The fact that college enrollment is dropping isn’t exactly a fact that most universities want the general population to know about. This may be one reason why they are doing practically nothing (read: nothing effective) to compensate for this reality. In fact, if anything, enrollment prices have gone up at most colleges and universities. Many colleges and universities are staunchly denying the decrease in students and claim that they have been receiving record numbers of applications. But there is a dramatic difference between applications and matriculations (or applicants that actually enroll). It is a difference that colleges and universities likely don’t want anybody to think about.
More applications per student are being sent out due to the common application, which makes the process much easier (we can fill out one application and send it to lots of different schools). Additionally, universities are waiving admission fees for lower-income individuals and households. So, this is responsible for the “record applications,” but it fails to factor in the low student-matriculation rates.
A bleak reality for schools
There is a double threat for colleges and universities in this country right now. First, there has been a severe dip in the birth rate; fewer people are being born right now in America. Second, there is an increase in students who are choosing to go into the workforce rather than into higher education. This 200-year-old education model has never had to face cutting its costs, and so they are in uncharted waters. They are the equivalent of the child born with a silver spoon in their mouth who now must work three jobs, but it is without a clue how to do it. Universities have never had trouble receiving students, until now.
It’s similar to fashion
So, Gucci bags and Prada outfits, it seems, are always going to do fine in certain market segments. And so are the Harvards and the Yales. But the second-tiers like Walmart and H&M are suffering, as are second-tier universities. The less popular colleges and universities are definitely feeling the enrollment pinch and just don’t know how to pivot to cut their costs. Some are, rather pathetically, trying to change all the light bulbs to energy-efficient ones or increase the size of their classes to mitigate the issue. This has led many experts to ask the fairly obvious question: “If you increase the size of your classrooms and make people pay the same amount for less individualized attention, then how exactly is that supposed to make people want to go to school more?”
Some universities got creative
Not all ideas are superficial and ineffectual. Some ideas, in fact, might have some potential. Might! Well, at least on the surface. Some universities and colleges are blinging out their campuses. I know, right?! For example, universities, such as Louisiana State University, built a freakin’ lazy river: a 536-lighted leisure pool in the shape of the letters LSU. Going further, the University of Akron also has a lazy river and a 56-foot rock climbing wall, a leisure pool and a dang spa, too! Tons of universities are following suit in favor of these opulent strategies.
But there’s a problem…
This is totally too expensive for universities! And if their bets don’t pan out, then they end up not cutting costs, but only increasing their debts. Colleges and universities are borrowing lots of money to do these things, and today nearly 10 percent of colleges’ operating costs go to servicing debts. To wit, colleges and universities collectively owe $240 billion, according to the Moody’s bond-rating service reports. It sounds like poetic justice just a little bit, no? All these universities are responsible for such massive student debt, and now the universities, themselves are experiencing debt crises. Yes, institutional debt is on the rise! Students are taking out loans to pay to go to schools, which in turn are also taking out loans to pay their debts. Hilarious or tragic? Maybe both?
Some schools are approaching this, shall we say, more logically. That is, they are just lowering prices already! But they aren’t actually lowering their sticker prices, which is their posted tuition prices. What they are doing, however, is providing more financial aid and discounts than ever before. The National Association of College and University Business Officers just released a study that shows many universities and colleges are pouring 50 percent of their earned revenue back into these financial aid and discount strategies, meant to lure more students.
There’s also a problem here
Just like the lazy rivers, spas and leisure pools, this strategy, at least according to the experts who have been crunching the numbers, is just as unsustainable as the lazy-river method, or almost as unsustainable! Colleges are offering discounts, and financial aid, to those students who are savvy enough to know to ask for it. But what they are not doing is lowering their cost of doing business in any way shape or form. These luring schemes are ending up costing the second-tier universities more than they are worth. In other words, their bets aren’t paying off, and are only casting these institutions, which hope to get out of debt, deeper into the debt-hole. Consequently, many colleges are closing. These include St. Gregory’s University in Oklahoma, Atlantic Union College and Mount Ida College in Massachusetts and Trinity Lutheran in Washington and many nonprofit universities — Sweet Briar and Antioch, to name two, only have been saved from the ax through generous contributions from alumni.
Colleges also are going corporate as a strategy for survival. Yes, they are getting into the mergers and acquisitions game. The University of Georgia, for example, merged 14 of its schools into seven. But these processes can take years and can be difficult, to boot. It is also not a popular solution in the academic world amongst faculty. In an attempt to stay solvent, some colleges are being forced to raise their tuition prices (likely driving more students away). What a mess!
Impact and takeaway
Will the college and university crisis have an impact on the nation’s economy? Many see the crisis itself as a “market correction” of sorts. As in, they believe there to be an over-saturation of colleges and universities operating in the United States currently. This crisis will obviously be responsible for the closures of many of them, hence “correcting” the market. But if schools close — schools that provide scores of jobs and attract people to the cities and towns where they are located — what will happen? Well, businesses that are supported by colleges (pizza places and bars) certainly will be affected, that’s for sure. And people that rent housing to students also will suffer, and probably many renters will be forced to close their businesses. Likely, innumerable other subtle impacts will surface as well. But as to the broader implications for the economy, colleges and universities are well-known producers of innovation and employers. That will surely pack a punch for the economy.
If students continue to eschew higher learning and advanced degrees, then there will be a problem filling positions that require higher-learning degrees (the jobs that do not require these degrees, in fact, are decreasing by the second in America!) So this whole college/university thing is actually causing a fairly large debacle! Whatever happens though, universities and colleges will need to figure out a viable long-term economic plan, or they may not just end up wrecking the entire industry of academia. They may end up wrecking much of American economy while they’re at it!
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