To the list of small liberal arts colleges struggling to balance their budgets in these tough economic times, we need to add Haverford College — at least, according to an article that appeared this week in The Philadelphia Inquirer.
This is a bit surprising, given Haverford’s high degree of selectivity, a sticker price of $66,490 per year, and a $500 million endowment. Nevertheless, it seems that the college is struggling with a $5 million shortfall in its $100 million annual operating budget, and it has been filling the gap with revenue from other sources.
Plans approved by the Board include capping the financial aid budget and backing away from the school’s historic practice of being “need blind,” meeting the financial needs of all students who are admitted to the college. About half of the 1300 students receive financial aid today, and the new policy will affect approximately 10-15 students who will now be admitted under a “need aware” basis.
Another source of revenue will come from expanding the size of incoming classes by seven “full-pay” students per year over the next five years. I’m sure every college wished it had that type of demand and ability to micro-manage its incoming classes.
All of this is being met with concern by students and alumni, who fear a change in Haverford’s mission to educate all who gain admittance, regardless of ability to pay.
A couple of things struck me about all of this. First is the failure to mention any type of cost-cutting as a way to make ends meet. In the business world in which I lived most of my professional life, a reduction in costs of 5% can be done almost blindfolded, as there are multiple ways to accomplish this — salary freezes, elimination of bonuses, reasonable force reductions through attrition, reduction in travel expenses, etc., etc.
The second thought is why more money could not be appropriated from the school’s healthy $500 million endowment. Assuming cost reductions come anywhere close to meeting the $5 million shortfall, the endowment would only need to be tapped for an amount that is well within its ability to fund. But Haverford’s president Kim Benston said that “eroding the endowment would run the risk of diluting the value and meaning of a Haverford education.”
Benston did not say exactly what the meaning of an education has to do with how it is funded, though. Maybe he just means that eroding the endowment would run the risk of….eroding the endowment. If that is the case, he certainly has company among the presidents of other wealthy elite colleges and universities.