The Great Connections Seminar
Discussing ethics
Thursday, December 4, 2008
Harvard loses 1/4 of its endowment
"The Harvard endowment, the biggest of any university, stood at $36.9 billion as of June 30, meaning the loss amounts to about $8 billion. That's more than the entire endowments of all but six colleges, according to the latest official tally." reports the Wall Street Journal.
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2 comments:
Interestingly, two years back, there was a big to do questioning why Havard had such a massive endowment and was not actually using it for expanding educational opportunities, etc. (LA Times).
The real ugly in this story is that other universities that depend on endowments for the services they offer have to sell at the bottom and realize the paper losses.
The way market dips work is that the only people who really lose the money are those that are forced to sell at the bottom of the market. Harvard doesn't need to dip into its funds; so, if the market recovers, they will see incredible gains.
It is the people forced to sell that I worry about.
Harvard and the other dominant, wealthy universities, have not had to use their endowments as much in recent years because of federal loans and grants for students. See http://www.centerforcollegeaffordability.org/uploads/Bubble_Report_Final.pdf,.
Author Andrew Gillen gives a fascinating analysis as to why real inflation-adjusted tuition has more than doubled in the last 30 years.
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