Williams Stuffs Students Into Dorms as Economy Pares Endowments

By Janet Frankston Lorin

April 1 (Bloomberg) -- Wesleyan University plans to add 120 students to help shore up finances after its endowment fell 22 percent, an indication the recession is forcing doors to open a bit wider at top-rated U.S. colleges.

The extra enrollees, an increase of about 4 percent for the college in Middletown, Connecticut, will arrive during the next four years and bring about $4.7 million in new revenue, said David Pesci, a university spokesman. To accommodate the addition, Wesleyan will convert some dormitory rooms to double or triple occupancy, he said.

Experiencing investment losses, Amherst College, Cornell University, Johns Hopkins University and Bowdoin College are also planning to increase student populations, according to the schools’ admissions and public-relations officials. The institutions gain income because the expansions generally don’t require new buildings or faculty, said Michael McPherson, president of the Chicago-based Spencer Foundation, which funds education research.

“What a lot of places seem to be doing in response to the current economic situation is easing up on the supply of places by letting in a few more kids,” said McPherson, formerly president of Macalester College in St. Paul, Minnesota. “If there is a little bit less luxury in the way things are provided, I think that’s a good tradeoff.”

The plans to seat more students are the latest indication of financial turmoil that has unsettled colleges, students and their parents since the economic crisis began last year, said Morton Schapiro, an economist and president of Williams College, which plans to enlarge its class by 10 students for the next academic year.

“Schools are looking to augment revenue to replace the amount of money they take from the endowment,” said Schapiro. “If the market hadn’t tumbled, they probably wouldn’t be looking there.”

Rooms at Williams

Notices of admission from the school, in Williamstown, Massachusetts, were available electronically on March 27, as the peak season for private-college admissions got under way. Williams can absorb extra students because enough rooms meant to accommodate two residents have been used for single occupants, he said.

At Johns Hopkins, in Baltimore, the admissions office’s ability to help raise revenue has become important, as philanthropy, the endowment, and funding from the state of Maryland all are declining, said John Latting, dean of undergraduate admissions.

“My orders are, ‘Look, if you can grow the class and the quality remains high and the students are bringing in revenue, let’s do that,’ ” he said in a phone interview.

If the applicant pool is strong, the school plans to double its incoming transfer students to 70 to make up for the loss of revenue as more Hopkins students elect to spend time abroad, Latting said. The extra transfer students may generate as much as $1.4 million in revenue, Latting said.

Budget Shortfall

The school disclosed in February that it is facing a $100 million budget shortfall for the next two fiscal years after its endowment fell about 20 percent in the second half of 2008.

When colleges needed more money in previous years, they would step up tuition, said Sandy Baum, an economist at Skidmore College in Saratoga Springs, New York. The average cost increase for private schools was 5.9 percent last year, according to the New York-based College Board, the publisher of college-entrance tests.

During the recession colleges are “ trying to avoid large tuition increases and avoid cutting their student aid,” said Baum, who is also senior policy analyst for the College Board.

Financial needs are prompting Amherst to step up increases in enrollment. Two years ago, Amherst decided to add 80 students in stages by 2012, “taking advantage of the richness of the applicant pool,” said Tom Parker, dean of admission and financial aid.

Target Altered

In January, the school increased the expansion target to 180, or more than 10 percent of the current population, because of “fiscal considerations,” he said. The endowment fell 26 percent in six months, to $1.26 billion on Dec. 31, according to the school.

Amherst’s expansion plan would create the largest campus population in its 188-year history, Parker said. The school, in Amherst, Massachusetts, now has 1,697 students.

Amherst enrolled 438 first-year students in 2008, accepting 15 percent of applicants, Parker said.

“If we didn’t have this amazing applicant pool, then growth might come at the price of quality,” President Anthony Marx said in a phone interview. The school will maintain its commitment to financial aid, and probably half of the new students will receive help, he said.

Netting $2 Million

After taking into account extra costs, the latest planned increase of 100 students should net Amherst about $2 million over four years, Marx said. The college could generate more money if it didn’t plan to “hire more faculty to ensure maintenance of educational quality and faculty-student ratio,” he said.

Bowdoin College, in Brunswick, Maine, will add 10 students in each of the next five years unless the economy improves, said Scott Hood, a spokesman. Now, 1,723 students attend the school. Bowdoin may take more international students, who typically aren’t offered financial aid, Hood said.

When Bowdoin expanded enrollment by 6 percent in the years 1994 to 1996, it also added professors, classroom and dorm space, and science programs, Hood said. There are no such plans this cycle, he said.

The enrollment targets set by colleges aren’t always met, as admissions officers can’t predict exactly how many offers will be accepted, said Simeon Moss, a spokesman for Cornell University in Ithaca, New York.

For the latest class that entered Cornell, the school set an enrollment target of 3,050 and wound up with 3,139, 89 more than planned, according to the school. Now Cornell has raised its target for the next entering class to 3,150.

Not ‘Exact Science’

“You do your best with those numbers, but it isn’t an exact science,” Moss said.

Enlarging the student body is one step Cornell is taking to close a projected $215 million budget gap over five years, after the school’s endowment fell 30 percent in the last year to $4.5 billion, said Joanne DeStefano, vice president of finance.

The additional seats at colleges don’t necessarily mean that students will have an easier time getting in, said Bruce Breimer, who directed college guidance for 37 years at the Collegiate School, a private institution in New York, and retired two years ago.

“I don’t see a tremendous advantage for people applying, nor do I see a downside if the schools have more kids,” he said in a telephone interview. “Hopefully it’ll make it a little easier for the group that has the most difficulty getting in: the straight-up scholar who doesn’t have a special tag,” such as athlete, musician or child of an alumnus.

Applications Rise

At Wesleyan, undergraduate applications rose 22 percent this year to 10,065, outpacing the planned increase in seats, according to data provided by the university. Wesleyan’s endowment fell 22 percent, to $503 million, in the six months through Dec. 31, according to the school.

Expanding enrollment raises the question of whether the percentage of students to faculty will still be low enough to ensure quality classes, said Karen Leach, vice president for administration and finance at Hamilton College in Clinton, New York.

The school had planned to shrink its enrollment by 25 students this year, said Monica Inzer, dean of admission and financial aid. The idea was to restore a student-to-faculty ratio that had grown after more applicants than anticipated accepted offers of admission to what are now the junior and senior classes, she said.

Cut Postponed

Because of endowment losses, Hamilton has postponed the enrollment cut for at least three years, Inzer said, as keeping 25 extra students generates about $936,500 in revenue, after financial aid.

Instead of returning to 9.5 to 1, the ratio of students to faculty will stay closer to the current 9.8 to 1, Leach said.

The endowment fell about 29 percent in 2008, to about $510 million, according to the liberal-arts college.

“We are maximizing use of existing resources, Leach said. ‘‘We can’t do that forever. We’re working right at the edge of our bed counts right now.”

To contact the reporter on this story: Janet Frankston Lorin in New York jlorin@bloomberg.net .

Last Updated: April 1, 2009 00:00 EDT

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