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We all know that Warren Buffett has praised the power of human potential in the United States of America, and he does so in conjunction with the amazing rate of innovation.

Warren Buffett has provided a video interview in regards to the power of innovation, which was used to officially launch the start of PYMNTS.com’s The Innovation Project 2013. This is currently a two-day program which will challenge the way payments and the much broader commerce ecosystem actually thinks, delivers, talks and ignites innovation.

Buffett recently sat down with Kathy Baron Tamraz, the CEO of business wire, where he offered his particular view on the current landscape of the payments industry. He also provided his optimism for the future of economy in his keynote intro to the 2013 program, which is held at Harvard University.

Berkshire Hathaway owns a Business Wire as part of a joint venture with another partner, and they also own Market Platform Dynamics and PYMNTS.com.

“The pace of change in terms of what customers are doing, how they pay us, how they come to us – it’s breathtaking,” Buffett said. “Any company that interacts with consumers and thinks that last week’s technology and approach is going to work five years from now is probably making a mistake.”

As the current economic climate improves, Buffett tells us that he describes himself to be a “realist,” when he looks toward the future. But, he tells us, it’s America’s way to continually innovate, improve and progress – a very important theme which will certainly endure throughout the entire event.

“Our system does work. It works because it unleashes human potential,” Buffett said. “Never bet against what a human is going to accomplish if they’re operating in the right soil. And we have the right soil.”

Grinnell College, who had a $1.4 billion endowment which benefited from Warren Buffett’s brilliant guidance, is currently looking into financial aid, and recognizes that rising costs and the decline of investments will make the current policies very unsustainable.

Grinnell is a liberal arts school in the United States of America, and they are currently the fifth richest. They are considering raising the amount that students need to take out in loans if they are currently receiving financial aid. The school is based in Iowa, and they admit students into Grinnell no matter what their ability is to pay their tuition. It is not likely that they are going to completely scrap their current need blind policy, but President Raynard S. Kingston said that it is a possibility.

“The question is at what price is it sustainable?” mentioned Kingston in a telephone interview which he gave. If we don’t do something, will we slip into mediocrity?”

Currently, Grinnell College costs the average student about $51,000 a year. They are the latest college in the realm of wealthy liberal arts schools that is backtracking on their student aid. Wesleyan University, the Massachusetts Institute of technology and Cornell University all mentioned that they are also scaling back on their financial aid. The reason being that the weak economy requires more students to seek out financial aid, and it is becoming a burden on the schools. Please also note that since 1995, the tuition at four year private schools has more than doubled. The rising tuition is currently outpacing the rate of inflation.

Warren Buffett, current chairman and CEO of Berkshire Hathaway Inc., was actually a Grinnell trustee for more than 40 years, and he served on both the investment and finance committees. Warren actually stepped down last year when he gave up certain appointments on boards that were unrelated to Berkshire Hathaway, which he spent the last four decades building by making financial acquisitions and impeccable stock picks.

Buffett chose not to comment on this article when he was e-mailed a request to do so through his assistant.

Operating Budget

As of June 30, the endowment investments of Grinnell College suffered a 4% loss during the year. We learned this through David Clay, the chief investment officer of the school. He told this in a telephone interview. During the fiscal year of 2011, the school made a 23% gain on their investments. This helped offset the 23% loss that they had in 2009 due to the financial crisis that was taking place on a global scale.

Grinnell College relies heavily on its endowment because it is responsible for taking care of half of its operation budget, which we learned according to Clay. To make a fair comparison, the majority of private colleges and universities only depend on roughly 7.1% of their endowment to cover the operating costs. This was learned from a report that Moody’s Investors Service released yesterday.

According to a report from Wilshire Associates on August 6, college endowments are either showing stagnant returns, or they are declining in their investments, even after the S&P 500 index posted a 3.1 percentage gain for the fiscal year which ended on June 30. Foundations and endowments posted the worst returns of every class of institutional investor, and they only gained a total of 0.37%.

Roller Coaster

As of last week, the richest school in the world, Harvard University, actually posted a 0.05% loss on its investments in fiscal 2012. Yale University, which is the second wealthiest school in the world, posted a total of a 4.7% return on their investment. You can make a comparison to the roughly 21% return on investments that both schools made just one year earlier.

The Dean of the College of education at Michigan State University, Donald Heller, said “a lot of institutions believe that the recovery from this recession is not going to be the same pattern as we’ve seen in the past and everyone is very nervous about it.”

Schools similar to Grinnell are most likely thinking that they are not going to be able to count on the same returns on their high-end endowments, or even the same increases that usually occur within family incomes, said Heller.

“The demand for financial aid may accelerate more than it has in the past,” said Heller.

Wesleyan, Cornell

Wesleyan College also has need blind admissions, so they are beginning to consider the financial needs of their school applicants. Because of this, they are considering granting three-year degrees in order to save money. We learned this through a post on the school website made by President Michael Roth.

Cornell, which is an Ivy League school based out of Ithaca, New York, is going to force families that have a total income of $60,000 a year or more to look for other financing to pay for a portion of their schooling beginning in 2013. MIT actually raised the amount of contribution that low income students need to make by 36% this fall. They are now required to make a contribution of $6000 a year. If you are a student who receives a federal Pell grant, you are capable of using that money toward your contribution, we learned from MIT.

Grinnell College was founded in 1846, and some of their most prominent alumni include Mary Sue Coleman, who is the president of the University of Michigan, as well as Thomas Cech, who won the Nobel Prize in chemistry and is the former president of the Howard Hughes Medical Institute.

The school is about to speak with trustees, alumni and faculty members this month, and the board is planning on voting on the course of action that they must take in February. We also learned this through a letter that Kingston wrote to the Grinnell community in September.

Inside Higher Ed was the first to report that Grinnell had plans to reconsider their current financial aid policies.

The financial aid budget of Grinnell College is increasing due to the fact that the school is starting to attract more students who have needs, and there is also more need per student, we learned from Kingston. One of the options the school is currently looking at is to increase the student loan caps, which are currently at $3000 a year for freshmen entering in 2012.

“We can’t make decisions as if we’re going to have returns of the pre-crash world, of pretty significant returns, for long periods of time,” said Kingston.