<p>[University</a> Debt Jumped 54% as Endowments Tumbled in Fiscal 2009 - Bloomberg.com](<a href=“Bloomberg Politics - Bloomberg”>Bloomberg Politics - Bloomberg)</p>
<p>"U.S. universities boosted their long-term debt by 54 percent in the year ended June 30, as the economic crisis forced them to borrow to offset record losses in their endowments.</p>
<p>Universities, on average, had $167.8 million in debt in the 12 months ended June 30, with the biggest borrowing done by endowments with more than $1 billion in assets, according to a study released today by the National Association of College and University Business Officers and Commonfund, in Wilton, Connecticut. The money was used to build up emergency cash, refinance existing loans, and fund campus expansions. The study included debt for the first time this year.</p>
<p>Harvard University and Princeton University were among the U.S. colleges to sell bonds as the credit crisis forced universities to borrow to replace variable-rate bonds investors no longer wanted and offset drops in their endowments caused by illiquid investments.</p>
<p>The wealthier schools are clearly going to stay in business – they have management and budget challenges that are more difficult than theyre used to, as debt has risen, said John Nelson, a managing director who studies higher education and not-for- profits at Moodys Investors Service in New York. It forces them to be more efficient and make some more difficult budget decisions on the number of staff they have, the amount of salary increases and the scope of capital expansions. </p>
<p>"Last year, only fixed income and short-term securities and cash generated gains, of 3 percent and 0.8 percent respectively, the study showed. International equities were the worst- performing asset class, losing 28 percent, followed by U.S. stock declines of 26 percent, while alternative strategies dropped 18 percent.</p>
<p>Funds with more than $1 billion in assets, of which 61 percent was allocated to alternative strategies, lost the most last year, with 21 percent average declines, according to the report. Endowments of less than $25 million had the smallest losses, an average of 17 percent, as they benefited from owning more bonds and U.S. stocks and fewer hedge funds and less private equity, according to the research.</p>
<p>Endowments gained an average of 4 percent annually in the decade ended June 30, with the largest funds of more than $1 billion performing the best, the study shows. Those funds jumped by 6.1 percent each year, while their smaller peers had average increases of 3.4 percent to 4.3 percent each year. "</p>