The grim realities of the ongoing financial crisis for higher education are becoming more and more apparent every day.

Graduates of Harvard received a grim warning earlier in the week from President Drew Faust that the university’s endowment had lost about $10-billion, and news reports tell us that most college and university endowments have declined about 30 percent. That is bad enough, but of course there is no way of knowing when the economy will touch bottom. It will probably get worse before it gets better, and it seems clear that it will not get significantly better for at least a couple of years.

There is no way of knowing whether endowments will ever regain their values of summer 2008, for that matter. Financially weaker private institutions will start to close their doors over the next couple of years. The news from state governments is as bad, if not worse, with disastrous implications for all state-supported institutions of higher learning. Across the sector, we read about cutbacks in future budgets, and rescissions in current budgets. Faculty and staff benefits will be whittled down. Construction projects are being canceled or delayed. Maintenance will be (once again) deferred. There will be more pressure on tuition at a time when everyone thinks that tuition levels are too high. New programming is an endangered species, hiring freezes are the name of the game, and everything seems up for grabs. The pain is going to be spread quite widely, but in a Darwinian higher educational world, the weak (institutions, groups) will be hurt very badly indeed.

I am not Pollyana, and I can see nothing good in the present situation. It would be nice to think that the Obama administration will fix the economic problems quickly, increase funding for research and student support, and appoint brilliant administrators to the Department of Education. But only one of those things, the last, is remotely feasible in the mid-term. This is the grimmest economic situation for higher education in the approximately 50 years that I have been in the teaching profession. The outlook is particularly bleak for untenured faculty members, and for retirees who thought that TIAA (and other pension plans) had secured their “golden” years. But those who lose their jobs — and those aspiring academics (now in grad school or about to apply to grad school) who will not find jobs to lose, will also be devastated.

I am not an economist, nor am I an expert on educational administration. I will defer to my colleagues Graham Spanier and Stephen Trachtenberg on what exactly will happen institutionally and what can be done in the short term. But it does seem to me that all of us who care about postsecondary education have to think together about the longer-term educational implications for the sector. If my fears are well-founded, we are about to experience a contraction that will not be so different from that now confronting the American automobile industry. One thought is that we may have to change both our behavior and our product, moving from SUV’s to hybrids.

Can we do more with less by redesigning our product, or must we go into a defensive crouch and hope that the threat will dissipate? Can we ride out the storm? While I do not believe that every cloud has a silver lining (I am too old for that), I do think that adversity sometimes brings out the best in committed individuals, and it sometimes reveals alternative strategies. Shouldn’t we start to consider what creative possibilities there might be for us as educators in an era of constricted resources?

(Brainstorm illustration incorporates a photo by Flickr user mikebaird)