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Part of the endowment story is this: Big elite unis jacked up tuition sticker prices but expanded financial aid for most students so that the discount rate actually declined relative to inflation. But that was premised on estimates of stable aggregate need.
The problem right now for university budgets is *not* endowment income. Endowment income is usually drawn on the basis of longterm quarterly averages to "smooth" market fluctuations. Plus year over year the S&P is only down 2%.
The budget problem is two-fold: 1) there& #39;s a bunch of specific COVID related costs that unis are currently footing with the hope that a Fed bailout will make them whole. 2) Much bigger: Financial aid needs in a world with 15% unemployment.
The issue there, to relate it back to the first tweet, is just that the basic assumption of budgeting (stable aggregate need) is totally out the window and in a way that most administrators never planned for.
I assume that most universities have canned plans to deal with major economic crises, but the on-set and phase-in for those plans is not one month. They assume admin will have some leading indicators and they can prepare in advance.
They& #39;re now looking at a massive problem that they likely didn& #39;t plan for: acceptances already went out and now they& #39;re going to be making financial aid offers. Acceptances were issued in a world with 3% unemployment. Financial need will be in a world with 15% unemployment.
Unless those universities walk away from their commitments to meet 100% of demonstrated need that& #39;s going to generate an unparalleled budgeting crisis even if endowment income is stable.
Meanwhile, Duke announced no pay raises for anyone making above 50k, a massive lockdown on research spending, and a hiring freeze that they& #39;re not calling a hiring freeze.
As truly, abysmal as the job market was before all this, the carnage for new PhDs is going to be so wildly unparalleled that it will be deceptive to even refer to it as a "job market" since that assumes someone, somewhere is hiring.
