A "slight economic recession' that drags down one but not costs has thrown today's 1600 American colleges and universities into their worst financial plight in history. Not only do institutions of higher education have less money for their needs today, but they are finding it harder and barder to do anything about it.
Like every other college and university, Harvard and Radcliffe are having their troubles in the economic downdrift. Neither is feeling as bard a pinch as many a U.S. school, but each is facing the same worries. Gifts, invested endowment, and, in some cases, tuition incomes are sliding downward, but wages, salaries, and equipment costs are still clinging to inflation-high levels. In other words, the "cost of education" is too high for an increasingly large segment of America's educational institutions.
In 1948-1949, one-fifth of the country's private colleges and universities wound up behind deficits despite a peak in fees paid by their students. According to New York Time statistics, one per cent of the schools went bankrupt, and another 15 per cent will have to sacrifice their standards in order to continue in operation.
Harvard Had Surplus
Harvard is much better off than today's average U.S. colleges or university, but is still not exempt from financial worries. The 1948-1949 Financial Report revealed an excess of almost $500,000 of income over expenses, but this surplus was gained only by eating into reserve funds to pay off the debts of such deficit departments as the Athletic Association, the library, and five graduate schools. Moreover, there is no assurance that there will be any overall surplus next year.
The recession's main effect on Harvard so far has been to make it harder for both individual departments and the University as a whole to raise money. Last year Harvard was lucky enough to attract about the same volume of gifts as it did the year before, but in the face of the uncertain economic future, the University discovered an increasing reluctance among its donors to sign pledges for future gifts. As a result, many of last year's gifts were of but one term's duration.
Investment Problems
Another recent source of university concern has been the reduction in the return on investment, for the rate of interest has been declining over a long period. Harvard suffered no serious drop in its total return on investment last year, but there remains the danger that the recession may suddenly worsen and thus take a bigger chunk out of investment income. However, the University takes comfort in its continued conservative investment policy. Harvard's capital is much safer than that of schools whose need for higher returns has made them switch to more risky investments.
The main sources of college and university income, of course, are tuition and other students fees, and today across the country these are at their peak. However, the higher rates aren't having their full effect in narrowing the cost-income gap because enrollments are falling. In Harvard's case the enrollment dip simply reflects the University's decision two years ago to slash war-swollen figures. Many other colleges, however, would like to continue with a bigger students body but can't because fewer and fewer men today have enough money to pay the expensive bill.
The failure of the recession to lower appreciably the major expenses added to college and university problems. Although a few such items as food cost Harvard a bit less, wages and salaries continued to rise. The individual increases were small but of big overall importance, for wages and salaries are 60 per cent of the University's total outlay.
Radcliffe Ran Deficit
Radcliffe was harder hit by economic conditions last years than was Harvard. Through 1947-1948 there was a small string of surplus years, but higher costs in all departments last year brought about a (relatively small) deficit of about $10,000. Radcliffe has recently been experiencing a slight increase in gifts and investment income, but this increase has been quickly wiped out by the spiraling costs. As a results, Annex students pay higher tuition, room, and board rates despite the savings of the dormitory work plan and the conversion of many single rooms to doubles.
Significant about Harvard and Radcliffe is the fact the neither school, despite its increased financial cares, has curtailed any of its main facilities. Instead, both schools have been able to continue expansion; libraries, housing, and research facilities to name a few items, have continued to grow.
In schools with more pronounced lags in income, however, there has been no alternative but to eliminate courses, discharge faculty members, and postpone plans for modernization and other improvements. Only about 15 per cent of the country's colleges and universities fell into this category last year, but if the financial crisis continues to grow, many more will join those making retrenchments.
Harris Studies Problem
The prospect of seriously lowered educational standards in the country disturbs such students of the problem as Seymour E. Harris '20, professor of Economics. In his view, the biggest danger of all-a deficiency of first-class teacher is beginning to show itself already.
Harris points out that to earn "a decent living" professors are forced to teach summer school, give public lectures, and take in roomers in their homes. "Each year faculty members become more overworked and more neurotic, and their research, productive writing, and teaching suffer correspondingly."
A number of steps towards casing the country's educational crisis" were posed by Professor Harris in last Sunday's New York Time Magazine. Harris, a backer of Federal aid to education, wants government and state help in the form of scholarships, fellowships, and capital outlays, and he doesn't fear any resulting threats to academic freedom. "British experience shows us that aid is possible without control of college educational policies," he explains.
The Times figures show that the majority of colleges would just as soon get along without any Federal aid. 19 per cent of the private colleges say they need aid to continue in operation, but most of the others admit that they fear Federal aid would mean Federal interference in their policies.
Other Possible Solutions
Among his supplement recommendations, Harris includes "scaled" tuition increases which would not prevent financially handicapped students from attending college. "Tuition charged wealthy undergraduates can well be raised enormously," Harris says, "and our schools should seriously consider furnishing a free education to deserving but impoverished students."
Harris' final suggestion is consolidation. "No great injury would be done the country if a substantial proportion of its institutions of higher education were closed. By reducing the number of schools, we will be able to increase the size of the remainder and thus lower unit costs in the end."
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