At the best of times, universities are not always making a profit. Not all sports teams are well funded, and not all games are well attended, leaving universities with expensive programs running at a loss. Even the Athletics Department at the University of California, Berkeley is heavily subsidized despite its strong intercollegiate performance.
On top of athletics, universities sponsor festivals and events all out of pocket. Just the speaker's fees and expenses for a commencement address can cost tens of thousands of dollars. The University of Idaho racked up nearly a half million dollars in expenses. Clearly, the problems of universities can't all be blamed on the recession.
Even if poor financial planning is to blame, the 2008 global recession has accelerated the symptoms and, for the first time, made them a cogent concern for the general public. Universities have a wide array of expenses to manage -- from the costs of running laboratories and maintaining equipment, to massive utility bills and staff salaries. All of these expenses snowball into a large annual figure that public schools pay off using federal grants, private sponsorship and the handful of profit making campus programs that every university has. When the money stops coming in, however, whether because the federal government is trying to reduce its deficit or private donors have lost millions of dollars in a plummeting stock market, universities are left scrambling for ways to pay for expenses planned years in advance. Even Harvard University was forced to offer its senior faculty a retirement program to reduce faculty costs.
Another major factor that plagues universities, particularly the very new and very old, is the need to stay modern. Universities are responsible for training students to understand and handle cutting edge technology. To do so, they themselves must remain as cutting edge as possible. From up-to-date library databases to new laboratory equipment and expensive research programs, all universities are forced to balance their need to upgrade with their need to stay afloat. For newer campuses that are still expanding to meet student needs, this also means financing expensive new buildings. Universities overseas must also handle these problems with the added issue of buying technology against higher currencies, effectively multiplying the already high costs.
The university's financial dilemmas are also the students' financial problems. Though tuition rates have been rising steadily for decades, they have jumped in response to university attempts to increase revenue. Simultaneously, cuts to university, state and federal student aid programs means that the neediest students will find it even more difficult to finance their education.
In addition to tuition worries, university budget cuts threaten the quality of education that students will receive. As tenured faculty members go into retirement, they take with them the kind of experience and knowledge that aren't covered in textbooks. Cuts to laboratory budgets and library accounts also means decreased resources for students looking to pursue their own research projects.