As a result of the sharp 2009 declines, Princeton, Haverford and many other schools say they have been tweaking their investment strategies to reduce the potential impact of another big plunge. Many universities achieved outsized returns during the previous decade by taking chances on volatile and hard-to-cash-in investments in timberland, commodities, hedge funds, and secretive private equity deals.
Nevertheless, it will likely take years for some of the biggest losers to return to their 2008 highs. More careful spending and investing will likely be the "new normal," Princeton President Shirley M. Tilghman has said.
Updated on 2/3/10: An earlier version of this story was written before Skidmore College published a release indicating that it will not need to resort to layoffs.