Moody's Investor Services reported recently that 1 in 5 small, private colleges face "fundamental stress" and that as many as 15 colleges will close by the end of the year (as reported by CNBC.com). Small liberal arts colleges in the Midwest and New England are particularly under pressure, and four
Vermont colleges have closed within the past year.
What's going on?
First, changing demographics provides part of the explanation. There are simply fewer people in the traditional college-going age, and this population decline is especially acute in rural areas where a great many small colleges are located.
Second, tuition costs have risen sharply in recent years, and potential students and their parents are experiencing sticker shock at the prospect of paying $60,000 to $70,000 a year to attend a small, liberal arts college. Even though liberal arts schools have been discounting their tuition by 50 percent or more, these slashed tuition rates are still often higher than the cost of attending a public university.
Finally, fewer students want to study liberal arts, which has traditionally been the core mission of small, private colleges. For example, the University of Tulsa, a highly regarded private university, is shifting its mission from liberal arts to science and technology and intends to cut 40 percent of its programs--primarily in the humanities and natural sciences--in order to focus on STEM-related academic programs.
Without question, many small, liberal arts colleges are facing an existential crisis, and they have tried a variety of strategies to boost their enrollments. Some have invested in athletics programs, hoping to attract students who are interested in sports. Others have rolled out new vocation-based majors like criminal justice, sports management, and business administration.
But these tactics are often unsuccessful. A college that was founded to be a traditional liberal arts institution often finds it difficult to break into new areas of study, particularly those fields that have been offered by public universities for decades.
Furthermore, new majors usually require new faculty members--and that costs money. Colleges cannot easily lay off tenured liberal-arts professors s in order to replace them with business and criminal-justice professors. Schools that try to cut faculty positions in order to balance their budgets often run into threats of litigation, as the University of St. Thomas in Houston recently discovered.
A fair number of private colleges are going to fail in the coming years, regardless of the tactics they employ to boost their enrollments. Obscure liberal arts schools with religious affiliations seem especially vulnerable because the millennials are far more secular than previous generations. Many young people have no interest whatsoever in religion. Moody's estimate of a 20 percent attrition rate may understate the crisis.
While shopping for a college, potential students and their parents need to realize that the small, liberal arts college they may be considering could be closing in the near future. Does anyone want to take out student loans to attend a college that could be shutting its doors within the next five or ten years?
Showing posts with label Moody's Investor Services. Show all posts
Showing posts with label Moody's Investor Services. Show all posts
Wednesday, December 11, 2019
Friday, November 11, 2016
Tiny liberal arts colleges are dead. They just don't know it. 15 small-college presidents meet in New York City.
My father was a fighter pilot in the Army Air Corps in December, 1941, stationed at Clark Field in the Philippines. He often told this story about his introduction to World War II.
About two weeks before the Japanese attacked Pearl Harbor, my father told me, his commander called all the young airmen together for a meeting.
"Make out your wills and get your affairs in order," the commander told the pilots. You are not dead yet, but most of you will be soon."
And the commander was right. My father's P-40 fighter plane was bombed on the ground when the Japanese attacked Clark Field a few hours after the Pearl Harbor attack. Six months later, my father was captured on the Bataan Peninsula, along with the entire American army. He experienced the Bataan Death March and spent the rest of the war in a Japanese concentration camp. Two thirds of his fellow prisoners died while in captivity.
I thought of my father's story as I read an article about a recent meeting of 15 presidents of the nation's smallest liberal arts colleges, which took place in New York City last June. All 15 presidents represented institutions with 800 students or fewer.
Rick Seltzer of Inside Higher Ed reported on the meeting, from which I gathered the presidents concluded that their colleges are doing a great job educating young people. The problem, from the presidents' perspective, is poor public relations; the public simply does not realize just how neat and special these colleges are.
Thomas O'Reilly, president of Pine Manor College (about 450 students), said this about his institution: "We're small enough that we can work with a handful of students, and if it works for them, it can be quickly spread across the rest of the programs we're offering.. If it doesn't we can quickly stop--just as importantly--without having made a major investment."
OK, I got it. Small liberal arts colleges are nimble, and that's why they're special.
Mariko Silver, president of Bennington College, another micro institution, said the nation was focused overmuch on scaling up higher education without appreciating the small colleges. "One of the things that I feel makes American higher education the envy of the world is a real diversification of institution types--an ecosystem."
Nice talking points, Mariko! Everyone in higher education likes to be reassured that American colleges are the envy of the world.
But in fact, the tiny liberal arts colleges are on the verge of extinction. A few small liberal arts colleges will survive and even thrive: those with large endowments or sterling reputations like many of the small liberal arts colleges in New England. And small colleges that excel in nursing or health care will probably be fine.
But tiny colleges with 800 students are fewer cannot long survive, in my opinion. As my father's commander might have put; they are dead and just don't know it.
I don't say this with any pleasure. The microbrew college presidents are probably right to say there is a distinct value to receiving a liberal arts education at a small college. But the economics of higher education today simply won't allow the small liberal arts colleges to survive. In 2015, Moody's Investor Service predicted that college closings would triple by 2017.
And Moody's prediction is too conservative. Of the 15 colleges represented at the New York City meeting last June, I predict half will close within five years. Shimer College, for example, has fewer than 100 students. Who thinks it will still be open in 2022? Shimer is in Chicago. I'm surprised Shimer's president could afford to travel to New York City.
Apart from all the other challenges small liberal arts college face, they simply can't survive in a world of ever increasing state and federal regulations. And here's an example.
In a case decided by the Second Circuit Court of Appeals last May, Michele Dziedzic sued SUNY Oswego for sexual discrimination under the Civil Rights Act of 1964 because she was transferred from the paint department to the plumbing department. The plumbing department, in her view, was "less prestigious" than the paint department, which she maintained was an elite unit. Dziedzic also said she had suffered from a hostile working environment due to sexual jokes and racy pictures that she was forced to endure when she collected her mail from a mailbox in the men's locker room.
I am not belittling Ms. Dziedzic's grievances. She may very well have been transferred to the plumbing department for nefarious reasons, and being forced to visit the men's locker room to collect her mail may have been humiliating.
But is this a federal case that must travel to the Second Circuit Court of Appeals? The suit may not have cost Ms. Dziedzic much; she represented herself. But SUNY Oswego was represented by four lawyers!
How many suits like that could an institution like Shimer College or Pine Manor College endure? Not many.
At my own institution, I signed a form awhile back certifying that I had read a safety memo informing me that it is dangerous for university students or employees to text on their cell phones while walking on campus. I imagine this memo was spawned by some state or federal safety regulation. How much did my university spend warning students and employees not to walk while texting?
In recent years, the U.S. Department of Education has issued "Dear Colleague" letters that dictate how colleges manage their restrooms and their student grievance procedures. Each of these "Dear Colleague" letters imposes a financial burden on coleges and uniersities.
And the colleges don't push back on the ever tightening noose of federal regulation because they are all addicted to federal student aid money.
I will be sorry to see the small liberal arts fade away like old soldiers. But I feel sorrier still for students who take out student loans to attend these dying institutions--institutions that may well be closed before their graduates pay off their student loans.
References
Dziedzic v. State University of New York at Oswego, 648 Fed.Appx. 125 (2d Cir. 2016).
Rick Seltzer. Leaders consider future of tiny liberal arts colleges. Inside Higher ED, November 11, 2016.
Kellie Woodhouse. Moody's predicts college closures to triple by 2017. Insider Higher ED, September 28, 2015.
About two weeks before the Japanese attacked Pearl Harbor, my father told me, his commander called all the young airmen together for a meeting.
"Make out your wills and get your affairs in order," the commander told the pilots. You are not dead yet, but most of you will be soon."
And the commander was right. My father's P-40 fighter plane was bombed on the ground when the Japanese attacked Clark Field a few hours after the Pearl Harbor attack. Six months later, my father was captured on the Bataan Peninsula, along with the entire American army. He experienced the Bataan Death March and spent the rest of the war in a Japanese concentration camp. Two thirds of his fellow prisoners died while in captivity.
I thought of my father's story as I read an article about a recent meeting of 15 presidents of the nation's smallest liberal arts colleges, which took place in New York City last June. All 15 presidents represented institutions with 800 students or fewer.
Rick Seltzer of Inside Higher Ed reported on the meeting, from which I gathered the presidents concluded that their colleges are doing a great job educating young people. The problem, from the presidents' perspective, is poor public relations; the public simply does not realize just how neat and special these colleges are.
Thomas O'Reilly, president of Pine Manor College (about 450 students), said this about his institution: "We're small enough that we can work with a handful of students, and if it works for them, it can be quickly spread across the rest of the programs we're offering.. If it doesn't we can quickly stop--just as importantly--without having made a major investment."
OK, I got it. Small liberal arts colleges are nimble, and that's why they're special.
Mariko Silver, president of Bennington College, another micro institution, said the nation was focused overmuch on scaling up higher education without appreciating the small colleges. "One of the things that I feel makes American higher education the envy of the world is a real diversification of institution types--an ecosystem."
Nice talking points, Mariko! Everyone in higher education likes to be reassured that American colleges are the envy of the world.
But in fact, the tiny liberal arts colleges are on the verge of extinction. A few small liberal arts colleges will survive and even thrive: those with large endowments or sterling reputations like many of the small liberal arts colleges in New England. And small colleges that excel in nursing or health care will probably be fine.
But tiny colleges with 800 students are fewer cannot long survive, in my opinion. As my father's commander might have put; they are dead and just don't know it.
I don't say this with any pleasure. The microbrew college presidents are probably right to say there is a distinct value to receiving a liberal arts education at a small college. But the economics of higher education today simply won't allow the small liberal arts colleges to survive. In 2015, Moody's Investor Service predicted that college closings would triple by 2017.
And Moody's prediction is too conservative. Of the 15 colleges represented at the New York City meeting last June, I predict half will close within five years. Shimer College, for example, has fewer than 100 students. Who thinks it will still be open in 2022? Shimer is in Chicago. I'm surprised Shimer's president could afford to travel to New York City.
Apart from all the other challenges small liberal arts college face, they simply can't survive in a world of ever increasing state and federal regulations. And here's an example.
In a case decided by the Second Circuit Court of Appeals last May, Michele Dziedzic sued SUNY Oswego for sexual discrimination under the Civil Rights Act of 1964 because she was transferred from the paint department to the plumbing department. The plumbing department, in her view, was "less prestigious" than the paint department, which she maintained was an elite unit. Dziedzic also said she had suffered from a hostile working environment due to sexual jokes and racy pictures that she was forced to endure when she collected her mail from a mailbox in the men's locker room.
I am not belittling Ms. Dziedzic's grievances. She may very well have been transferred to the plumbing department for nefarious reasons, and being forced to visit the men's locker room to collect her mail may have been humiliating.
But is this a federal case that must travel to the Second Circuit Court of Appeals? The suit may not have cost Ms. Dziedzic much; she represented herself. But SUNY Oswego was represented by four lawyers!
How many suits like that could an institution like Shimer College or Pine Manor College endure? Not many.
At my own institution, I signed a form awhile back certifying that I had read a safety memo informing me that it is dangerous for university students or employees to text on their cell phones while walking on campus. I imagine this memo was spawned by some state or federal safety regulation. How much did my university spend warning students and employees not to walk while texting?
In recent years, the U.S. Department of Education has issued "Dear Colleague" letters that dictate how colleges manage their restrooms and their student grievance procedures. Each of these "Dear Colleague" letters imposes a financial burden on coleges and uniersities.
And the colleges don't push back on the ever tightening noose of federal regulation because they are all addicted to federal student aid money.
I will be sorry to see the small liberal arts fade away like old soldiers. But I feel sorrier still for students who take out student loans to attend these dying institutions--institutions that may well be closed before their graduates pay off their student loans.
References
Dziedzic v. State University of New York at Oswego, 648 Fed.Appx. 125 (2d Cir. 2016).
Rick Seltzer. Leaders consider future of tiny liberal arts colleges. Inside Higher ED, November 11, 2016.
Kellie Woodhouse. Moody's predicts college closures to triple by 2017. Insider Higher ED, September 28, 2015.
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