Financial meltdown hits higher education

As news about the economy continues to be bleak, even major universities are finding themselves scaling back. The ivory towers tend to be immune to small changes in economic conditions, but as incomes shrink, donations decrease and financial aid applications increase.

With the price of private school tuition barely within reach of many families even in good times, but as the economy slows, the burden seems increasingly hard to bear. Lower family incomes, rising inflation, and dips in the stock market could mean that many college funds may not go as far as parents originally planned.

Home equity lines of credit, an increasingly common way to pay tuition bills, are now no longer an option for many families. As home values fall, the cash does not exist to take out.

With the state of the economy in mind, colleges are planning to make changes to their budgets for the upcoming year. According to an Associated Press report by Justin Pope, schools such as Boston University are putting a hold on development projects.

Though private universities will have to work through the challenges of receiving fewer donations and fielding more requests for financial aid, public schools are also likely to have to reevaluate their spending decisions.

With incomes likely to be lower and aid programs more necessary, state governments will be forced to take a hard look at their budgets. Funding for state schools could be high on the list of items that get scaled back in the upcoming year.

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