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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe number of distressed institutions in higher education is up 70 percent in the United States compared to a decade ago, according to a report by Bain and Co.
About 910 schools met at least one risk indicator such as declining tuition revenue or number of applications, the report released Monday said. About 364 schools met four or more indicators.
Authors of the report attributed the schools’ challenges to factors including inflation, higher interest rates, the threat of tuition cuts during a recession and declining domestic enrollments.
Their analysis of over 1,500 schools shows improvement with the outbreak of the coronavirus when colleges and universities received $76 billion in stimulus to help cushion enrollment declines. But with that aid set to expire, the authors expect the sector’s overall stability to fall below pre-pandemic levels within three years.
“The industry really needs to continue to rethink itself,” said Jeff Denneen, global head of Bain’s higher education practice and one of the authors of the report. The top tranche of schools will likely be stable. “For everybody else, they’re going to hit a wall coming out of covid,” he said.
The pool of students graduating from high school in the Unites States is expected to peak in 2025 at 3.9 million before sliding back down to 3.5 million over the following decade, according to a 2020 report by the Western Interstate Commission for Higher Education.
Macroeconomic factors, such as inflation and rising interest rates, have also exacerbated problems by driving up costs for colleges. The threat of a recession could then force schools to slow tuition hikes, offer more financial aid, and make cuts into endowments.
Elite private schools and members of the Ivy League are in a “substantially” stronger position thanks to reputation, enrollment growth, healthy reserves and larger endowments, the report said. Large public universities may struggle due to weaker margins, but the highest risk is concentrated among smaller private and public schools.
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Excellent news. Colleges should feel the pain for abdicating their responsibility to offer a truly liberal education. With few exceptions, most of them are just devolving into cult training camps. With consequences that are obvious as we struggle to find young people suitable to enter the workforce.
If enough colleges feel the pain and go bankrupt, the others might finally feel the pressure to reform themselves.
It’s a shame that the Ivy Leagues are likely to remain resilient, but we can hold out hopes that they too will retreat from the risk of collapse.
It’s sad that some people resent the value of a college education as much as you clearly do.
Thanks Riley. I appreciate it. College education no longer has a great deal of value, certainly not in relation to the soaring price tag, which is one of the reasons enrollment is in a steady decline…and why so many of these schools have completely earned their financial hardship.
This is the point where you’re supposed to call me “anti-intellectual” for not agreeing with the cult-like behavior that is now the status quo among most universities.
Well said on both fronts Lauren.