University endowments are plummeting in value, in lockstep with the rest of the market. Endowments increased substantially in the past few years as managers poured funds into risky, high-return investments. Harvard – ever the pioneer of American higher education – had only about a fifth of its $36 billion endowment in stocks and bonds. The balance of its portfolio was invested in so-called “illiquid assets” – things as esoteric as timber forest and oil stockpiles – and, as the economy soured, those illiquid assets became even more toxic than GM’s common stock. Oil lost two-thirds of its value, for example. So, aside from the fact that we’re college students, why should we care where universities invest?

See what I did there? I made you want to click “Read Full Post.” I know how you think. Anyway, we should care how universities invest their money – we who are concerned with the future of American education, at least. As trustees of America’s (and, to an extent, the world’s) higher knowledge, colleges have a responsibility to continue operating, even when market conditions are unfavorable. I’m not an alarmist, so I’ll readily admit that a soft stock market isn’t putting any universities out of business. But when colleges’ investment strategies are focused on short-term gain at the expense of long-term viability, there is cause for concern. Harvard’s endowment has quadrupled since 2000, but the real-market value of its losses in the past three months is estimated at $18 billion. That’s half its value.

Endowment managers can hardly be blamed for investing aggressively. Since our last recession in 2001-02, the value of pretty much everything has skyrocketed; only a foolish money manager would not tie his fortunes to the market. When you’re playing with someone else’s money, though, caution always has to be exercised. And when the daily operations of a university depend on the money you’re throwing around, extra care must be taken. Managers were so caught up in positive returns that they forgot whose money they were investing.

Fortunately for deep-pocketed Harvard, only a third of its operations are endowment-funded. Yale – whose coffers have been bled, too – depends on its endowment for 44 percent of its budget. Smaller, more-impoverished schools are no doubt even more reliant on their endowments than the Ivies. Georgetown, to its credit, has not lost as much as its northern rivals, and the $75 million bequest it recently received should keep the new science center on track for completion. Endowment losses are becoming a national epidemic, though. Shouldn’t those funds be guarded more closely? Money, it seems, is just a plaything – even for the country’s first-rate academic institutions.