<p>HC increased its financial aid budget by 10 percent this year, like many private schools, to mitigate economic impacts and sustain its yield.</p>
<p>It will be interesting to see how the school will be able to sustain this level of financial support in the future without continued scale back in services. Last year, need based financial aid representing about 5% of the school’s reported endowment. As the post you note references, the endowment took a major hit this past year. If the school were to maintain a similar approach to managing its finances in the future, this could require a reduction of $10MM or more in its annual budget (If one assumes that HC’s $600MM endowment fell by 30%-40%, which is likely if they marked real estate and private equity type investments to market).</p>
<p>This is the challenge that many smaller, moderately endowed private schools will face in the coming years – as they also deal with the expected reduction in college application levels across the Board.</p>