Cash-strapped colleges are draining their endowments to survive
Nearly 200 private colleges borrowed from restricted endowments last year as the enrollment crisis emptied their classrooms and coffers
Many colleges are resorting to draining their endowments to survive financial hardships. Hiram College, a 1,000-student liberal arts school in rural Ohio, is an example, having borrowed over $47 million from its $56 million endowment in 2025 alone. Hiram is working with the state attorney general’s office and donors to repay the loans.
President David Haney considers this a risky bet, regretting his decision to take office. Nearly 200 private colleges borrowed from restricted endowment funds in 2025, up from about 130 in 2021. Smaller, lesser-known institutions face dwindling pools of potential students due to a declining US birth rate, leaving them with few options.
Other colleges are drawing more from their endowments than advisors deem sustainable. For instance, Manhattan University increased its spending rate to 7% of its endowment in fiscal 2024 and 2025, leading to a downgrade in its credit rating. While dipping into the endowment can sometimes work, it carries long-term risks, such as downgrading a school’s credit rating.
Schools should focus on cutting expenses instead of relying on endowment funds, according to Hiram’s former president.
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