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Economic Downturn Hits Liberal Arts School

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Economic Downturn Hits Liberal Arts School

Education

Economic Downturn Hits Liberal Arts School

Economic Downturn Hits Liberal Arts School

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In the past few months, Washington College, a small liberal arts college on the bucolic eastern shore of Maryland, has seen almost $60 million sucked out of its $170 million endowment. The faculty, administration and students now wonder what the future holds.

MICHELE NORRIS, host:

From NPR News, this is All Things Considered. I'm Michele Norris.

ROBERT SIEGEL, host:

And I'm Robert Siegel. The recession touches everything, everywhere, even a place of quiet refuge where young people go to sharpen their minds in an idyllic setting. I visited one recently, a beautiful place called Washington College in Chestertown, Maryland. It's on Maryland's eastern shore. It's a liberal arts college, academically impressive and expensive - $33,000 a year in tuition plus another $8,000 in room and board. Multiply that by four, and you get an amount of money that some parents and their children will save for, invest for, borrow against the house for, take out student loans for, and work part-time jobs for, all to make the pursuit of learning in a small college affordable. The word from Washington College in this season of economic gloom? So far, not so bad. Even though the endowment has dropped in recent months, at one point it was a $170 million, then $140 million.

Dr. BAIRD TIPSON (President, Washington College): I think last Thursday it was 114. I mean, it's dropped about a third, and it may drop further, I think, and we're going to have to ride it out.

SIEGEL: Baird Tipson, the president of Washington College, says that unlike some big universities and even some other colleges like Amherst or Oberlin, Washington College doesn't rely heavily on the endowment for operating expenses. It does count very heavily on the tuition students pay, so a big question is, how are the finances of the middle class families whose sons and daughters apply?

Dr. TIPSON: That is our concern, and we feel like we're on a bubble right now. The indicators are good. Our applications are way up. We're not seeing signs that students will be leaving. But there will undoubtedly be conversations around the dinner table. Can we, as parents, continue to afford to support you at a relatively expensive institution?

SIEGEL: It sounds like much is riding, not just on the number of applications, but - and not just on the number of acceptances, but the people who come back and tell you, I'll actually be here in the fall of 2009. When that number is clear to you, you'll know how healthy this college is.

Dr. TIPSON: That's right. And that won't be until probably late in the spring. We'll know who registers for classes among our present students, who registers for a place to live, who's requested a transcript, which you would need to transfer to another institution. We're monitoring all that very closely, but we really won't have a firm grasp until late spring. And frankly, if the economic conditions continue to deteriorate, there may be parents who are willing to make a deposit in May but by August say, I'm sorry, I just can't make this happen. So, you know, that's one of, I think, the things that keeps most of us awake at night.

SIEGEL: Keeps you awake at night.

Dr. TIPSON: Yes.

SIEGEL: But so far, the signs are positive.

Dr. TIPSON: So far the signs are positive, and we don't know whether this is the calm before the storm or whether some of the dire predictions are likely to come true. The one thing I don't want to do is begin to operate as if the predictions will surely come true, visibly cut the quality of education that our students receive, and then cause parents to think, well, maybe Washington College isn't worth the extra investment.

SIEGEL: A year of college here without any scholarship help or without a loan defraying it is up, I believe it is over $40,000.

Dr. TIPSON: That's right.

SIEGEL: And college costs have risen much faster than the rate of inflation over the past couple of decades. Are you experiencing the same inflationary pressures that made that price as high as it is? And must you ignore them or somehow eat them, given the state of the economy?

Dr. TIPSON: Yes and yes. We are experiencing the same inflationary pressures. I think absent this economic crisis, we probably would have felt we had to continue to raise tuition roughly the way we've been raising it the last several years. Given the situation that we're facing, we will prepare and present to the board a lower tuition increase than we have in the past and the implication for us will then be that salary increases will be significantly lower than they have been in the past.

SIEGEL: I sat down with a group of students at the Rose O'Neill Literary House, home to the college's creative writing program. The house is run by the writer Joshua Wolf Shenk. There's a well-endowed creative writing prize for one Washington College senior every year, and it's a measure of recent times. Shenk says last year, it was an eye-popping $70,000.

Professor JOSHUA WOLF SHENK (Director, Rose O'Neill Literary House, Washington College): It comes out of the - a gift to the college by Sophie Kerr, who was a writer of some note in her time, and she left her estate to the college and asked that half of it be used to - for literary programming and that the other half be used for this single prize. At the time, you know, it was significant, but not eye-popping. But, you know, as the money has grown in the endowment, it has become eye-popping.

SIEGEL: Although again, anything that's dependent on an endowment will not look as good at the end of this year as it did at the end of last year, in all likelihood.

Prof. SHENK: Yeah, I think it's a perfect illustration of the point when you - of where we're starting at with this place, so you know, I think if you were to ask anyone…

SIEGEL: Would you take a $30,000 prize?

(Soundbite of laughter)

Prof. SHENK: Yeah, exactly. Well, I think it'll be more than that, but it'll still be eye-popping and significant.

SIEGEL: The students I met are a mixed group. Antoine(ph) and Stefan Jordan(ph) are freshmen fraternal twins from Maryland, Rachel Field(ph) is a sophomore from Pennsylvania, Peter Stewart(ph) is a freshmen and a lacrosse player from Maryland, and Karen Hyde(ph), who's from New Jersey, is a junior. Her college education is almost paid for.

Ms. KAREN HYDE (Student, Washington College): My parents recently took out a third mortgage in order to pay for college, and my dad is coming in to sign up for our first college loan. Luckily, we made it to junior year without having to borrow any money as far as student loans go. But this will be our first loan. ..TEXT: SIEGEL: Does that change the way you think about either your education or your future after you get out of college?

Ms. HYDE: It makes me kind of worried for the rest of my education. Now I know that I at least will have the money to graduate, but it makes me worry about grad school, and I'm now learning the value of an education, but also the cost of an education.

SIEGEL: Antoine?

Mr. ANTOINE JORDAN (Student, Washington College): It is kind of difficult for our family, seeing as it's me and my twin brother going to college, so it's double.

SIEGEL: I imagine in the delivery room after the second twin is born…

(Soundbite of laughter)

SIEGEL: College tuition comes to mind, within about another five minutes.

Mr. JORDAN: College tuition is always constantly sitting in the back of our mind. You know, how are we going to pay for this? And we've gotten scholarships, but we've had to take out loans, and our parents are really worried. We've had - you know, we're feeling the pinch.

SIEGEL: Rachel, tell us about you and money.

Ms. RACHEL FIELD (Student, Washington College): It's a big issue in my family, particularly right now because my grandfather is going through some significant medical problems, so we have to consider him and work with what he's going through. And that's - obviously wasn't expected, so we've had to reshuffle some finances. But this year is going to be a tight year and I've definitely had to pick up some more from my parents. I'm working two jobs on campus now, covering everything that's not tuition, and I'm getting scholarships from the college. That is really the only reason I could have attended this school.

SIEGEL: Peter.

Mr. PETER STEWART (Student, Washington College): It's definitely been hard on my mom. My father passed away last year, so it's definitely been hard on her. Both my brothers graduated from college last year. But right now, she's trying to get me through, and I'm sure she will. But looking at Washington College, all the sports here are Division III, so they cannot give athletic scholarships. So current players on the team rely on the endowment and money from the school. If the economy is off-balance right now, then obviously they're not getting the money that they need, so they might turn toward other schools.

SIEGEL: I asked these Washington College students if they or their friends had had a conversation with their parents recently in which it was said, you know, there's a very good state university and you could always go there. It was a familiar conversation, but all of them say they are intent on finishing at this challenging, comfortable and more expensive private college.

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