Shrinking endowments, state funding reductions and families struggling to pay tuition are forcing many colleges and universities to cut staff and spending or to delay construction and development plans.

From well-heeled Ivy League schools such as Harvard and Dartmouth to large public institutions such as the California State University system, many schools are facing difficult financial decisions stemming from the nation's economic standstill.

A representative of Career Education Corp.'s largest shareholder has been named to the board of the for-profit education company, possibly signaling a showdown with management over lagging returns.

Greg Jackson, a partner at San Francisco-based Blum Capital Partners LP and co-head of its investment committee, has wanted a seat on Career Ed's board for a "long, long time," says someone who knows him professionally. A former analyst and partner at Harris Associates L.P. in Chicago, Mr. Jackson, 42, declined to comment.

The government sought Tuesday to dismiss concerns that it might try to delay rollout of the new GI Bill, pledging to be ready to handle growing claims in veterans education benefits after abandoning plans to hire a contractor.

Testifying before a House panel, officials with the Department of Veterans Affairs acknowledged the potential for glitches as they scramble to upgrade government IT systems before the new legislation providing millions of dollars in new GI benefits takes effect next August.

But the VA contended it was on track to implement an IT system "in-house" just one month after abruptly scrapping plans to hire an IT contractor that the government previously contended was critical to get a system up and running on time.