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Only the few richest schools can afford to be completely need-blind and also meet full-need. Tufts and Bowdoin recently quietly ended their need-blind policies. Reed certainly shouldn’t be overly castigated just because it’s being open about the latest developments.</p>
<p>Prospective applicants should consider that while Reed is need-aware, at least it promises to meet full need of admitted students (albeit with loans) Which is more than can be said for other schools like New York U.</p>
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<p>I have been surprised that there has been virtually zero discusssion of financial condition and budget implications in any of the college specific forums here. IMO, the budget cutting plans should have been the number one topic for any family choosing a college this year.</p>
<p>Journalists don’t have to look into it. By now, most colleges have published somewhat detailed budget plans for the fiscal year starting this July. Those plans, in every case, include some significant cuts and freezes with plans for even more severe adjustments next year. I haven’t seen mention of the plans or discussion of the cuts. Reed is certainly not an outlier here.</p>
<p>Interesteddad, I think that over the past admissions cycle, most schools didn’t publish news about any revisions in their policy until applications had been submitted.
[Tufts</a> announced on 2 April, suspension of need-blind for US citizens](<a href=“http://www.tuftsdaily.com/tufts-accepts-26-percent-of-pool-suspends-need-blind-admissions-1.1639896]Tufts”>http://www.tuftsdaily.com/tufts-accepts-26-percent-of-pool-suspends-need-blind-admissions-1.1639896)
[Bowdoin</a> announced on 3 April, suspension of need-blind for US citizens](<a href=“http://orient.bowdoin.edu/orient/article.php?date=2009-04-03§ion=1&id=3]Bowdoin”>http://orient.bowdoin.edu/orient/article.php?date=2009-04-03§ion=1&id=3)
Middlebury announced mid-cycle, suspension of need-blind for international students</p>
<p>Yes, a lot of announcments came after acceptance letters went out. I’m talking about more than admissions and financial aid issues, though. The increases in enrollment will have measurable impact on student/faculty ratios. And, there have been some real bombshells like Harvard, Yale, Columbia, Stanford, and Amherst having to borrow to cover liquity needs and operations. There has been meaningful news from almost every college and university.</p>
<p>My younger d’s college has increased its budget, increased its financial aid, and is planning to add 60 new faculty, while cutting the number of undergraduates.</p>
<p>@mini Wow! How are they affording that?</p>
<p>They spend less than 1% of their endowment each year on operating expenses. All their new buildings have been paid for with outside philanthropy independent of the endowment. Their masters programs (for which there are very few scholarships) are booming, and they’ve started several new ones. The law school is packed.</p>
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<p>I think what you meant to say is that less than 1% of their operating expenses are covered by endowment spending.</p>
<p>The endowment dropped to $265 million. There is $220 million in debt. So I would not exempt American from the schools with some budget issues. They are very highly dependent on increasing net tuition revenue.</p>
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<p>That’s a fair point. To be slightly more precise, for its class of 2012 Reed had 3,845 applicants, of whom it accepted 1,132, or 29.4%. Of those, only 330 enrolled, for a yield of 29.2%. If we assume a comparable yield this year, only 29 of the 100 full-pays Reed added at the bottom of its admit pool (displacing 100 students with need who otherwise would have been admitted) will actually end up attending. To put the most charitable spin on it, Reed might plausibly claim to be “90% need-blind” (if it wasn’t already need-aware at earlier stages in the process, which it may have been).</p>
<p>But let’s not underestimate what this means for the prospects of applicants with need gaining admission, either. According to U.S. News, 50% of Reed students receive need-based financial aid. Now suppose Reed could numerically rank all its applicants from #1 to #3,845 as to how much it wants to admit them, using whatever admissions criteria it likes—call this the “admissions desirability” list. If Reed could afford to be need-blind, it would simply accept the top 1,132 applicants off this list, and count on its 29.2% yield to get the 330 enrolled students it wants.</p>
<p>But now Reed is in a financial crunch and needs to knock out 100 “need” applicants from its “accepted” list, and replace them with 100 “full-pays.” But then, assuming the “need” and “full-pay” kids are more or less randomly distributed at all levels of the “admissions desirability” list, that means a “need” applicant needs to be at or above roughly #932 on the “admissions desirability” list to be admitted. That’s so because, working their way up from #1,132 and searching for “need” applicants to knock out, the adcom will find that on average every other kid is already a full-pay, so they’ll need to go up 200 spots to find their 100 “need” applicants to knock out. Similarly, as the adcom then goes down the list in descending order from #1,132 to find additional “full-pays” to accept, it will again find on average every other applicant is a “need” applicant, so it will need to go down roughly 200 spots on the list to generate an additional 100 “full-pays” to accept. So the last “full-pay” offered admission will be around #1,332 on the “admissions desirability” list—a full 400 spots below the last “need” applicant offered admission, at #932. That’s a huge disparity. And all for the sake of 29 additional full tuitions.</p>
<p>Of course, it’s not as mechanical as that, but you get the point. Even as small a shift as this can create a very large disparity in admissions prospects for “full-pays” v. applicants with need. In a need-blind admissions policy, Reed would simply admit 29.4% of its applicants regardless of need. By deciding to replace 100 “need” applicants with 100 “full-pays” at the bottom of the admit pool, Reed has shifted the admissions percentages rather dramatically, so now to be admitted a “need” applicant needs to be in the top 24.2% of candidates, while a “full-pay” applicant needs only to make the top 34.6% of applicants. Reed is still quite selective for both “need” and “full-pay” applicants, but it’s suddenly gotten significantly more selective for “needs” and significantly less selective for “full-pays.” (And it may be even worse for kids with great financial need, as the adcom might pass over some “need” kids with a relatively large EFC and go up even higher on the “admissions desirability” scale to knock out the applicants with the lowest EFCs). </p>
<p>Notice this doesn’t change the school’s overall acceptance rate. Nor is it likely to affect their reported 25th-75th percentile scores, either—at least not very much. Presumably, the 100 weakest “need” applicants knocked out of the acceptance pool were already below the 25th percentile medians. Replacing them with 100 “full-pay” applicants even further down the SAT scale would affect the mean SAT scores for the school (which US News doesn’t report or use in its rankings), but it would not affect not the 25th or 75th percentile medians because any score below the 25th percentile median counts exactly the same as any other score below the 25th percentile median.</p>
<p>Interestdad, I seem to recall that you and I are the same age.</p>
<p>I don’t think one year or two year dips in spending, or digging into reserves, or postponing various programs has much of an impact on any individual kid at any single institution. Hence, the lack of interest.</p>
<p>I think when you see systemic and prolonged financial issues, like you and I witnessed back in the '70’s, that it starts to impact students (enough so that parents are aware of it.)</p>
<p>Does it really change a kids quality of life if the pool closes at 10 pm every night instead of midnight at the college athletic center? Universities are quietly trimming back amenities to save money-- but these amenties didn’t exist when we were in college. Heck, dump the espresso machines for all I care! I think it will take several years of cutting to make an appreciable difference- and that’s the point at which people will sit up and take notice.</p>
<p>If a college outsources its landscaping services and moves from a weekly trim to an every other week trim- the place make look a little ragged at certain times of the year but I don’t think the core educational mission is being sacrificed. I will watch with interest to see if the physical plant arms race of the last few years turns into a historical footnote, or if schools decide to divert money from scholarship to maintain the grooming.</p>
<p>Very much enjoyed that post bclintonk. Reed has been need aware for a few years. The acting president when the change came, wrote a very moving article about it. He said that the admissions committee was trying to decide between two students who were marginal, one could pay the full price and one could not. For the first time ever the admissions committee factored in the one students ability to pay and admitted him over the one who couldn’t. Noone, especially not the acting President, was happy to see that shift. That was a few years ago.</p>
<p>That means that this year the admissions committee would have already been considering ability to pay into their decisions about who to admit. When their final list was rejected they had to factor in that consideration even more, to the tune of changing 100 decisions. I found the article to be very sobering.</p>
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<p>I actually think this situation is going to get significantly worse for many colleges before it gets better. If I understood the graph in today’s NY Times correctly, Reed is actually projecting a 2009-2010 payout from endowment that is HIGHER than 2008-2009. It’s only in 2010-2011 that the payout begins to decline, and the projected declines worsen in 2011-2012 and 2012-2013. That’s because like most schools Reed bases its endowment payout on a 3-year moving average of endowment assets. So the 2009-2010 payout will be based on a 3-year average dominated by the pre-2008-downturn boom years; the late 2008-early 2009 downturn is presumably reflected in the last year of that 3-year period, but endowment assets probably reached record highs in the previous two years. It’s the second and third year after the downturn where endowment payout really takes a beating. Even if endowment assets have recovered most of their value by the third year (a highly uncertain prospect, at best), the third year after the downturn is likely to show the smallest payout.</p>
<p>It’s not just Reed. Every college or university that depends on its endowment for a substantial fraction of its operating budget is bracing for the same problem. And colleges that depend on net tuition and endowment for most of their operating revenue (as Reed does) really don’t have many attractive options. I think, one way or another, it comes down to raising net tuition. And there are only so many ways you can do this. One is to raise the sticker price, squeezing more out of full-pays—though if you’re committed to meeting 100% of need, much of that increase will simply be recycled into greater FA for the kids with need. Another is to retreat from need-blind admissions and/or financial aid commitments. Likeliest? A combination of all three.</p>
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<p>We are already past the point of short term cuts. There are signficant long-term cuts being made at most schools. For example, 10% swings in student/faculty ratios have real implications. I only know of a couple of schools that are just making temporary cuts and that’s only for one more physical year. These were colleges with extraordinarily strong financial positions and that didn’t make any big mistakes (like Amherst’s $500 milliion private equity cash call commitments).</p>
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<p>They are making a big mistake if they aren’t reducing endowment payout (in actual dollars) immediately. Most of the colleges I follow have put the 12 quarter averaging formulas on the shelf and are now focused on endowment percentage as of the value June 30th. They don’t want the false security of the averaging when they know they have to start whittling away at a multi-year budget cutting challenge. Any college spending even this year’s endowment dollars is going to be sending their endowment spending percentages into the stratosphere.</p>
<p>^ I agree with you, interesteddad. But as I read the NY Times article, Reed’s president is intent on keeping the endowment payout percentage (as usually calculated) constant. And it sounds like he faces possible opposition from the Chair of the Board of Trustees who is thinking it’s time to consider a temporarily INCREASE in the endowment payout rate to offset declines in net tuition revenue. </p>
<p>That’s “eating the seed corn,” as we say here in the Midwest.</p>
<p>I think Reed has always been need aware, and although supposedly 100% of need is met- their policy has not always provided students with the financial aid they need to attend.
Hasn’t Steve Jobs admitted that the reason why he dropped out was because his single mother couldn’t afford it?
( and while my daughter recieved a good package- we had also heard from others who were not as happy)</p>
<p>( but still why is the NYT obsessed with everything and anything Portland?)</p>
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<p>No, he had two adoptive parents and he dropped out because after 6 months, he couldn’t find the value of a Reed education, considering his parents were spending their hard earned savings to send him there.</p>
<p>“The endowment dropped to $265 million. There is $220 million in debt. So I would not exempt American from the schools with some budget issues. They are very highly dependent on increasing net tuition revenue.”</p>
<p>Neither of these has affected their spending plan one iota. As noted, they are adding 60 new faculty, finishing (or just finished) three new buildings, started two new graduate programs, and are in the process of reducing the number of undergraduates.</p>
<p>I wonder what American’s cash position is when I read their numbers.</p>
<p>Where are you guys finding the information on endowments?</p>