LAWRENCEVILLE, N.J. — For now, the nation’s biggest preparatory schools are protecting students like Ivy Alphonse-Leja, who depends on financial aid to attend the Lawrenceville School.
The Bunn Library on the campus of the private Lawrenceville School in New Jersey.
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“There was never a concern that I could not come back next year,” she said recently.
The question is whether the schools, which, like their university brethren, suffered significant declines in their endowments as financial markets withered, can continue to offer that same promise to incoming students.
The question goes to the heart of the prep schools’ longtime efforts to open up their classrooms to promising students of all incomes, and not just the children of wealthy families. Adding to the pressures on the schools are the increasing financial woes of their students.
The schools are left with limited options. This is a bad time to dip more deeply into their endowments. Raising tuition would just mean that “more of their families may qualify for financial aid because their incomes may become insufficient to pay tuition bills,” said Amy Falls, who oversees the endowment for Phillips Academy in Andover, Mass. And attracting gifts from alumni may get harder if the downturn continues or tax laws change.
Lawrenceville has decided to keep its financial aid budget flat for now, and that means “somewhat fewer newcomers receive aid next year,” the school’s chief financial officer, Wesley R. Brooks, said. Phillips Exeter Academy, in Exeter, N.H., has also decided to keep its financial aid budget the same as it was last school year, said Julie Quinn, the spokeswoman for the school. None of the schools want to find themselves in the predicament that the Albuquerque Academy is in. The academy, a private day school in New Mexico, suffered a 20 percent decline in its endowment, and its prospects for raising new money are especially limited. Much of its investments were in real estate, and there is little hope for that coming back anytime soon. Next year, for the first time in its history, Albuquerque Academy will not be able to provide financial aid to all needy students.
“The core of our mission is accessibility to everyone,” said Albuquerque’s treasurer, Gary L. Gordon, who graduated from the academy and sends his two children there. “Other schools don’t have as a mission to help so many families in so many ways. They have a much larger capacity for giving programs and they have so much money coming in that they don’t have to worry.”
Now Albuquerque has to rethink its core mission.
The outlook for other schools seems less severe. The budget cuts so far at the other big prep schools in the country, most of them in the Northeast, have been noticeable, but are not likely to be as deep if the markets recover.
Lawrenceville laid off 6 percent of its staff. Phillips Exeter Academy is trimming all its budgets, including the one for recruiting. Andover, where the value of the endowment fell 15.1 percent, is using “restraint” in hiring.
Ms. Falls said that Andover planned to continue to meet all the financial needs of students it accepts. The school was in a relatively good position last year, she said, because the endowment had raised about 5 percent in cash, which meant it did not have to sell investments that had plummeted in value.
Nevertheless, she said, “We have sharpened our pencils a lot.” It may become more difficult to raise money, she said. “People’s tax rates are going up. There will be less to go around. So everybody has to be thoughtful.”
And some schools are even increasing their commitment to financial aid despite steep drops in their endowments. The Peddie School, in Hightstown, N.J., for instance, is increasing its financial aid budget by 8 percent despite an 18.6 percent drop in the endowment’s return. “We felt it was important to maintain our strong commitment to the policy,” said Sean Casey, the school’s director of communications.
Many of the prep schools also have the advantage of being generally conservative in their investments. As a result, they did relatively better when the markets turned down than the big universities — their endowments generally declined 20 percent or less, while Harvard’s and Yale’s returns were down over 24 percent.
