Showing posts with label National Association of College and University Business Officers. Show all posts
Showing posts with label National Association of College and University Business Officers. Show all posts

Saturday, May 28, 2022

College Enrollments are Down, Tuition Prices are Up & Student-Loan Forgiveness Is on the Way: The Wounded Grizzly Syndrome

 Earlier this week, Inside Higher Education reported that college enrollments have declined for five straight semesters. In the spring 2020 semester--when the COVID epidemic began--the nation's colleges enrolled 17.1 million students. Today, 15.9 million Americans are in postsecondary classes--a decline of 1.2 million students.

Some states saw more significant declines than others, and some saw enrollments grow. California suffered an 8.1 percent decline, the most significant drop among the states.

New Hampshire's student population actually grew after the pandemic hit, mainly due to increased online enrollment. I imagine a lot of that growth can be attributed to the University of Southern New Hampshire, which aggressively markets its online programs.

Businesses operating in a market economy often slash prices when demand falls for their products. But American colleges keep raising their tuition. Boston University--a very pricey institution, will increase undergraduate tuition by 4.25 percent next year. 

BU's tuition rate will be $61,000 for the 2022-2023 academic year. And total cost, including room and board, is almost $80,000. Ouch!

Not to worry, BU tells us on its website. Each year the university awards almost a third of a billion dollars in financial assistance to undergraduates. In other words, BU assures us, most students won't have to pay the sticker price.

Indeed, colleges all over the United States are slashing tuition to lure students through the door. The National Association of College and University Business Officers said that schools are discounting tuition for first-year students by 54 percent on average.

Four out of five undergraduates will get a tuition discount in the coming academic year, NACUBO reported. So if you pay the total price to attend BU, you got suckered.

For more than a quarter of a century, colleges have raised their tuition prices annually above the cost of inflation. But the party is about to end.  

Young people are beginning to wonder if it makes sense to borrow $100,000 or more to get a liberal arts degree from an elite school if their diploma doesn't lead to a good job. 

With inflation running at a 40-year high, most colleges can no longer raise their tuition prices to cover their increased costs. BU's tuition hike of 4.25 percent is below this year's 8 percent inflation rate.

The Biden administration is signaling that it will forgive at least some student debt.  During the election campaign, Mr. Biden promised to grant $10,000 in student debt relief to students from lower-income or middle-income families. According to a recent Washington Post story, Biden will likely keep that promise.

I hate to break the news to you, President Biden. Ten thousand dollars in debt relief ain't nearly enough.  Millions of students have seen their total debt double over the years due to accrued interest. 

Offering to forgive $10,000 in debt to someone who owes $60,000 is like shooting a grizzly bear in the gut. The shot doesn't kill the bear; it just pisses him off.

Ten thousand dollars in student-debt relief won't make anyone happy.






Wednesday, November 25, 2015

Going out of Business Sale!! Prices Slashed!! Everything Must Go!! Colleges that heavily discount student tuition are teetering on the brink of closure

According to a survey conducted by the National Association of College and University Business Officers, private colleges discounted their tuition prices for first year students by an average of 48 percent in 2014. Think of it: on average, a private college now charges only about half its tuition sticker price to its freshman class.

And the discount rate is going up. Inside Higher Ed reported that the discount rate has risen 20 percent in just seven years: from 39 percent in 2007 to 48 percent last year.

Moreover, at many schools, nearly everyone gets a discount. As explained by Inside Higher Ed, 69 percent of the colleges surveyed by NACUBO offered discounts to 90 percent or more of their students last year.

As many experts have pointed out, heavily discounting tuition rates is not sustainable. In fact, heavy discount rates are a sure sign that a college is in trouble. Sweetbriar College, for example, which closed (and then reopened) last year, was discounting its tuition price by 62 percent, but still couldn't attract enough students to keep its doors open.

 NACUBO's survey determined that almost 10 percent of private colleges discounted their tuition prices by an astounding 60 percent, surely a bad sign for all the colleges that discount at that level. “If your discount rate is at 60 percent, that's a very dangerous warning sign,” observed David Breneman, former Dean of the University of Virginia's school of education (as quoted in Inside Higher Ed).  “If you were any other business of any other sort [you wouldn’t] think you were in a very good position.”

What does this mean for higher education in general? At least three things:

1) First, a liberal arts education at a non-elite private college is not worth what colleges have been charging, and everyone knows it.

2) Second, heavy discounts are destroying colleges' credibility.  When 90 percent of students are getting a discount and when discount rates average nearly 50 percent, everyone know that colleges have posted deceptive sticker prices for their tuition. They've become like Texas fireworks peddlers: "Buy 1 and get 6 free!"

3) Third, a lot of small, nondescript private colleges will close in the coming years. A Moody's report on colleges' financial viability predicted that college closures will triple by 2015, which would mean about 15 colleges will close that year. But surely that figure is too conservative.

Personally, I think we will see many private liberal arts schools closing in the coming years. The economics of getting a liberal arts degree from an obscure private college just don't make sense anymore. In fact, if it weren't for the federal student loan program, which is propping up the private-college sector, half of them would be closed already.

Image result for "fireworks stand" images
Discounting college tuition prices: Buy 1, Get 6 free!

References

Kelly Woodhouse. (2015, November 25). Discount Much? Inside Higher Ed. Accessible at: https://www.insidehighered.com/news/2015/11/25/what-it-might-mean-when-colleges-discount-rate-tops-60-percent?utm_source=Inside+Higher+Ed&utm_campaign=389f6fe14e-DNU20151125&utm_medium=email&utm_term=0_1fcbc04421-389f6fe14e-198565653