Higher Education

Financial crisis at Harvard

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Despite amassing an almost US$37-billion endowment, Harvard University is warning that the economic slowdown has reached America’s richest university. President Drew Faust said Monday the school was looking at ways to cut spending and would review compensation costs, which account for nearly half of the budget.

Harvard was also reviewing its ambitious expansion programme, including plans announced early last year to expand across the Charles River from its Cambridge campus into Allston, she said.

The university is considering the steps because the economic slowdown might reduce federal grants and the school’s substantial endowment, Faust said. ‘We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial restraint,’ she said.

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Harvard’s efforts to address the economic downturn mirror what is happening elsewhere in the country, including other Ivy League schools. Dartmouth College has announced that it would cut spending after its endowment, which also makes up about a third of its budget, lost US $220 million. Trustees blamed the loss on poor returns on stocks and bonds because of the Wall Street meltdown.

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