http://www.msnbc.msn.com/id/27363934/

Interesting story on MSNBC on how independent colleges are facing serious financial issues and dwindling enrollment. The major state schools are fine and a well-endowed, prestigious school like Rice is obviously in great shape, but I do wonder if any schools in Texas might be in rough shape?

Texas Southern obviously has had some financial issues - what about the private schools like HBU and St. Thomas?

As an aside, I was wondering about this the other day. Is Rice's endowment suffering from the recent stock tumble? One would think it would have to lose money but has it had any years of negative growth ever?

As I had noted in a previous post, Rice did lose money on its endowment during the tech crash (at least, in terms of net year-end value, after taking out money for the budget and any gains/losses).

As for the actual size of the endowment, remember that a rather significant portion of it is land that is valued at what it was bought or gifted at. It's worth much more at this point.

Speaking more generally, I just don't see how the 5-10 percent annual tuition increases are going to be sustainable. At some point, you reach a tipping point and employers figure out a way to identify the people they need some other way and train them on the job. And demographics aren't helping universities, either--my sister's high school graduating class (2009) will be the largest ever. From then on, the numbers start declining and in 5-10 years really accelerate, meaning that the bargaining power shifts from the colleges (now) to the students (then).

Exactly. As much as colleges try to deny it, they're businesses and subject to the same economic laws as any other business. They have a product (education) which they sell (tuition). As Amber and others point out, for various reasons we're reaching a situation where the product they're selling isn't worth as much as it used to be. Typically, in the past colleges haven't handled this situation very well. When most businesses face a decline in their revenues for whatever reason, they'll do things such as cut back expenses in various ways and/or re-tool the business to make themselves more profitable. Colleges, on the other hand, keep doing everything the same while jacking up tuition and sending out letters to students' parents and alumni asking for more donations and bemoaning how America's future is being threatened. As Amber rightly points out, at some time one reaches a tipping point where it's just not worth it to people anymore to pay the money, and the colleges' strategy in the past will be woefully unable to cope with the situation.