College endowments have suffered a sharp blow in the financial crisis, with aggregate investment losses of at least $94.5 billion, according to a new survey.

The losses, covering the period between July 1 and Nov. 30 of last year, likely understate the severity of the hit schools have taken, since they don't include losses in illiquid, hard-to-value investments that many schools have loaded up on. Schools warned that the declines could lead to cutbacks in financial aid.

Endowment income is a critical part of budgets at colleges, especially at private schools. Many schools large and small have already announced budget cuts, including hiring freezes and the curtailing of construction projects.

The survey, by the National Association of College and University Business Officers and Commonfund Inc., a Connecticut nonprofit, covered 435 schools and is the broadest tally to date of the markets' toll on colleges, which held $413 billion in endowment funds as of June 30, when most schools' fiscal year ends.

The $94.5 billion loss amounts to a decline of 23% during the five-month period, which was less than the 29% drop in the Standard & Poor's 500-stock index. But if results don't improve by the end of the collegiate fiscal year, the loss would be the biggest since the association began tracking returns in 1974. And many colleges may be putting off a more severe reckoning by excluding likely losses in private-equity funds and real estate from their figures.

The college business officers' association, along with TIAA-CREF, a financial-services firm that focuses on educators, also released its annual list of the biggest U.S. endowments as of the end of the schools' 2008 fiscal year, generally ended June 30. Harvard led the list with its $36.56 billion endowment. At that date, a record 77 endowments had assets of more than $1 billion. Their wealth has drawn recent attention from the Internal Revenue Service, which monitors schools' nonprofit tax exemption.

The IRS interest follows an inquiry by Sen. Charles Grassley, the senior Republican on the Senate Finance Committee who has been examining the business practices of hospitals and universities. Mr. Grassley has questioned repeatedly whether schools were hoarding their money at a time when tuitions were placing a heavy burden on middle-class families.

Mr. Grassley has suggested requiring the largest college endowments to make the same 5% minimum annual payments as private foundations. The new survey found that schools, on average, spend 4.6%, though many of the wealthiest have spent considerably less in recent years. Terry W. Hartle, senior vice president for the American Council on Education, which represents 1,600 college presidents, said he expected the spending rate at many colleges will rise to 6% because of endowment losses.

On Monday, Mr. Grassley said colleges shouldn't use their endowment losses "as an excuse" to raise tuition or freeze student aid. "Contrary to what colleges might argue, the weak economy makes a strong case for more endowment spending," Mr. Grassley said. "If an endowment is a rainy-day fund, it's pouring."

Click here to view larger image.