Private Colleges in Distress

Despite the rise in applications to many of the country’s most highly selective colleges and universities, a significant number of small, mostly regional, private liberal arts colleges are suffering and the future is daunting.  Inside Higher Ed recently reported the following:


“Some private colleges that managed to weather the recession are finding new troubles.


So they are announcing layoffs, cutting programs and more. Almost all of these small to mid-sized privates are tuition-dependent and lack large endowments. National declines in the number of traditional college-age population mean students just aren't showing up to privates, which are facing competition from public colleges that are more stable now than a few years ago and the reality that privates cannot afford to indefinitely lure students by cutting prices with generous financial aid packages. And this could become a huge problem.

College presidents, private college trade groups and higher ed consultants blame a confluence of long- and short-term trends for battering some private colleges, particularly the small to mid-sized privates that depend on tuition dollars because they don't have significant endowments.


It’s hard to tell if there is an existential threat brewing that could close a significant number of colleges, as some pundits have grandly predicted. But a sampling of the cuts — primarily driven by falling enrollment — suggests serious challenges for many institutions.


The outside causes of recent troubles are numerous: a decline in high school graduates, worries about loan debt, students looking at college programs that would seem to ensure a job after college, new technology, competition from for-profit colleges, a decline in the amount of government aid, the recent economic downturn, the bond market and, because of some rebounds in the economy, a loss of graduate students coming back to college to get new skills.


Private colleges have their own unique challenges, too: small endowments mean they depend on enrollment to bring in tuition dollars, they have smaller class sizes so can’t subsidize operations with large lectures, they traditionally have mostly tenured faculty, they are often in rural areas with shrinking populations and they are perceived as being unaffordable.”




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