<p>All in all, about 13% of the University’s income is from the endowment, so the endowment decline won’t impact University revenue.</p>
<p>What is generally misunderstood is how the University spends money on projects. For example, the University has come under fire recently for wanting to spend money on building projects while still cutting budgets and whatnot. The reason they do this is because building projects are paid for by issuing debt (selling bonds) versus things like financial aid and paying salaries which are paid for with capital the University is holding. Constructing buildings, since they are paid for by issuing debt, is an INCREDIBLY smart thing to do in this economy, as the costs of construction are down and the University won’t have to pay for it for a few years, and even then the expenses are spread out over 10-30 years. Therefore, construction is a lot cheaper now than it would be later.</p>
<p>Lastly, tuition, and many other fees that students pay, is indexed to rise with the rate of inflation (roughly 5% per year), so it’s very unlikely that we’ll see a “real” tuition increase- that is, one that’s higher than normal.</p>