Yale feels the pinch as endowment dives

The endowment fund at President Bush's old university Yale has taken a 25%, $5.5 billion (£3.59 billion) hit from plunging markets over the past four months.

Yale president Richard Levin wrote to the school's faculty and staff warning them the decline would force budget cuts in coming academic years.

"Our best estimate of the endowment's value today is $17 billion, a decline of 25% since 30 June, 2008," Levin wrote.

"This is the value we are using for purposes of budget planning."

He said it is still "a very large endowment", but added that the school would need to reduce all wages and non-salary expenses such as travel and consultants' fees by 5% for the coming year and by another 5% the following year.

America's wealthiest Ivy League universities have been hit hard in the crisis. A few days ago Harvard said its endowment had lost 22% and that it would be likely to post its worst returns in 40 years.

In the year to June, Yale earned a 4.5% return on its investments, bringing the endowment to $22.9 billion.