NAICU Survey Explores Economic Challenges

NAICU recently released the results of its third survey for 2008 of the impact of the economic downturn on private colleges, and for the third time in a row, the survey results have impacted significant legislation before Congress.

Previous survey results helped inform Congress in developing emergency student loan legislation that is widely credited with averting a crisis in student loan lending equivalent to that in the housing market (see this January 6 Wall Street Journal story).  This most recent set of NAICU survey results was used by Congress to help develop a stimulus package that, if enacted, will provide the largest two-year increase in Pell Grant funding in the history of the program (see related story).

The NAICU survey results, which were shared with key congressional staff and widely reported by the news media in December, were collected Nov. 18 to Dec. 12. The survey showed that fund raising, endowments, the availability of student aid, institutional debt, and student enrollment led the list of campus economic concerns as 2008 came to an end.

Institutions reported they had been hit broadly by the economic downturn. Ninety-seven percent said endowments have been affected or significantly affected, 90 percent reported fund raising was down, and 82 percent indicated demand for student aid had risen. To offset the effects of the financial constraints, independent colleges were turning to a variety of cost-saving steps. Leading the way were hiring freezes (50 percent of respondents); constraints on construction, renovation, and maintenance (49 percent); cutbacks in staff travel (49 percent); and smaller salary increases (42 percent). Only 8 percent reported they cut or froze institutional student aid budgets, or had plans to do so.

Respondents widely supported a number of proposed steps that the federal government could take to assist students and institutions struggling during the economic turmoil. Measures that received near universal support were increasing the maximum Pell Grant by $500 (98 percent), increasing federal student loan limits, making PLUS loans easier to borrow (98 percent), and extending the student loan grace period for new graduates (96 percent).

Nearly all of the survey's 372 respondents reported they were greatly or moderately concerned about preventing a decline in fund raising (97 percent), protecting endowment value (96 percent), and preventing a decline in student enrollment (93 percent). Large numbers were also concerned about securing student loan availability (87 percent) and reducing the cost of institutional debt (62 percent).

The complete survey results, accompanying news release, and subsequent media coverage - as well as the earlier survey findings - are available via links posted in the NAICU Web site News Room.

For more information, contact Gigi Jones, gigi@naicu.edu,
or Wendy Weiler, wendy@naicu.edu