<p>I am not as optimistic as some of you here in viewing financial conditions for HY, (I dont know that much about Princeton, I never really paid that much attention to Princeton). </p>
<p>Apparently, HY have a lot of similarity in their investment allocation for the endowments based on what I read on the parents forum. I am sure HY will be committed to support those undergraduate students on financial aid. But I do believe that HY are very stressed on cash. Most of the HY endowments are in illiquid investments (private equities), which cannot get an accurate valuation and both HY are facing cash calls on those investments. They cannot unload these investments, no buyers/ not be able to sell even at a huge loss. My understanding is these private equities are similar to toxic assets. Both HY sold taxable bonds after financial crisis in late 2008, to raise cash to run their daily operation and to fulfill the cash calls. H just paid near 500 million last Friday to get out of some kind of SWAP (I am pretty illiterate on those financial terms). One poster said something like H also put its 3.2 billion (its the checking account) into that type of investments. Just service the debts, H has to pay about $500 million per year for next 30 years. I dont know how much Y has to pay for the debt service. HY both lost similar 30% in their endowments. I believe H borrowed a lot more cash. </p>
<p>So the problem is not how much HY still have in their endowments, which they really cannot get a real valuation. They cannot get any cash out of endowments to supplement their operation budget, whether it is 0.1% or 4%. Most of their endowments are not in stock market, (which is quite liquid), so they actually missed the upswing of the stock market (since March DOW is up 50%). </p>
<p>My understanding is HY are supporting their students on financial-aid on borrowed cash, which HY have to pay tax and interests. But how long can they live on borrowing if the private equity market would not recover soon. Many schools are in the same situation. Yale is definitely not alone and certainly is not in any situation worse than other universities.</p>