Many of the nation's top universities are experiencing problems as a result of the financial meltdown — even Harvard University, which has the largest endowment of all universities by far.
While their final numbers aren't official yet, Nina Munk, contributing editor at Vanity Fair, told NPR's Linda Wertheimer that the university's $37 billion endowment a year ago has shrunk to an estimated $26 billion today.
"It's rather like someone who has taken on a mortgage, bought a house that far exceeds what it can afford, and they're now facing really what is the worst, most dangerous financial crisis in their 373-year history," Munk says.
Munk says Harvard did what many Americans did: It overspent. In this decade, it's added 6.2 million square feet, Munk says. That's roughly equal to the space occupied by the Pentagon. These land acquisitions have cost Harvard more than $4 billion. It has had huge expenses built up while the number of students stayed constant.
"At a corporation, if your expenses go haywire and you start having cash problems, you close down plants, you fire a lot of employees. You can make these very tough and often unpleasant choices," Munk says.
But she says a university doesn't work that way.
"You can't lay off tenured faculty, of course," she says. "You can't shutter buildings; it's almost impossible to close down departments once they're up and running."
The people who were investing Harvard's endowment have been known to make aggressive, daring and, some say, reckless investments, Munk says. A lot of those investments — like hedge funds, private equity real estate holdings and junk bonds — have been hurt in the past year.
But Munk says Harvard students on need-based scholarships need not worry.
"Harvard will cut just about anything before they will cut their financial aid program," Munk says.