Thursday, October 2, 2008
A Washington Post Article today states that The Community Foundation for the National Capital Area lost $40 million from its endowment over the last quarter and that other foundations, schools (not to mention students) and hopitals are beginning to directly feel the effect of the credit crunch:
Universities and private schools nationwide were alarmed this week when Wachovia Bank effectively froze the short-term investment accounts they rely on as checking accounts to make payroll and other expenses. As part of its sale to Citigroup, Wachovia stopped managing the Commonfund, a nonprofit organization that runs short-term investment funds for about 1,000 colleges and independent schools. Commonfund officials announced an infusion of capital yesterday, even as they sought to replace Wachovia. ommonfund is liquidating about 32 percent of the schools' short-term investment accounts, spokesman John S. Griswold said, adding, "We would hope that 32 percent being made available would help most through the next months." The Wachovia sale will affect about 50 students at Marymount University in Arlington County who had loan packages with Wachovia. They will need to find a loan provider for the spring semester, said Chris Domes, a school vice president.
I understand the sentiment that unhindered borrowing is ultimately bad for the economy. Bigger houses, faster cars, fancier electronics ALL RIGHT NOW got us into this. Let's just be honest, blaming the proverbial Wall Street "fat cat" without coming to grips with our own instant gratifcation needs is a bit hypocritical. But borrowing for education is not in the same class. The educational assets purchased with borrowed money (i.e., student loans) never wear out --its good debt! The mind power only appreciates even after we die. So yes, maybe there is some merit that we should all suffer for what we've done (borrowed ourselves quite broke!) -- "forget the bailout" let them (and us) suffer! But educational borrowing is not part of the problem.