More on the “tipping point” for globalization of US higher education

The ongoing and very widespread economic problems are having a major impact on higher education, as I noted in a previous post.  Two recent articles in the New York Times provide some interesting examples of the problems.  The first, Tough Times Strain Colleges Rich and Poor, outlines some of the steps being taken to meet plummeting revenues.  They include, of course, deferring construction, hiring freezes, lay-offs, and cutting back on need-blind admissions goals. Students, feeling the economic pressures from all sides, are looking more favorably at  lower-cost public higher education, but there they are finding that states are cutting back on funding due to the hard times. Several states, including California, are considering, or planning to limit freshmen enrollments because of these cuts. 

The second, Beyond the Ivied Halls, Endowments Suffer, describes difficulties several universities are having with “alternative investments” in their endowments, including real estate partnerships, venture capital, and hedge funds.   Such investments have grown in popularity over the past years because of their potential huge gains, and university endowment managers have plunged into these alternative markets in a major way:

Endowments with more than $1 billion in assets reported 35 percent of their holdings in these types of investments on average last year.

Unfortunately, such investments are typically not very liquid, and often require periodic additional investment.  In these times, liquidity can be a problem, and additional investments become difficult if not impossible.  As a consequence, several major universities (including Harvard) are trying to sell some of their alternative investments, and having to accept greatly discounted offers in the process.  Does this sound familiar in other contexts?

All in all, this is developing into a very serious problem for higher education that is unlikely to be solved in a satisfactory and appropriate way by simply cutting costs.  Nor does it seem likely that a “government bailout” of higher education will occur.  More serious thought about the future of American higher education is called for, including, as I have previously discussed (here, and here), changes in mission and organization.