[cmckay]

One data point: I teach at a small liberal arts college. Our endowment is roughly of the same order as our annual budget. Annual draw-down on the endowment is 4.5% or so, which means that the rest of the budget comes from tuition. If enrollment cratered (but didn't go entirely to zero) I suppose the administration could draw the shortfall from the endowment, but the board would pitch a fit, (and likely not approve that kind of move) and it's a sign that the college isn't going to be around long.

The full sticker price (Tuition, Fees, Room and Board) just passed $40k/year last year, and it's having an impact on our ability to recruit students. Since so much of our budget comes from tuition, though, a shortfall of even 30 students from predicted numbers (out of a total student population of about 1400) can cause a serious budget crunch.