Amid a deepening financial crisis that has sapped college endowments, college and university officials are grappling with the growing fear that the Wall Street turmoil could cast a shadow over nearly all their operations.
Administrators at small colleges and large universities across the state huddled in tense meetings this week to discuss worst-case contingency plans and appraise their financial status after the market meltdown. While colleges stopped short of adopting new policies as Boston University did Tuesday when it froze hiring and halted new construction projects, they are scrutinizing everything from budgets and building plans, to how they and their students borrow money.
"Everything is on the table in this context," said Dennis Nealon, a spokesman for Brandeis University. "Colleges and universities can't pretend this isn't going to have an effect on us."
John Nucci, Suffolk University's vice president for external affairs, said that the economic uncertainty has caused the Beacon Hill school to take stock.
"We have no red lights on our plans," Nucci said. "But like everyone else we're proceeding cautiously. Sort of a blinking yellow."
The stakes are especially high for Massachusetts, where higher education is an economic mainstay and vital to the state's competitiveness. Independent colleges and universities pump $23 billion annually into the state's economy, according to a lobbying group for the schools, and the University of Massachusetts contributes an estimated $4 billion.
Hugh O'Neill, president of Appleseed, a New York economic consulting firm that has studied higher education's economic impact on the Boston area, said colleges and universities have proven to be "a source of stability in hard times." Yet the scope of the current credit crunch threatens colleges' willingness to embark on expensive building projects.
"Clearly, if things don't settle down fairly quickly, I'd have to assume you'd see some slowdown in higher-ed-related construction," he said.
A protracted downturn would deliver a heavy blow to colleges and universities, administrators and higher education specialists say. Cash-strapped schools could be forced to raise tuition, while families would probably find loans and financial aid harder to secure.
Adding to the unease, most colleges have watched their endowments fall sharply in recent months and expect fund-raising to suffer.
"Colleges are trying to put on their safety belts and ride out the storm," said Richard Doherty, president of the Association of Independent Colleges and Universities in Massachusetts. "They are a big piece of the economic pie, and if things get a little tighter for them, it does have a broader impact."
Despite the market turmoil, schools such as Boston College and Suffolk University said ambitious expansion projects were proceeding as planned. Harvard University said administrators were considering all their options.
"It's impossible to forecast all the ways in which we'll be affected," said Harvard spokesman John D. Longbrake.
But some officials at other schools expressed concern about the availability of credit and higher costs of borrowing.
Chris McCarthy, executive vice president for finance and administration at Assumption College in Worcester, said a chaotic market, particularly for tax-exempt bonds, has made schools leery of debt.
"In the last two weeks, I don't think there has been any new issues of debt from colleges and universities," he said.
At the same time, public colleges and universities are bracing for imminent cuts to state government subsidies that could lead to higher costs for students.
"Depending on their severity, there could be fee increases for the second semester," said Robert Antonucci, president of Fitchburg State College.
University officials worry that the state's deteriorating budget situation could also threaten Governor Deval Patrick's ambitious education proposals, such as tuition-free community college.
In an e-mail to trustees Wednesday, Jack Wilson, president of UMass, said the university had taken "strategic belt-tightening actions" but had no plans for across-the-board reductions.
"While the challenges have been severe, we have come through the initial period of distress in good shape and with a plan to weather the remainder of the anticipated storm - although it will not be easy," he wrote.
In an interview, Wilson said the university has been planning for several months for a downturn and would continue with the bulk of its plans, such as building more research facilities.
A struggling economy would probably influence admissions decisions. Several administrators predicted that smaller private colleges, already facing a decline in the college-bound population, could struggle to attract students.
"I would expect if there's no correction to the stock market, and parents see their retirement plans and homes lose value, then we may find that people are too skittish to commit to private higher education," said Eileen O'Leary, assistant vice president and director of student financial services at Stonehill College.
Richard Vedder, director of the Center for College Affordability and Productivity in Washington, D.C., said he expects a flight to less expensive colleges, saying "the less prestigious schools are most at risk."
"More people will say 'It's not worth the money and we can't afford it,' " he said. "There's going to be a drop in the number of people going to high-priced schools."
Many administrators said they were trying to adapt to a fast-changing financial situation that seems to defy prediction and make sense of a landscape that may have fundamentally shifted.
"People are saying everything will be OK once things return to normal," said Paula Rooney, president of Dean College in Franklin. "But what's the definition of normal right now? I think it's an assumption we have to give up."
Peter Schworm can be reached at email@example.com.