When the Titanic departed England, it was determined to arrive in New York City early. Despite warnings about icebergs, the ship was ordered to proceed “full speed ahead.” Well, we all know how that story ends.
The current economic crisis has universities throughout the country donning their life vests – or at least checking their lifeboats – but for GW it is still full speed ahead. While colleges nationwide are cutting costs, freezing tuition, nixing new building projects and taking pay cuts, GW is contemplating several new multi-million dollar projects. If so many other schools are heeding the iceberg warning, what makes us think we’re unsinkable, especially after our 20 percent endowment loss?
In a Hatchet news analysis last semester (“Outlook positive in poor economy,” Nov. 20, p. 1), University officials presented two reasons why GW was not visibly reacting to the recession. Our tuition dependency and advantageous D.C. location supposedly safeguard us from feeling the economic effects, but is that really the case?
Schools like Harvard and Brown panicked almost right off the bat because close to a third of their operating costs come from their endowments, and endowments nationwide have reported average losses of 23 percent. GW, on the other hand, relies on its endowment for only 6.4 percent of its budget and instead depends on tuition for more than 50 percent of costs, making us less dependent on fluctuations in our endowment.
As long as admissions applications – and applicants that can afford the whole tuition – are pouring in, GW does not need to panic. As the economic downturn catches up with families, applicants that are both qualified and able to pay the tuition may become few and far between.
GW is not unique in its model of tuition dependency. Northwestern, Boston University and Vanderbilt also rely comparably on tuition, but these schools that GW compares itself to in budget reports are rethinking their fiscal policies.
Boston University is initiating a hiring freeze, keeping salaries constant for all administrators earning over $150,000 and reassessing capital expenditures. While Northwestern has not frozen hiring, it has put a new information center for undergraduate admission on hold. Vanderbilt’s budget cuts have forced its ethics center to close.
GW has done none of the above.
Administrators have also argued that the D.C. economy is more or less safe from the worst of the recession, and our prime location will keep GW steady financially. However, Georgetown, whose endowment is only slightly lower than ours, and who actually depends on tuition and fees for 60 percent of its costs, has stalled any new construction projects, including plans for its own science center. The Hoya reports that the university will “focus on cutting spending and remaining financially flexible.”
Georgetown enjoys all the prestige and pull of Washington, just as GW does. If location and tuition dependency do not excuse unfettered spending, what does? If there is a specific reason that GW should ignore the signs that all other schools started listening to months ago, this reason needs to be publicized to the GW community.
In a smart PR move, GW raised financial aid by $10 million. However, as more students require financial aid, fewer are paying the full tuition, which gives us less tuition money to make up that vital half of our budget. Financial aid is perhaps the most important thing in this economic environment and must not be cut.
However, failing an explanation of why GW need not concern itself with economic problems, after the Board of Trustees meeting on Feb. 13, the Hatchet’s editorial board will analyze where exactly these cuts should come from – stay tuned.
