-interest, fixed rate would be helpful or extremely helpful.

Institutional Efforts to Assist Students

Beyond the survey results collected by NAICU, a growing number of private colleges and universities have announced new measures designed to help students and families during the economic downturn.  A regularly updated list of these campus examples is at www.naicu.edu/affordability. 

They include institutions that are limiting their tuition increases to the lowest levels seen in years – in some cases, decades; freezing tuition levels; expanding programs that replace loans with grants; lowering the amount of loans that students are expected to take out; matching public university tuition; discounting tuition for alumni and others who have been displaced from their jobs; guaranteeing students will graduate within four years; guaranteeing students will be employed or enrolled in graduate school within six months of graduating; and more.   

Full Survey Results

The complete survey questions and responses are available for download. (Note: Minor updates were made to the survey results on Jan. 30, 2009. The news release (dated Dec. 18, 2008) has also been updated to reflect these changes.)

About the Survey

The survey was conducted from Nov. 18 to Dec. 12 by the National Association of Independent Colleges and Universities.  Of NAICU’s 952 member institutions, 372 completed the survey, for a response rate of 38 percent. 

About NAICU

NAICU serves as the unified national voice of independent higher education. With more than 1,000 member institutions and associations nationwide, NAICU reflects the diversity of private, nonprofit higher education in the United States. NAICU members enroll 85 percent of all students attending private institutions. They include traditional liberal arts colleges, major research universities, church- and faith-related institutions, historically black colleges, Hispanic-serving institutions, single-sex colleges, two-year colleges, and schools of law, medicine, engineering, business, and other professions.

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