How a college with 340 students lost $220 million in five years

By Jon Marcus The Franklin W. Olin College of Engineering, with its sleek, glass-walled buildings around a peaceful grass oval, has earned glowing international attention for the successful ways it has pioneered the teaching of undergraduate engineering. Built from scratch with hundreds of millions of dollars from a private foundation and a commitment to charging no tuition, 12-year-old Olin has attracted standout faculty, even though it does not give tenure. Top companies recruit its high-achieving students, who graduate at enviable rates into jobs with above-average starting salaries. Behind the accolades, however, Olin has been bleeding red ink. The tiny college of about 340 students spent nearly $100 million more than it took in between 2008 to 2011, the last year for which the figures are available, according to financial records obtained by the New England Center for Investigative Reporting. The predicament would have been even more dire if not for Olin’s considerable endowment, which once reached $470 million. But the endowment has lost $120.4 million in value since 2008 in a combination of investment setbacks and cash pulled out to cover operating costs. “No one envisioned that responsible management of an endowment could ever lead to a situation in which the amount of the endowment precipitously dropped, and that’s exactly what we saw,” said Olin’s president, Richard Miller. Olin’s overall losses come to $129,412 per student annually, a staggering amount considering that Olin teaches only one subject, subcontracts maintenance and dining services, and does not offer an athletics program. Yet, it’s losing four and a half times more than what other colleges spend annually for all purposes, per student, based on a report by the Delta Cost Project, which analyzes higher education spending. While no one tracks operating losses at universities and colleges, national higher-education specialists said they could not recall an institution similar to Olin’s size that has lost so much. Read the full article here:

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