It’s easy sometimes to feel like you’re living in a bubble while in college. You probably live in a dorm, where janitors clean the bathrooms for you. You probably get away with waking up at 10:30 am for 11am classes. You probably have hours of free time on your hands to spend on a campus with thousands of people your age who also have hours of free time on their hands.

Now, however, it seems that the real world just may be squeezing itself into the college fantasy with the current credit crisis. Wachovia recently sold its banking operations to Citigroup and has since announced that it will limit the access of colleges to their own $9.3 billion worth of funds currently held by the company. Schools affected by this Wachovia freeze include BU, UVM, University of Anchorage, and Augsburg College.

According to the New York Times:

In a move suggesting how the credit crisis could disrupt American higher education, Wachovia Bank has limited the access of nearly 1,000 colleges to $9.3 billion the bank has held for them in a short-term investment fund, raising worries on some campuses about meeting payrolls and other obligations.

Wachovia, the North Carolina bank that agreed this week to sell its banking operations to Citigroup, has held the money in its role as trustee for a fund used by colleges and universities and managed by a Connecticut nonprofit, Commonfund.

On Monday, Wachovia announced that it would resign its role as trustee of the fund, and would limit access to the fund to 10 percent of each college’s account value.

 

On Tuesday, Commonfund said that by selling some government bonds and other assets held in the fund, it had succeeded in raising its liquidity to 26 percent.

Still, Wachovia’s announcement sent shock waves through higher education, sending hundreds of college presidents rushing to check their financial vulnerability on every front…

Molly Broad, president of the American Council on Education, which represents 1,600 colleges and universities, said: “A widespread credit crisis will affect a large number of our institutions very quickly. Those folks who’ve been saying that the economy could be seized by a liquidity crisis, well, it’s unfolding before our eyes, and it’s having an impact on colleges and nonprofits.”

At Boston University, President Robert A. Brown sent an e-mail message to faculty and staff members on Tuesday saying that the university would temporarily freeze hiring, with the exception of public safety employees and professors whose hiring process was under way, and that it would postpone all capital projects that had not begun.

Joseph Mercurio, the university’s executive vice president who oversees its budget, called the steps pre-emptive.

“Pre-emptive “? The last time we heard that word, we got ourselves stuck in Iraq and we’re still there. Understandably as cash flow is cut into, universities must limit their spending, but at the end of the day, does the hiring freeze help the current economic crisis? Or is limited job growth merely exacerbating the panic which is reducing spending and paralyzing the economy?