St. Norbert Times

Issue date: 12/2/08 Section: News

St. Norbert College is one of the small, tuition-driven colleges affected by the current economic crisis. In the article, "Big Trouble, Potentially, for Little Colleges," from October 17, Jack Stripling wrote that "a subsection of cash-strapped private colleges could be in serious trouble, according to a report released by Moody's Investors Service.

In order to gather a better understanding of how SNC is affected by the current economic hardship and uncertainty, the St. Norbert Times contacted knowledgeable faculty and administrators.

In an interview with the Times, Dr. Paul Bursik, assistant professor of business administration, identified several direct and indirect effects that the struggling economy could have on the college. According to Bursik, direct changes, such as budget decreases, can be handled, but indirect effects might be more serious.

"We need to be very concerned about what the turmoil in financial and real estate markets means to current and potential future SNC student families," he states and continues, "The loss of a relatively small number of students could lead to relatively large budget impacts."

As a result of the market crash, nearby Beloit College recently announced rather draconian cuts. According to news reports, a shortfall of 36 students from its projected student body of about 1,250 led to a $1 million budget deficit. In response, the institution had to let 40 people (about 10% of its employees) go.

Could SNC face similar distress? According to authorities contacted by the Times, there are at least four areas of possible concern that could have significant negative impacts on the college's budget situation:

1. The falling stock market results in less income from the college's endowment.

Since the beginning of the college's new fiscal on June 1, the endowment has shrunk from approximately $70 million to $50 million. Because the College expends 4.5% of its endowment value on its operating budget, this means that if matters remain unchanged, in the 2009/10 academic year, the College will only have interest and dividends (1.5% to 2%) available for spending from the endowment.

2. Tight credit markets and a down stock market will make it hard for students and their parents to find or borrow the money needed to pay for a college education.

Dr. Mark von der Ruhr, associate professor of economics, points out that students might experience increased difficulties in obtaining loans.

Continued...

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