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.