The Shrinking Future of Colleges, Especially the Small Ones
Interesting dilemma for higher education. I had heard that some colleges were having issues attracting students to their campuses. The high tuition and a lack of funding in the form of scholarships, grants, awards, etc. have been an issue when they do not keep up with the costs of colleges. Another issue has crept up which I was not aware of till reading it at The one-handed economist. This is one of David’s selected articles featured in Interesting Stuff, “The incredible shrinking future of college.” Author Kevin Carey at Vox’s The Highlight starts off his article telling about Division II Shippensburg University winning the Field Hockey championship.
The activity on campus was in fine form with many students enjoying the activities Shippensburg had to offer. There was no hint of the underlying issues at Shippensburg University being a shrinking institution. And the problem was going to worsen. Shippensburg was just one of many institutions nationwide which would experience a decreasing enrollment.
The oncoming issue in four years, was the decreasing number of students graduating from high schools, Across the nation will begin a sudden and precipitous decline, the result of a rolling demographic aftershock of the Great Recession. It hit hard across the spectrum of citizens. There was no Joe Biden then to convince a majority Democrat Congress with minority Republicans to pass an ARA, a Jobs Plan, and expanding healthcare. Funds were directed towards Wall Street and bankers to bail them out from their gambling. Mainstreet had to resign itself to 2 years of meager Unemployment until Republicans gained control and cut them off. The difference between 2008 and 2020 is very discernable.
In 2008, I was stilling battling with the courts. Our children were grown. Being out of work cut our income. However, I could find other things to do to supplement my wife’s income. We survived and kept our home.
Among colleges today, the elite colleges and research universities consisting of the Princetons and the Penn States the oncoming drop off of the cliff will be no big deal. These institutions have their pick of applicants and can easily keep classes full. There could be dire consequences for everyone else.
In some places, the crisis has already begun. College enrollment began slowly receding after the millennial enrollment wave peaked in 2010, particularly in regions that were already experiencing below-average birth rates while simultaneously losing population to out-migration. Starved of students and the tuition revenue they bring, small private colleges in New England have begun to blink off the map. Regional public universities like Ship are enduring painful layoffs and consolidation.
I went to smaller universities. Even Loyola University-Chicago is smaller when compared to state universities. Matched to timing the outcome is dire. Trade policy, de-unionization, corporate consolidation, and substance abuse have ravaged countless communities. Colleges have been one of the only places providing good jobs in communities, offer educational opportunities for locals, and have strong enough roots to stay planted. The enrollment cliff means they might soon dry up too.
Simply speaking, fewer students mean empty seats, and costs remain the same at small colleges. The trend of fewer students will stress smaller colleges especially in small communities. Cities and coastal areas will not suffer as badly. For students who attend less-selective colleges and universities near where they grew up. For many college students, the enrollment cliff means fewer options for going to college in person, or none at all.
Some 4.3 million American children were born in 1957, a number that would not be matched for another 50 years, even as the overall population almost doubled to over 300 million. In 2006, the replacement rate was 2.03 and enough to keep the population growing. Twenty twenty-one is the first year since 1937 the U.S. population grew by fewer than one million people. The lowest numeric growth since at least 1900 (Census Bureau began annual population estimates).
The relationship between demography and higher education is always a two-decade delay of cause and effect. The college years of one generation fall in the birth years of the next. The baby boom meant that by the 1970s, campuses were bursting as the children of midcentury fecundity reached early adulthood and women increasingly sought degrees in professions that were finally opening up to women.
And in 2008, families decided to not have children as they were afraid of losing their jobs.
This article is long. I am not going to put it up here. The link is above. I have written on the topic of immigration and population growth and added some links. For many colleges, there is a serious issue. For many people, there will be an issue also as they will not be able to afford the costs of colleges. Many will disappear. Enjoy, the rest of The Vox read.
@run,
Loyola’s endowment is $1 billion. Shippingsburg’s is $37 million. Endowments will determine sustainability.
Of course, Loyola has a medical school, which means lots of wealthy alums to dun for philanthropy.
while state schools may have a more reliable (you would think, but they really dont), they too will have problems in their smaller schools. many of them may get closed (unless they are lucky to have a very powerful politician on their side that is)
It seems to me that the cost of college has been pretty much a function of what the market will bear up til now without any real connection to the actual costs of the institution, including faculty and staff salaries. The increases have significantly exceeded the cost of living increases. Maybe Jill Biden was on to something with her emphasis on community colleges.
some of its that, but i lot is selling to a market, and you need marketing, nice facilities and sports teams to keep the students coming
I’m just guessing, but with the pressures that look to be building, I’d think it natural that some institutions might go for a purposefully stripped down experience to sell for many thousands/year cheaper. If employers decide that there is nothing wrong with degrees from these places, it might work for some to keep going. Some will try it I think. Keep in mind that the NIL system definitely could blow-up a lot of Division 1 football programs over the next decade. Quite possible that major revenue college sports contracts to a hard-core professionalized group. It might dawn on people that the pros playing in Ole Miss unis really aren’t collectively as good as the worst NFL team.
There’s a story in today’s New York Times about some small colleges cutting their tuitions in half to attract students. I’m guessing that’s a better marketing move than constructing an artificial wall for students to climb, and the like.
@Jackd,
Many or most colleges and universities discount their tuition for most students. Higher topline tuition makes them look more desirable in the market.
Maybe but the “discounted” prices are still so high that the student debt becomes hugely burdensome for many. It’s somewhat like drug prices which are sky high but often discounted and still sky high.
Jack:
More on the drug issue forthcoming and as soon as other writers pick up some of the slack.
Have to go to the dark side to read it, Thanks for the info.
The more one looks at the 2008 meltdown and its long, slow recovery, the more it looks like the Great Depression writ small. It took ten years for the economy to just barely recover, and we have a similar demographic setup with low birth rates, low rates of household formation and changed attitudes towards money. Retail, for example, never really recovered. People in their peak buying ages, young adults, didn’t have the affluence to shop for entertainment the way baby boomers did. They had been scarred, just as many baby boomers’ parents had been scarred.
COVID played the part of World War II and convinced Trump and Biden to pump a bit of money into the lower tiers of our economy, something usually anathema to the economic planners at the Federal Reserve. With the Republicans taking the house, I’m guessing that the only agenda item will be another tax cut for billionaires, so the stimulus is over, but the demographics remain. It takes at least 18 years to make an 18 year old, so the worker shortage is here for a while.
As for the more marginal colleges, maybe their time has passed.
Kalesburg
I am not sure the time for colleges has passed. Joel may have comments on the issue. I think we will see some disappear for good. I know Ohio Wesleyan and Lake Forest are hurting. I believe Biden did a great job pumping the economy back up with stimulus packages. He helicoptered money to the constituents and paved the way for more affordable healthcare under the ACA. ACA subsidized till 2025.
The only downfall I see for Biden on the economics side is letting down the railroad works the same as he did with students until this year.
Thanks for the comment.
@run,
Small private colleges, particularly in suburban and exurban settings, have been disappearing for years, either by closing or merging with others. I know of one that was merged with the University of Tennessee. In a few cases, alumni have rallied to keep their college open, but absent a huge increase in philanthropy, this appears to be a holding action.
I did some online teaching for Albany College of Pharmacy for a couple of years as part of a credentialing course in pharmacogenomics, but that doesn’t seem to be happening anymore, and I’ve heard they’re struggling financially (my sister just retired from there).
Even research universities are struggling, since research is always and everywhere a cost center for the university. It is justified by the positive externalities of reputation that can attract better students and faculty (the “good schools” are almost always “good” because they are research powerhouses, something most undergrads don’t see), but ultimately grant funding doesn’t pay the freight. Increasingly, tuition can’t be used to subsidize the research mission anymore, which leaves philanthropy (or margin on the practice, for those universities that operate their own medical school). The research mission is concentrating at universities that have the larger endowments.
861 colleges and 9,499 campuses have closed down since 2004
Hechinger Report – Nov 21
(Maybe has something to do with job-losses in high tech in recent months, if not years.)
Tuition Is Too High: Some Colleges Are Slashing It in Half
NY Times – Dec 14
@Fred,
Thanks for this post. I confirms, with a specific example, what I posted above: that most private colleges and universities is discounted from the published rate. The “reduced tuition” is actually just advertising the actual tuition, where previously the published tuition was a marketing ploy to make the school appear more desirable.
Ultimately, though, the effect on students and parents who go into debt to pay tuition is mostly unchanged. A college education hasn’t gotten much cheaper, the tuition has just become more transparent.
The UMass university system has for ages concerned itself with rising tuition, keeping it ‘affordable’, not succceeding too well probably. But room & board and ‘fees’ are allowed to go up as needed. So, in general, one could assume that attempts to curtail tuition increases will lead to additional charges elsewhere, in colleges & universities public & private, large & small. Those with outsized endowments will survive as best they can.
@Fred,
My alma mater, the University of Tennessee, was not allowed to charge tuition, so it rebranded what everyone else calls “tuition” as “fees.”
My current university employer has been adding fees to keep “tuition” increases moderate. They also built some shiny new dorms, then discovered that students didn’t want to pay a premium to live in them, so students were offered tuition discounts if they agreed to live in the new dorms.
All of which goes to show that if you only pay attention to the top line tuition advertised by the university, you don’t understand the actual business model. And if you think that the advertised tuition reductions have a material effect on student debt, you don’t understand the business model.
Mrs Fred & I graduated from a private polytech, approaching its 200 birthday it occurs to me. Such institutes have quite a bit of corporate donorship, but also successful/wealthy alumni donors. Their biggest donor remains anonymous, gave ‘$360 million, believed to be the largest single gift ever to a university in the United States.’ I believe this is the funding model for private higher-ed. It works.
For Rensselaer Polytechnic, a Record-Setting Gift
NY Times – March 2001
@Fred,
Yes, them that gots, gets. Donors like to donate to wealthy institutions. It’s not the largest single gift–Michael Bloomberg donated $1.8 billion to his alma mater, Johns Hopkins University. As I posted upthread, Shippingsburg (which is mentioned in the original post) has an endowment of $37 million. Rensselaer has a total endowment of ca. $1 billion. It cannot serve as a model for most private higher ed for the simple reason that it is unattainable for most colleges and universities.
The model works pretty well for tech schools and presumably for the Ivy League, it seems.
@Fred,
There are about 2300 four-year colleges and universities in the US. There are eight Ivy League schools. It is laughably unrealistic to propose 2300 Ivys.
The model works for the ‘Little Ivys’ also. And as I said, for the elite tech ‘Institutes’ also.
There is a tendency here in MA to send sons & daughters off to any of the above. And it has been said that Harvard is quite affordable, what with abundant financial aid from the endowment to those who are accepted & need assistance. People also manage to conflate UMass/Amherst with Amherst College, the latter being a premier Little Ivy, the former not so elite.
Bloomburg does like to show off, apparently. That giga donation was many years later, and was indeed a whopper.
Second sentence should read: “It confirms, with a specific example, what I posted above: that most private college and university tuition is discounted from the published rate.”
Do small colleges have a ‘right to exist’?
Not really. But if you care enough about one to help it along, feel free to do so.
My daughter attended an excellent, small, new engineering college.
We continue to donate to them, as does she, in the hopes that they will last.
She had a wonderful experience there, as did her fellow students, many of whom became her lifelong friends. That’s more than Mrs Fred and I can say about RPI, though we still have a few friends there, from fifty odd years ago. (My only truly wonderful experience there was meeting the woman I married, but that certainly counts for something important. But they have a huge endowment, and they can keep themselves going. One of my friends from there told me that was the case way back then.)
How Do We Save Small Colleges?
@Fred,
As I posted above, people like to donate money to institutions that already have lots of money. Donating to a small college actually has more impact per dollar. Development offices have a really hard job separating alumni from their money. I don’t envy them, but the truly skillful among them can work wonders!
Indeed. That has had some appeal for me & Mrs Fred, but in the end, operating a higher-ed institute is a very expensive operation, and my daughter’s choice started off with a sizeable endowment but needs all the help it can get.
In the case of my daughter’s alma mater, eventually there should be wealthy alumni who will kick in big-time, but that will take years. Right now, they just have alumni with stratospheric starting salaries. But some of those alumni have uber-successful high-tech parents who provide support in the interim. (I do not include us in that group; Mrs Fred and I are only ‘comfortable’.)
I know of RPI grads some 20 years after me, who went on to have successful jobs in high-tech – as many others did – but were spectacularly successful and went on to found successful companies of their own, are the source of much of RPI’s cash, and they appear to prefer making a wealthy institute even more so.