An informed Earlham veteran advised me last week that another big factor in Earlham’s plight is that it gives away a great deal of scholarship aid, which has cut down its net tuition revenue to dangerously low [aka “unsustainable”] levels.
So one “fix” likely to be in the mix for the Round Two plan is a substantial reduction in scholarships and raises in tuition.
Such reductions might yield a jump in net tuition income. But then again, maybe not: perhaps enrollment would fall, as prospective students take their tuition money and look for better bargains elsewhere.
And there’s another wild card which the Board did not mention in the December 19 letter, but which I bet has been on all the Trustees’ minds since then: the stock market’s rapid slide. Just three months ago, as the first round of plans were taking shape, the market was riding high, seemingly promising continued steady growth and income from endowments.
Last August, Earlham estimated its endowment at $438 million, up from $425 million in 2017. The school had been drawing on its endowment to cover operating deficits (“unsustainably,” said the Trustees).
But as of last week, all the year’s growth in major markets had been abruptly and completely erased, and more chaos was in the forecast. Could the markets be heading for a new crash like that of September 2008, when Lehman Brothers collapsed?
Who knows? But uncertainty hangs over us all, including colleges living on or near the edge.
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