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Higher Education Essay

Economic Crisis and Higher Education in the United States The 2008–2012 economic failure is considered by many economists and investors to be the worst financial crisis since the Great Depression of the 1930s. It results in the risk of total collapse from big financial firms, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis also plays a significant role in the crash of key businesses and collapse of housing market, results in the delayed unemployment.

Higher education is a large and various venture in the United States, which has impacted by the economic recession in a number of ways, but these impacts have not been the same and vary depending on state and type of institution. Most higher education traditions started to be concerned about their financial problems due to economic recession. Their main source of revenue has been hurt by the downturn, and that those universities would need to make hard decisions about how to spend their money.

In some states, a lot of institutions are in process of fund-raising programs to avoid delaying their supported campus building projects. Many of higher education university’s leaders have been considering and solving of two following questions: How is the economic downturn affecting institutions both public and private? What strategies are leaders implementing to guide their institutions? Unsuccessful budget strategies are the main reason that caused many institutions’ problems. Their top managers have not effectively managed their money.

Fund-raising, government support, and earned income will also suffer in a poor economy. They are also experiencing revenue deficits due to lower state appropriations, endowment losses, or a reduction in donation. Furthermore, institutions’ difficulties in gaining access to funds invested in a major short-term investment fund. According to Ken Chabotar, author of The Economy and Higher Education, budget management is related to the most complicated set of relationships in higher education are among college costs, student tuition fees, financial aid, and enrollment.

Quality plus financial aid and affordability are the issues that most colleges and universities worry how much economics will affect while thinking about to limit costs and prices. In the current economic situation, adults and recent high-school graduates are willing to study for two years at a community college make more financial sense than going straight to a more expensive campus. Community colleges as known as lower cost institutions are recognizing a rise in enrollment levels while small, independent colleges and universities result in a fall in enrollment.

As a result, the economic crisis creates hardship not only for students in paying their tuition and also difficulties for higher education institutions to maintain their enrollment level, especially their budget and revenue. Additionally, many of well-known universities such as Harvard, Yale, and Princeton etc. are facing difficult financial problems due to cut of endowment and donation from investors and alumni. Well-endowed institutions have suffered losses up to a third of market value and 30% of donated money compelling budget cuts, wage freezes, and borrowing to support the operating budget rather than increase endowment spending.

In the United States, there are a lot of campus relied on endowment too much. Many universities have been delayed on cash funding of appropriations from state and federal government. The top managers have to suspense almost half of capital projects and research in order to balance their institutions’ budget. Loss of enrollment and endowment in higher education increases the financial needs of university in order to afford their expenses and keep operation going.


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