Wall Street hits education; Colleges hit students

The media's depiction of the current economic crisis has largely focused on either troubled homeowners or failing investment companies. Over the past couple of months, however, another big loser has emerged: educational institutions.

For example, five Wisconsin school districts recently announced that they were on the brink of losing $200 million. The money, which was part of the districts' retirement and healthcare funds, had been invested in what appeared to be solid, conservative bonds. Unfortunately, these investments, while rated "AA" and "AAA," were actually based in CDOs, or synthetic collateralized debt obligations. Thus, through the magic of financial wizardry, the school districts were actually investing in Fannie Mae, Lehman Brothers, Freddie Mac, and Washington Mutual. As these titans have fallen, the districts have watched their money evaporate.

This is a particularly egregious case, and the districts are now suing their investment adviser. However, it points to a larger problem: from the Madoff scandal to inflation to the recession, the economic hardships that have struck across the country have not spared educators. In some cases, this has had a positive effect: Yeshiva University, which lost $110 million in the Madoff scandal, has used its misery as a springboard for a series of discussions about the importance of ethics, money, and greed in determining the aspirations of its students. For many Yeshiva students, the Madoff scandal may well be a defining event in both their religious and secular education.