Recently, the Wall Street Journal ran an article on enrollment declines facing private colleges that may lead to closures and mergers. The story is right on, but it made me wistful because I pitched a similar story to almost every business publication out there five years ago or so.
Such is the life of a freelancer!
Several things are happening. Birth rates started declining in 1995, when the current crop of college freshmen was born. Endowments have been hit hard by the financial crisis. Families are stretched between low returns on savings and low increases in income, so they are demanding more financial aid. Finally, when people look at the unemployment rates in this recession, they are asking hard questions about tuition costs and student loan burdens relative to starting salaries.
Then, you can throw in a few more variables: the population is moving westward, but private liberal arts and religious colleges are disproportionately located in the East and Midwest. People are marrying at later ages, so the potential benefit of finding a marriage partner in your state or who shares a religious denomination is less important. Americans lead non-linear lives, so flexibility in education is important – and most traditional four-year colleges are not set up for flexibility.
The net effect is that too many private colleges have become to expensive to remain competitive in a changing market, and that means that some will close and others will merge. The winners will be the private colleges with huge endowments and state universities. Yes, public universities are facing massive budget cuts, but they are usually a good value even as they increase tuition – especially relative to a college that is close to closing its doors.
It’s going to be interesting to watch.
