I recently took part in online presentation by the editors of Inside Higher Education, a prominent journal reporting on all things in higher education. The purpose of the presentation was to advise college representatives how to make college affordable. There were no clear answers.
While tuition rates at public four-year colleges and private colleges have had the lowest percentage increase in 30 years and the average sticker price for community colleges has been frozen in 14 states and many local districts, the fact remains that this is not what parents and students believe to be the case. Their perception is based primarily on reporting in the media that focuses on the extreme cases of graduates carrying $75,000-$100,000 of student loan debt while being unable to find a good paying job. In fact, the average student loan debt is $32,731 (as of the third quarter 2019, Federal Reserve & New York Federal Reserve).
Compounding the public’s perceived extravagances of colleges is the fact that virtually every college in the country is experiencing significant to severe budgetary shortfalls. While the pandemic has certainly been extremely costly to the colleges, one of the editors emphasized, “Most of the issues in higher ed predated COVID-19 and will outlive COVID-19.” He is correct in this because COVID-19 has only made visible the elephant in the room that is the failure of higher education to address serious fiscal issues many years ago.
Why is this important to parents and students planning to attend college or who are already there? As with any problem that is allowed to become more serious over time, the moment when it can no longer be ignored is inevitably painful. In June, Fox Business News reported that a spokesperson for the American Council on Education, the main higher education lobbying group in the United States, told World University Rankings that losses across higher education of $50 billion are probable because of the pandemic.
The Chronicle of Higher Education reports that four-year private nonprofit colleges rely on tuition and fees for about 30 percent of their revenue at a time when freshman enrollment has dropped more than 16 percent from last year and a month into the fall semester, undergraduate enrollment overall was running 4 percent below last year’s levels, according to the New York Times.
Nor is the outlook bright as Moody’s Investors Service just released a report on the fiscal health of colleges and universities and forecast that approximately 75% of private colleges and 60% of public colleges expect net tuition revenue to decline in fiscal year 2021.
The result is that colleges must find ways to reduce costs while at the same time incurring great costs due to the pandemic. This will inevitably impact teaching and services at thousands of colleges across the country. The wealthiest colleges, which typically are also the most selective, will experience the least stress. But state colleges and universities will face serious budget cuts. The Institute for College Access & Success has said that according to the Center on Budget and Policy Priorities, “State budget shortfalls may total about $650 billion over the next several years.”
Small private colleges that don’t have significant financial reserves will be at greatest risk of either closure or merger with a financially stronger college. Edmit, a college advisory company, predicted earlier this year that at least 345 private nonprofit colleges could close or merge within six years.
Therefore, the questions you should be asking as you consider colleges to apply to (or return to) include:
- Is a program/major you are considering likely to be closed before you graduate?
- Are the sizes of classes likely to increase?
- Have there been reductions in faculty and staff? Are any anticipated?
- Has enrollment at the college been stable or increasing in recent years? What was the decline in enrollment entering this academic year?
- In subsequent years, will financial aid that does not include loans be comparable to my first financial aid package?
Unfortunately, colleges probably will be unable to provide definitive answers to any of these questions. Nevertheless, ask the questions. Regardless of the kind of answers you get, these are the kinds of issues to pay attention to when considering any college.