Tuesday, March 5, 2019

Wall Street Journal op-ed: America’s Disappearing Private Colleges, by Allen C. Guelzo (Gettysburg College):

Over the past decade, the idea that the higher-education bubble is about to burst has been waved away as headline pessimism or conservative sour grapes over the leftward drift of college faculties. Yet the biggest threat to higher education comes not from rising tuition or political bias but demographics. The Great Recession not only played havoc with financial markets and subprime mortgages; it persuaded anxious adults not to have children. Birthrates plunged by almost 13% from 2007 to 2012, and the Centers for Disease Control and Prevention believes fertility could fall further.

In “Demographics and the Demand for Higher Education,” economist Nathan Grawe finds that the “birth dearth” will cost America 650,000 people of college age in the 2020s. At the prevailing rate of college attendance, which has plateaued at 65% in the past decade, that means 450,000 fewer U.S. college applicants. Hardest hit, unfortunately, will be those areas most populated by private colleges: New York, Pennsylvania, New England and around the Great Lakes.

There are approximately 1,800 private four-year degree-granting institutions in the U.S., including some of the most visible names in elite education, such as Stanford, the Massachusetts Institute of Technology, Duke and the schools of the Ivy League. But the vast majority are more like Concordia. These schools may be long on history, but they’re short on money and shorter on students. ...

As the pool of college-bound students shrinks, elite schools will recruit more from populations once left to the smaller regional colleges. That will leave the small colleges with fewer candidates to recruit, and less in student-aid enticements to keep applicants from being sucked away by big-name schools.

marvard Business School’s Clayton Christensen expects half of all U.S. colleges and universities—not private ones, all—to close or go bankrupt in the next decade. That’s a worst-case scenario. But even the gentlest estimate, from Moody’s, is that 15 private colleges will close each year, causing major problems for local economies. Overall, Mr. Grawe expects small four-year colleges to shed some 9,000 faculty and staff positions over the next decade.

“Free college for all” may deliver the coup de grâce. Several proposals to eliminate tuition for some or all students have emerged from the Democratic Party, most notably in 2016 from Sen. Bernie Sanders and Hillary Clinton.Sen. Brian Schatz’s Debt Free College Act of 2018 is only the latest idea. These programs would benefit almost exclusively students at public universities. Students who might consider private colleges like Franklin & Marshall for $50,000 a year or Rosemont for $32,500 would find the prospect of a tuition- or debt-free education at a public university more appealing. That would be an inestimable loss, not least since so many of the small colleges are vigorous outposts of traditional liberal-arts education.

https://taxprof.typepad.com/taxprof_blog/2019/03/americas-disappearing-private-colleges.html