Here’s a lesson for you — it’s called supply and demand. It states that when there’s little demand and your price is too high, you’re in trouble. That’s the dilemma that many US colleges face in the coming years.
Dropping enrollments, financial troubles, and the soaring costs of education have many institutions of higher education at a crossroads. The costs for a four-year college education are starting reach way beyond the capacity of the average household, which means that the days of guaranteed student loans pumping up the numbers may be ending.
The College Board reports that a “moderate” college budget for an in-state public college for the 2013–2014 academic year averaged $22,826. A moderate budget at a private college averaged $44,750. These figures do not include meals, housing, books, or other items necessary to higher education, which can add another $10,000 to $15,000 to your bill for the year.
The notion of college as the automatic passage to the good life is becoming as quaint as a raccoon skin coat and ukulele.
While there are still a record number of applicants for certain schools, all is not rosy in the ivied walls of Academia. College enrollment is falling, and Moody’s Investors Service reports a number of schools are in financial trouble. That means schools may be doomed to close — unless the trend can be reversed.
Add to this the general frustration of Millenials, who can’t find a job no matter what their degree, and it’s clear that the notion of college as the automatic passage to the good life is becoming as quaint as a raccoon skin coat and ukulele.
In fact, the biggest blow to some colleges has yet to fully blossom. Technology has made it easier than ever to educate yourself from a computer, and many schools are investigating the possibilities of opening up their superstar professors to the world of online learning.
If that becomes a viable alternative to spending money for a shoebox of a college dorm, what’s now a trickle of college closing may well become a gusher. After all, you can learn to drink in your local community. You don’t have to pay inflated rent for that privilege.
The Elite Shall Always Be With Us
Yes, there will always be a Harvard, a Yale, a Stanford, and any number of prestigious schools that offer a campus life to the privileged children of the elite. But the handful of elite institutes aren’t the professional schools, smaller private schools, and budget-stretched public universities that will take it on the chin when oversupply meets demand.
A Vanderbilt University study said that four-year private college closings have doubled, from about five a year before 2008, to about 10 in the four years from 2008 to 2011. More are teetering on the brink. Most of the schools that closed were small, with fewer than 1,000 students and average assets of less than $50 million.
(As an aside — also hamstrung by the vanishing private colleges are those who desired a career in academics. Already, many colleges hire only adjuncts, paying them a poverty-level wage for the prestige of running a classroom. Ph.D in Anthropology? Good luck finding a position that’s open).
Where’s it all heading? Millenials are already causing marketers to tear their hair out because of their contrary consumer ways. No longer interested in cars or big houses, the coming generation may also reconsider its options when it comes to college. The population of college-age candidates is going down after a baby boom in the 2000s.
What you’ll have is under-funded institutions chasing a dwindling number of prospects, borrowing from their endowments and increasingly having to price cut on tuition in order to remain viable.
It’s an economic tailspin that has an almost certain ending. And you won’t need a college degree to see that it’s going to end badly.