Augustana will survive economic crisis
A message from President Steve Bahls
There is a Swedish proverb that says "worry gives a small thing a big shadow." What started out as a meltdown of a relatively small number of mega-banks has cast a long shadow over almost every sector of the world's economy. High-quality liberal arts colleges like Augustana have not been spared from our share of concern about finances. Some have predicted that liberal arts colleges with modest endowments, and particularly those in the Midwest, will have the hardest time remaining strong because of the double challenges of a sour economy and a shrinking number of high school seniors in the region.
Augustana, like other colleges, has suffered significant market losses in its endowment and has witnessed greater volatility in its interest rates. Interest rates are settling down, but it is unlikely that our endowment values will rebound quickly due to a lethargic stock market. Thanks to our history of conservative and prudent budgeting, the college has contingency funds to cushion against losses in the stock market. While many colleges have laid off faculty and staff, Augustana is strong enough that it has not had to follow suit. In fact, the college is conducting 12 faculty searches this year to replace retiring faculty and to enhance the student-faculty ratio. With little competition from other schools, this year's group of new faculty hires promises to be outstanding. And in times like these, Augustana needs to seize every possible opportunity to strengthen itself.
Augustana will survive the economic crisis. The harshest impact of the crisis is not on the college's financial statement, however; it is on our students and their families.
As unemployment rates spiral upwards and as the net worth of our students' families is under pressure, it is nearly impossible for many of our families to continue to pay for the cost of an Augustana education. Sadly, because the college's endowment is down, the college's ability to assist these students will be put to the test.
Consider Hilmir Kristinsson, an international student from Iceland. Hilmir and his family had saved money for college, putting the money in a bank in Iceland. When the bottom fell out of Iceland's economy in late September, the Kristinssons' savings lost half of its value, making it impossible for Hilmir to attend Augustana. Fortunately, however, anonymous donors have stepped forward to provide the financial assistance necessary for him to stay at Augustana.
Hilmer and his family are not alone. Dozens of current students and their families are facing economic hardships they never imagined. High school seniors, who will be selecting a college soon, may be forced to shy away from outstanding colleges like Augustana to attend less expensive state schools.
Augustana is committed to do all it can to be accessible to all students, even in times of financial crisis. We have announced the smallest tuition increase in 20 years. The college is "tightening its belt" financially to free up additional funds for financial aid. But we can't do it alone.
Financial support from alumni who are in a position to support the college is particularly important to our students and their families. Friends and alumni who are able to step up their giving during these difficult times will be rewarded with the knowledge that their support makes the difference in allowing students to stay at Augustana and benefit from the same sort of education that shaped their own lives.
The character of a college is best measured during difficult times. Working together, I am convinced that the college's compassion for our families will shine through.
A detailed description of the college's response to the economic crisis can be found here.