Dozens of universities and colleges were already under financial stress from declining enrollments and state support before Covid-19 shut down campuses. With classrooms and dorms shuttered, some may not survive.
You’ve possibly heard of the Federal Reserve’s bank “stress tests” (you have if you read CNBC). A private organization runs public and nonprofit higher education institutions through a similar “stress test” examining “key metrics including enrollment, tuition revenue, public funding and endowment health,” NBC News says. Read story here.
Their conclusion: A crisis is looming for higher education.
Among their findings:
- More than 500 colleges and universities exhibit warning signs
- Troubled institutions are concentrated in the midwest (especially Illinois and Ohio)
- Roughly 1,360 institutions, including ~800 four-year institutions, have seen declining enrollment since 2009
- Nearly 30% of all four-year schools receive less tuition revenue per student than they did 10 years ago
- ~700 public institutions have seen their state support fall since 2009, and ~190 private four-year institutions have seen costs outstrip their endowments over the same period
This is hardly news. The financial struggles of higher education have been discussed for a long time. Among the struggling private institutions is Brandeis University, which I believe is the alma mater of the late Stephen Schwartz, founder of this blog, and his father, both of whom became medical doctors.
State support for public colleges shrank during the Great Recession, and never fully recovered, forcing colleges to pass more of their costs to students via higher tuition, driving them deeper into debt. Now, a decade after the Great Recession, continued state budget struggles are amplified by Covid-19 demands, making advocacy for more state support of public institutions an uphill struggle.
While a larger percentage of the population now seeks college degrees because more jobs require them, and fewer blue-collar jobs not requiring degrees exist, high school graduating classes have gotten smaller as Americans have fewer children, contributing to an overall enrollment decline. Financial stresses also mean fewer families can afford college. Bottom line, total U.S. enrollments dropped by 1.2 million over the last decade.
Much of this is beyond the control of college administrators, but some mismanaged finances by spending on new facilities and going farther into debt despite shrinking enrollments. Generally speaking, those are the most vulnerable institutions.
The totality of financial problems besetting higher education institutions have resulted in dozens of closures and mergers; and revenue losses from campus closures due to Covid-19 could become “devastating” to many more. Some that survive may have to drop academic programs and specialties for lack of funds. Public perceptions of the value of a degree also decline when colleges shift more instruction from prestigious faculty to part-timers and adjuncts, as many have done.
Some advocates want the Federal Reserve to rescue ailing colleges, arguing it has done so for business on a wholesale basis and could easily do the same for struggling higher education institutions. Read about that here. It would be nice if good colleges worth saving could get government help during the Covid-19 crisis comparable to what big business gets, given the massive value of higher education to society and the economy, but they can’t count on it, when you can’t even get Republicans to bail out mail delivery of medicines. Instead, they’ll have to get to shore by themselves (video clip below).
Photo: Was this the administration building of a Druid university that went bankrupt?
Then again an examination of what was once expected of the grade school to high school. Most adults at one time could get by on an eight grade education, while completion of high school meant men and women could function in society and do most jobs, with perhaps some technical school or on the job training.
If employers were more willing to do OJT many could be employed without the need of a two or four year degree. Employers drive the requirement for degrees, and it does not always serve them well. And it may cost them more than the cost of training their people, rather than depending on others to do it for them and expect a new hire to be able to do the job from day one.
It is rather like professional football depending on the college system to turn out new players. The college system does turn out a lot of quality players at significate societal and actual costs. The NFL could have a minor league, with NFL teams shouldering some of the cost of having their field team in some small city in America. This is not the best example, but it is an example of American priorities being somewhat warped. After all the highest paid public employee in Washington state is a football coach at a state institution. I think that says a lot about American society and what we perceive is important. Now if it turns out I really can get a good plumber or carpenter when I need them to be available, but I rather doubt the TV and radio adds.