While most institutions have reserves, they are not extravagant. Most could operate less than a month on reserves. They further suggest that operating reserves are a characteristic of good management. National accreditation agencies also recognize the importance of reserves in best management practices. Loss of accreditation results in the loss of faculty positions, inability to attract new faculty, decreased value of diplomas.
Lost accreditation puts student loans in jeopardy.
Loans account for more than half of the students enrolled. Among the assets counted in fund balances are textbooks in libraries and fuel for fleet cars. K-12 has school systems that have reserves. It costs more to educate a college student than a second grader. The costs of educating a chemist or engineer are much greater than the cost of teaching a second grader about multiplication.