Madison Area Technical College

First came the good news for St. Olaf College: early-decision applications were way up this year. Now comes the bad news: the number of regular applications is way down, about 30 percent fewer than at this time last year. In a survey of 371 private institutions released last week by the National Association of Independent Colleges and Universities, two-thirds said they were greatly concerned about preventing a decline in enrollment. Conversely, public universities are enrolling more students at a time when funding is being slashed.

Beloit College is struggling with a $1 million deficit, caused by a shortfall in donations, as well as 36 no-show students this fall. Earlier this month, the college announced the elimination of 40 positions, or 10% of the staff. Because three-quarters of Beloit College's operating budget comes from tuition, the decisions of a relatively small number of students to delay school or leave early can mean the difference between business as usual or making difficult cuts. It's a problem for private colleges nationwide who have to convince cash-strapped parents & students that their higher tuition is ultimately worthwhile.

The Wisconsin Legislature is facing a $5 billion shortfall, and with most rainy day funds depleted by previous budgets, analysts caution that without cuts to higher education, tax increases may be inevitable. “Most states have tried to protect K-12 and even higher ed,” said Raymond Scheppach, the executive director of the National Governors Association, “but I think they are both going to be on the block.” Forty-one states are experiencing deficits, and most are scrambling to find ways to get through the rest of the year without hacking apart vital services or raising taxes.

UW-Madison is faced with a problem: faculty salaries lag behind those of similar colleges, and with the state facing a $5bn deficit, prospect for raises are uncertain. To make matters worse, a glut of faculty hired across the country in the 1960s is rapidly approaching retirement. Nearly 40% of UW faculty is 55 or older, according to UW System President Kevin Reilly, who warned that of a national bidding war between colleges could ensue. This will drive up the costs for all institutions, at a time when budgets, already cut to the bone, are expected to make further reductions.

Applications for unemployment benefits soared to the highest level since just after the Sept. 11, 2001, terrorist attacks while the trade deficit shrank more than expected as demand for imports plunged, further evidence of the struggling U.S. economy. The Labor Department reported Thursday that jobless claims shot up by 32,000 last week to a seasonally adjusted 516,000, the highest total in seven years. The tally was much higher than analysts expected and a further indication of how much the labor market is deteriorating amid the shrinking economy. The government reported last week that the unemployment rate surged to a 14-year high of 6.5 percent in October.

The U.S. unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut. The new snapshot, released Friday by the Labor Department, showed the crucial jobs market deteriorating at an alarmingly rapid pace. The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994. October's decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported. So far this year, a staggering 1.2 million jobs have disappeared. Over half of the decrease occurred in the past three months alone.

Goal Financial is the latest student loan company to have reached a settlement agreement with the New York attorney general Andrew Cuomo, whose investigation of the loan industry found that some were using deceptive tactics and offering prizes to attract borrowers. Since 2001, Goal Financial had sent out 60 million pieces of direct mail, most of which looked as though they came from the federal government & offered gift like iPods & spa gift cards to entice borrowers. This settlement comes two months after eight other major lenders, including GMAC Bank & My Rich Uncle.com made settlements with Cuomo. The companies agree to abide by a code of conduct for direct-to-consumer marketing efforts & will contribute a collective $175 million to a fund to educate & assist students and families with the financial aid process.

For students who set their sights on Wall Street during the boom years, the end has come just as they are getting ready to join the party. Citing turmoil in the markets, Wall Street firms have canceled recruiter visits to elite universities & withdrawn jobs from online job postings. Financial companies shed 150,000 jobs last year and more than 100,000 so far this year. With the uncertainty, finance majors are increasingly applying for graduate studies. A program director at Columbia University has noticed that instead of regretting their choice of majors, her students are instead concentrating on enhancing their credentials.

Faced with a faltering economy and falling tax collections, Tennessee is turning to its public colleges and universities to absorb $106 million of budget cuts. The 42,000-student University of Tennessee system and the 180,000-student Tennessee Board of Regents system have been told to develop a plan by next week to save $43.7 million. UT-Knoxville Faculty Senate President John Nolt fears the shortfall will translate into permanent budget reductions, faculty losses and program cuts at UT's flagship campus. "We are cut to the bone here. There is no fat to trim," he said. Bob Adams, Regents' vice chancellor for business and finance, said it may be too late in the academic year to cut faculty, "...but I am sure non-faculty will get a hard look," he said.

Facing a budget shortfall of $973 this fiscal year, Virginia Gov. Tim Kaine announced cuts in college funding. Kaine also announced that 570 state employees would be laid off. The Virginia Community College System (VCCS) & Christopher Newport University each got a 5% cut from their budgets, while the College of William & Mary saw a 7% cut. VCCS spokesman Jeff Kraus said that the cuts would amount to a $20 million loss, part of which would be made up by 12 job eliminations, including eight through layoffs. "It's going to limit our ability to provide economic opportunity to people who are seeking it... We're going to continue working with the administration, as well as the General Assembly, to explain the impact of community college cuts on the families and the employers that we serve."

Wall Street turmoil will make it more difficult for state colleges to pay for scholarships and programs as the market drop hits their endowments. The Shepherd University Foundation could see a 30 percent decline in the money it provides for student scholarships, classroom equipment and faculty grants for travel and research. Foundation VP Monica Lingenfelter anticipates that funding for scholarship awards will be down to $1 million from last year's $1.5 million. Lingenfelter said last week that while the foundation has "a good, diversified portfolio" the market is simply producing lower dividends. "The only thing we can do is to try to solicit more private donations," she said. But that could become difficult if the economy takes a nosedive.

Historically, most downturns have spared white collar and highly-skilled workers while hitting the least-skilled the hardest. Yet observers believe that this downturn is likely to be more democratic than ones previously, because of the severity of the credit crunch. According to Princeton economist Alan Krueger, higher skilled workers' employment is dependent upon the ability of businesses to afford not only the purchase of new equipment, but also the trained personnel needed to operate it. Recent labor data appears to support Krueger's hypothesis, as college graduate employment dropped 1.6% between March-August 2008, while the share of high school graduates and dropouts employed actually grew by 0.6 and 0.2 percentage points, respectively.

Boston University's president called for an immediate hiring freeze & a moratorium on new construction projects. "I feel it is important to act preemptively to manage the potential short- and longer-term risks to us created by the current economic uncertainty," Robert Brown wrote in an e-mail to faculty and staff this week. Brown emphasized that he was taking precautionary steps because of "uncertainties created by the upheavals in the financial markets and the nation's poor economic outlook," and not because of the university's fiscal health.

Nearly 1,000 colleges in this country belong to a $9.3 billion short-term investment fund run by Wachovia Corp, a bank which has been mired in losses from the sub-prime mortgage crisis. Following news of an acquisition by Citigroup under a deal brokered by the FDIC, Wachovia is now restricting access to that investment fund. This alarmed many colleges that have relied on the fund, and they are now scrambling for other ways to access funds in a credit-scarce environment. According to Molly Broad of the American Council on Education, “A widespread credit crisis will affect a large number of our institutions very quickly... a liquidity crisis [is] unfolding before our eyes, and it’s having an impact on colleges and nonprofits.”

Employers cut 159,000 jobs in September, more than twice as many as in August or July, the Labor Department reported. Economists had been expecting a loss of about 100,000 jobs in September. This discrepancy is especially worrisome because the government conducted its survey just prior to the latest events in the credit crisis. Job losses for 2008 are now over 850,000 and could even cross 1,000,000 for the year. Meanwhile, initial jobless claims were at a larger-than-expected 497,000 last week. This was the highest number of claims filed in one week since September 2001.