Elsewhere online
July 13, 2016

Colleges Dialing Down Endowment Spending as Returns Shrink

Bracing for slim investment gains or outright losses, some colleges and universities are scaling back spending from their endowments on financial aid, faculty, and other expenses, Bloomberg reports. The belt-tightening comes amid growing Congressional pressure on wealthier institutions to devote more of their assets to helping students cover rising tuition.

Higher-education institutions typically plow 4 percent to 5 percent of their endowments annually into academic programs and operating budgets, but the figure can fluctuate based on returns. After regularly seeing double-digit gains in the first half of the decade, college investments grew by only 2.4 percent in fiscal year 2015.

Less-wealthy schools are likely to take the biggest hit. “We need to begin ratcheting down,” said Bruce Arick, assistant treasurer of Butler University in Indianapolis. “The days of double-digit returns are gone for the foreseeable future.” After gaining 0.9 percent on investments last year, Butler is plans to cut annual spending from its $184 million endowment from 5 percent to 4.9 percent.