New Orleans Colleges Face Uncertain Future

The hurricane-stricken colleges of New Orleans have insurance, endowments, and loyal alumni ready to provide emergency donations. But whether the schools survive and thrive depends on whether they can persuade students such as Christie Cleveland to return to campus.

"I need to see what happens to the school and the city first," said Cleveland, a Loyola University of New Orleans (search) junior from California who has relocated to Boston College this semester. "I have to admit, everything I've been hearing from people who stayed behind really frightens me, the total breakdown of civilization."

For recruiters at New Orleans colleges, the city's rich culture — and hedonistic reputation — have been a powerful draw. Now, about a half-dozen universities and a few smaller institutions are facing a potentially enormous long-term problem: What if students no longer want to attend college in the city?

"How these next several months play out will determine whether or not these institutions make it or not," said David Warren, president of the National Association of Independent Colleges and Universities. "The most sensitive question is whether or not they can keep their students, because these institutions are so tuition-driven."

The concern is not necessarily the semester — at least — that schools including Tulane (search), Loyola and Xavier (search) universities have already announced they will be closed. Those schools can tap endowments, though of varying sizes, and have most of their fall tuition money in hand. Other colleges taking on their students, such as BC, have generally taken pains to emphasize they won't try to poach students away permanently.

But ultimately, the finances of even relatively wealthy colleges depend on filling desks. And college officials reached this week acknowledge there is no guarantee students will want to return, or that new ones will apply to be freshmen next fall.

"I'm not naive," said Xavier President Norman Francis, whose campus was under 8 feet of water in places. "Right now anybody seeing the city of New Orleans would say, 'My God, that's the farthest place from where I'd want to be."'

Underscoring the financial danger, the Moody's ratings agency on Thursday placed the credit of four schools with operations in New Orleans — Tulane, Loyola, the University of New Orleans (search) and Southern University (search) — on a watch list for possible downgrade. The agency said that "even with strong insurance coverage, the affected institutions may experience significant and long-lasting financial stress in the aftermath of Katrina."

Xavier, one of two private historically black colleges in New Orleans, along with Dillard (search), has a $52 million endowment, but "we could wipe that out in one year," Francis said. He says students he has heard from are determined to come back but says about 40 percent of students come from New Orleans, and the financial blow of the storm could mean many can't afford it. Xavier accepts about 80 percent of its applicants, so any decline in interest would be quickly felt.

"If you do have a substantial number who do not come back, you downsize," said Francis. "You hate to think about that, but obviously we have to think about it."

Even Tulane, with a stellar academic reputation and a $700 million endowment, says it could face irreparable harm if it cannot open for at least the second semester of this academic year.

"If you lost an entire year, it would be very difficult to retain students and to retain faculty," said President Scott Cowen, who is working with senior administrators out of a Houston hotel room. "They, because of the risk associated, would feel like they should transfer somewhere else."

The campus, he said, could probably be up and running in six weeks, but he acknowledged the school could not reopen until basic services are restored in New Orleans.

Despite the crush of more pressing concerns, Tulane has tried to reconstitute its admissions office in Richmond, Va., in time for the fall college search season for next year's freshman.

Dillard President Marvalene Hughes, on the job just two months, says other tasks like an emergency fundraising trip have prevented administrators from focusing on recruiting yet.

"I know that we will have to more than double our efforts and resources to attract new students and to re-attract some of the old students," she says.

In the long run, the colleges' best hope may be that applicants they might lose — perhaps those interested in New Orleans' party scene — will be replaced by students interested in participating in the rebirth of the city.

"Loyola is a big social justice school," said Alex Morris, a senior at Loyola and one of about 100 students who this week moved into a building Boston College opened up to visiting students. "I'm sure once Loyola gets opened up again, people can't help but be involved with the city in helping to rebuild it."