The Hazards Ahead

The week is full of bleak educational news. Take a look:
A Forbes story, “The Coming College Bubble”, forsees a world of trouble for Higher Education’s economic fortunes:

According to a September 2008 study by the National Association of Independent Colleges and Universities, of the 504 member institutions surveyed, one-third said the credit crunch had hurt enrollment, and about a fifth of respondents said they had fewer returning students than expected. Roughly the same number said they had a smaller incoming freshman class than expected.
But while head counts slide, needs rise. Demand for student aid is up, but charitable donations from foundations and individuals will fall during a downturn. Ditto for investment returns. And thanks to tanking tax revenue, federal aid may take a hit, too. Taken together, many independent institutions start to look vulnerable.

There’s undountedly a bind emerging for a fair number of private universities. What are prospective students to do?
USA Today has an answer, in “Tight Times Boost Public Colleges” reporting that applications at many public colleges are reaching signature heights:

Binghamton University, the most selective campus in the State University of New York system, says applications are running 50% ahead of last year. The 23-campus California State University system reports a 15% increase.

That’s a useful rejoinder to inflated private university costs, and particularly, the Forbes story suggests, a particular blow to colleges heavily invested in the amenities race (gyms, lavish dorms, new buildings). This isn’t to suggest that public colleges are a secure haven against increasing costs; in fact, they’re most likely to raise tuition amidst economic trouble. The Baltimore Sun reports in “Cost of College Rises Across U.S” an increase of 6.4% in the average cost of a 4-year public university this year. Much of this might be explained by residual tuition bloat, but, as states slash education subsidies in the face of declining revenue, tuition increases look certain at many public colleges.
Any hope in this? Well, not much, especially given the still-parlous state of the student loan market. Difficult times seem inevitable for all but the most affluent colleges, and for most prospective students. The question is whether they’ll provide any lesson to the spendthrift higher education sector. If many colleges are forced to reconsider buy-to-the-top strategies, and the galloping tuition increases that they require, we mgiht see some lasting benefit. Given the force of recent trends, however, there’s no telling how long a downturn we’d need to achieve that.


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