<p>In today's NY Times:</p>
<p>Ouch! Like a lot of fancy investor types who thought they were smarter than the markets, the managers of college endowments got greedy, and now they're getting burned. Endowments used to be quite conservatively managed, aiming for steady if unspectacular growth while preserving capital. But the high-flying success of Yale, Harvard, and a few other high-profile risk-takers set a new standard, and others tried to emulate their returns by taking on all manner of higher-risk investments. Now their risk-taking is coming back and biting them in the you-know-where. Who gets hurt? The students, ultimately. These losses won't be felt all at once. Most schools pay out a fixed percentage (usually 5% or less) from their endowments, calculated on a rolling 3- or 5-year average. So this year's losses will be partially offset by the gains of the two previous years. But next year will be even tighter, and barring a dramatic upturn in the markets, so will the third year. Colleges will have less money to spend, just at the time when many families also have a lot less to spend and financial aid requests are soaring. As a consequence, we're already seeing cutbacks: hiring freezes, wage and salary freezes, cancellation or deferral of major capital projects, deferred maintenance, increasing class sizes, and a few schools announcing they can no longer afford need-blind admissions. Not a happy time for college administrators.</p>