U.S. colleges and universities have seen enrollments decline recently. The trend could represent a double-edged sword, with present and future implications on endowments. Pensions & Investments called upon two local sources to analyze the implications.

John Griffith — Director of Endowments at Hirtle, Callaghan & Co., Conshohocken, seemed leaned toward characterizing college attendance rate numbers as perhaps based on geography.

“It is true,” he said, “the Northeast the Midwest and mid-Atlantic are experiencing a demographic cliff, but the West and South are experiencing increased [numbers of] high school graduates.

“Despite the enrollment challenges, we have seen very few schools increasing their endowment spending rate,” he concluded.

Mary Jane Bobyock, Managing Director of the SEI nonprofit advisory team in Oaks, said she does not think falling enrollments will have a “material negative impact” on endowments in the coming years. She does, however, think they will impact the “operational and academic infrastructure of the institution.”

Bobyock also noted that while endowment returns were historically strong for fiscal 2021, she cautioned that some university endowments may have to write down their private assets’ values, as valuations tend to lag the public market by six months to a year.

More on the enrollment-endowment relationship at U.S. colleges and universities is at Pensions & Investments.