The difficult economy has brought attention to something that few people seriously consider when choosing a Private School for their child, the School’s Endowment. While school tuitions may seem pricey to many, the actual costs of educating each student is often more than the tuition covers. In addition, schools offer financial aid to many of their students in order to help ensure that well-matched and deserving students can attend the school regardless of the family’s ability to pay tuition. All of this, however, is usually heavily dependent on the School’s endowment.
The NY Times recently carried an article regarding Private School Endowments and how the economy has affected many schools and, therefore, many students in need of financial aid to attend.
For now, the nation’s biggest preparatory schools are protecting students like Ivy Alphonse-Leja, who depends on financial aid to attend the Lawrenceville School.
The question is whether the schools, which, like their university brethren, suffered significant declines in their endowments as financial markets withered, can continue to offer that same promise to incoming students.
The question goes to the heart of the prep schools’ longtime efforts to open up their classrooms to promising students of all incomes, and not just the children of wealthy families. Adding to the pressures on the schools are the increasing financial woes of their students.
Some schools are choosing to ride out the economy without changing their levels of offered financial aid, however, and some have actually increased it to answer the increased need for tuition assistance.
And some schools are even increasing their commitment to financial aid despite steep drops in their endowments. The Peddie School, in Hightstown, N.J., for instance, is increasing its financial aid budget by 8 percent despite an 18.6 percent drop in the endowment’s return. “We felt it was important to maintain our strong commitment to the policy,” said Sean Casey, the school’s director of communications.
Many of the prep schools also have the advantage of being generally conservative in their investments.
CFOs of Private Schools across the nation are being particularly scrutinized for how they have handled school endowments in the past and what those decisions have resulted in now.
Some schools are trying to reduce the volatility by cutting their dependence on their endowments. At St. Paul’s, in Concord, N.H., the endowment now provides just 29 percent of the operating budget, compared with 50 percent seven years ago, according to Michelle F. Chicoine, the school’s chief financial officer. Ms. Chicoine said she did not believe it was wise either to erode the endowment or have the operating budget too dependent on it
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