BU president worries downturn will hurt access to education
Why does Boston University cost $50,000 a year, and what is BU doing to weather the economic downturn? The school's president, Robert A. Brown, addressed these and other questions today during an online chat on Boston.com. View the complete transcript. Here are some highlights:
The economic crisis
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A. I worry a lot about access to Boston University of qualified students, especially in the present economic environment. The major reason behind our hiring freeze was to anticipate the demand for more financial aid under our current need-based financial aid policies from both our existing students and new students next fall.
Q. Do you also anticipate a drop in applications, or as is the case with tough economic times, an increase in applications?
A. We don't anticipate a decrease in undergraduate applications; students only graduate from high school once. Typically applications to graduate programs actually go up in a recession. I do worry about the financial need of the applying students.
Q. What is BU doing to prepare its graduates for the unstable economy? In particular, what, if anything, is the School of Management doing to create business people who will fix this mess.
A. Any first-rate business school is focused on preparing its graduates for an ever-changing world and for the continuing education and personal growth they will need to deal with change throughout their careers. Wow, are we seeing the need for this kind of education now. Our graduates also need to understand the complexity of the world today and how difficult it is to assess risk in a host of ways.
Cost of college
Q. Why does it cost nealy $50,000 a year to attend BU? Where, roughly, does all of that money go?
A. The operation of BU is driven by tuition and fees with over 65% of the budget coming from these revenues. Because our endowment is small relative to the scale of the university, we cannot rely on income from the endowment to play a significant role. The majority of our expenses is for salaries and benefits of our faculty and staff, as well as financial aid for our students.
Q. One might argue that someone would be better off investing $200k+ elsewhere rather than attending a middle-of-the-pack ranked university. One's credentials certainly would presumably benefit from a top 20, but is the price of education at $50k vastly different and better than a state school or other schools that cost considerably less?
A. You can take that position, but be sure you define the middle of the pack correctly. There are thousands of universities and colleges in the United States and even more worldwide. Anybody in the top 100 is VERY good.
The endowment
Q. How is BU's endowment ($1.1 billion before recent market chaos) at risk, given the downturn in investment values and risk of default by major depository institutions?
A. Just as other institutions, our endowment is impacted by the drops in the capital markets. In the last fiscal year (ending June 30) we performed well, compared to indices and other institutions, in what was a very poor market. Hopefully our managers will continue to do well relative to others, but we will not immune to the drop in value. We have not been affected financially by the distress of any particular financial institution.
Q. Do your support efforts by some in Congress to require universities to spend a portion of their endowments each year?
A. I don't support such a blunt approach to overseeing the spending of institutions. The universities I know have prudent spending policies that reflect the long-term nature of endowments and the need for stable spending patterns in both good and bad economies. This year will be an interesting example where we will be distributing funds in excess of the growth of our endowment.
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