Harvard University and other elite institutions are facing financial challenges, leading to significant decisions like bond issuances and staff layoffs. Harvard plans to issue $750 million in bonds to enhance liquidity due to uncertainties with federal funding. Similarly, Columbia University announced approximately 180 layoffs after losing $400 million in federal grants. Despite their large endowments, many universities grapple with liquidity issues, as a large percentage of endowment funds are restricted by donor agreements, which impede their ability to access these resources for urgent needs.
A common misconception is that universities can freely tap into their endowments to address financial shortfalls. In reality, a significant portion of endowment assets are legally restricted.
These actions underscore that even the nation's most selective and well-resourced universities are vulnerable to financial strain and are recalibrating rapidly in response to shifting economic and political forces.
Liquidity and the Endowment Misconception highlight that endowments are vital but restricted, with an average 71.1 percent of funds constrained by donor agreements.
Colleges and universities withdrew a total of $30 billion from their endowments in fiscal year 2024, with almost half that spending going to student financial aid.
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