Melody Rose

Rose, Ph.D., of Rose Strategies, LLC, is a consultant for higher-education and nonprofit institutions.

Hearts are broken again in Oregon with the news of another college closure. While it may seem that the closures hitting our fair state are unexpected, the east coast and Midwest have been experiencing these losses for some time. And the trend is not likely to let up.

Like many other sectors, higher education is facing major disruption through this fourth industrial revolution. Understanding this disruption and why it leads to the current trend of college closures requires an explanation of the challenges the industry faces. Having overseen the seven public universities as chancellor of the Oregon University System, and later working as president to bring the small, struggling Marylhurst University to a graceful end, I have experienced these trends up close. Now as a consultant working nationally to provide college boards and presidents the insights they need to be future-ready, I see universities struggling with these trends every day.

We can easily separate the pressures colleges face into two categories: supply challenges and demand challenges.

Nationally, demand for a college degree has waned. There are nearly three million fewer college-going students than there were in 2011 at the nation’s peak enrollment, due to declining birth rates and other factors. This fact forces colleges to scramble to attract fewer students, which is in part why we see more aggressive enrollment practices. For smaller colleges, which may rely on tuition for more than 90% of their revenue, even a small fall-off in matriculation can have a sudden, devastating impact on financial sustainability.

Demand for higher education at four-year institutions is also threatened because students and their families are beginning to question the value of a four-year degree versus the price they pay for it. In the wake of the Great Recession, the new generation is simply more price-sensitive than previous students, and they want to know their education will result in a job. Colleges with low brand recognition or unclear linkages to employment struggle particularly within this environment.

Finally, suburban and religiously-affiliated colleges are less popular today for most demographic groups, adding even more challenges for colleges in these categories.

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These demand-side challenges for America’s colleges and universities are met with equally daunting supply-side hurdles. While it may seem as though the supply of colleges is going down through closures, that slide is not happening in proportion to the loss of students overall. And what is more: there is new competition for America’s traditional four-year institutions.

About half the states in the nation are in the process of extending the right to confer bachelor degrees to their community colleges, creating new competition for the four-year institutions. In the 2019 legislative session, Oregon took a step in that direction with SB 3, which allows Oregon's 17 community colleges to offer applied baccalaureate or targeted four-year degree programs, subject to approval by the state’s Higher Education Coordinating Commission. And what is more, corporate America has also stepped up to provide job-ready educational offerings that provide training and often direct entry to employment. Neither of these trends is expected to taper off soon.

The pressures described above will not abate soon. The decline in the aggregate number of high school graduates is actually expected to accelerate in 2025, when the babies born in 2007, the start of the Great Recession, become college age. As we might expect, the overall U.S. birth rate took a steep decline that year and has never recovered.

These trends show up in the Northwest in interesting ways. On the one hand, the population in Oregon continues to climb, though at a slower rate. Rising population is due in part to in-migration from chillier climates, where the college closure trend originated. As well, there are certain sub-populations, such as the Hispanic, Asian and Pacific Islander communities, with birth rates that will provide for more college-eligible young people. Oregon also claims a significant number of adults with college credits but no degrees. Oregon colleges and universities are wisely responding to these growth opportunities in their marketing and student support efforts, and some have pursued strategic affiliations that will see them through a period of stagnant (or even declining) enrollment.

Unfortunately, we should steel ourselves for more contraction in the industry. Regulators and policymakers are trying to anticipate this continued trend while contemplating changes that would better protect students and employees in such cases. As we await those protections, the closure trend will sadly continue nationwide. We must extend grace to all affected. Through transfer agreements and employee off-boarding, college boards facing closure decisions should hold students and employees at the heart of their decision-making.