<p>I have been reading these posts about finances for a while but I confess I don’t really understand it all. A is one of the LACs my D applied to along with Wes and Conn Coll. In addition she applied to 3 ivies (D, H, B) and RPI and a couple of safeties. She is actually very excited about A because she thinks she will get in and really liked the school. I am interested in the school’s reputation, not to be a snob, but more for the employment/grad school opportunities after graduation. Do you think all this financial stuff is going to SERIOUSLY affect A? Like jettison its reputation, or do you think it will be more of a speedbump that will change things a little? There was some really scary stuff going around about RPI in Nov but that situation seems to have gotten better - check their threads too. My problem is I don’t really have a good grasp on all this financial stuff and I want to spend my college $$$ wisely for my daughter.</p>
<p>^ I share your concerns. And my kid did not apply to swarthmore or Williams, but to Midd, 'gate, Tufts, Gtown, JHopkins... none of whom seem in stellar shape financially.</p>
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Do you think all this financial stuff is going to SERIOUSLY affect A? Like jettison its reputation, or do you think it will be more of a speedbump that will change things a little?
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<p>Long-term? It will be a speedbump. Amherst is one of the most financially secure colleges and universities in the country. Probably the second most secure school on your list. I would have zero concerns about that.</p>
<p>The question for today's applicants, however, is short-term. How are budget constraints going to impact the programs and "quality of life" on campus over the next four years. Make no mistake, the next four years will be a period of belt-tightening at all schools. There aren't going to be a lot of new academic programs (like Arabic). There aren't going to be a lot of new buildings. Some of the frills are going to be cut. Considering whether or not there's any reason to consider one school over another based on financial issues really can only be done when comparing two specific schools and, only then, if there are specific issues that will make the cuts more severe at one than another.</p>
<p>Amherst is one of the best schools in the country. It will be one one of the best schools in the country for the next four years of belt-tightening. And, I expect it to be one the best schools in the country for a long time after that. I would have no qualms about attending at all. I would, however, weigh the fianacial situation of all schools still under consideration come April 1st. Hey, Harvard and Princeton aren't exactly lying in a bed of roses, either -- borrowing $1.5 billion and $1 billion respectively to cover the cash calls from their mismanaged endowments.</p>
<p>The one thing that does bother me is college officials misleading students. There's just something about that which seems to violate the most fundament purpose of higher education. Both Princeton and Amherst published extremely misleading articles in their campus newspapers this week, with quotes from top school officials that didn't seem to help their students understand the financial issues (to put it mildly). One can only hope that the student reporters just muddled the articles and that the chairman of the board at Amherst didn't seriously try to pitch borrowing $100 million to cover operating expense was a good thing.</p>
<p>Guess I will be glad my D is not planning on majoring in Economics at any of these schools :)</p>
<p>I think one advantage Amherst has in this situation is the flexibility that the 5 college consortium gives it. It's true that Amherst doesn't really have an Arabic program, for example, but UMass does and Amherst students can take advantage of that. I expect that the schools in the valley will be working closely together to minimize the impact of cuts. By coordinating who cuts what, they can make sure that as many programs as possible are still available somewhere in the consortium.</p>
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Guess I will be glad my D is not planning on majoring in Economics at any of these schools
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<p>We laugh, but these are the schools that have been churning out legions of Econ major investment bankers headed for Wall Street who have basically run our economy into a ditch. I think there are some mea culpas, some accountability, and some soul searching about the values these educational institutions are passing along (or not).</p>
<p>In a way, Wall Street (and the endowment managers) have acted like a bunch of frat boys in a shot chugging contest without sufficient thought as to the wisdom or ethics gambling every last dime of a bank's money or an college endowment on the riskiest investments in search of bragging rights to the largest return. Let alone any responsibility for killing the economy. </p>
<p>I don't know that we'll see much soul-searching, given the make-up of the Boards at all of these schools. I, personally, think it's an issue and the last thing these board members need to be doing is glossing over their mistakes in interviews with student newspapers. For example, let's hear from Stiglitz and Zeitlin and Gluckstern on how the Amherst board approved $503 million in cash call contingencies to private equity partnerships and where the oversight failed.</p>
<p>In fairness to the interviewed, it is the journalists responsibility to do their homework and confirm and check out information once given. I would like to see them take on the subject with more depth. Certainly there are are a wealth of investment strategies -- some better performing than others. And there were plenty of very smart people handing their money over to Madoff as well. The point being, you cannot just report one side or one opinion of an issue if you want it to be legit. And I would imagine if the editorial board of Princeton or Amherst said they were launching a series of investigative reports, we'd be hearing a lot less spin and a lot more truth-telling from the Admin/boards.</p>
<p>Is anyone familiar with the Private Equity Firm used by Midd, Smith, Amherst (I believe) and a few other LAC's? I know it was started in early 2000's by someone who ran UVA's endowment for a number of years. What little I could find (PE's aren't required to submit financials) talked about working in partnership with the LAC through traditional and alternative investments (maybe another work for alternative marketables?). Just a bit concerning given the timing of the start-up of the PE and strategies they may have used given the emphasis of derivatives during the past decade. I believe Midd's president mentioned earlier that they thought Investure was doing a great job. He also mentioned that there was some difficulty valuating PE investments. Appears that Investure reports to Midd on quarterly basis and last report was for Aug - Nov 08 time frame so latest quarter should come Midd's way soon.</p>
<p>Here's an article on Ivesture and how Dickinson College decided to outsource their endowment management to Investure. It's a Charlottesville based company that contracts with about ten non-profits to manage their investments, lock stock n' barrel.</p>
<p>This article lists Dickinson, Middlebury, Barnard, and Smith as clients. Given the make-up of Amherst's board and the size of the Amherst endowment, I would be very surprised if Amherst is a client. The asset allocations of Amherst's portfolio (very aggressive) don't look like those appropriate for schools with smaller endowments. The $503 million in cash call commitments at Amherst is kind of dead giveaway.</p>
<p>Investure reported to Middlebury in February --- the video on the College website shows the president and CFO at a staff meeting and they state that the College reported a -20.3 endowment return for the July 1 to Jan 31 period. This included some mark-downs, but not all. The College president reported that they expect some more markdowns and they plan for a -25% year (ending the fiscal year June 30).</p>
<p>The performance to date is not as bad as many peer institutions, but who knows what the remaining 2-3 months of the fiscal year will bring. Amherst does not use Investure.</p>