In the period between 2016 and 2019, 86 colleges merged with other schools or completely closed down. In contrast, between 2019 and 2020 alone, 53 colleges closed permanently. This is a drastic increase and it isn’t something that came out of nowhere.
From 2019 to 2021 undergraduate enrollment has dropped 7.8%. This is the largest decrease in enrollment in over 50 years. Even now, there are fewer students enrolling in 2022 than there were in 2020. This, along with the increased rate of schools closing, is the consequence of a few factors.
Education is getting more and more expensive every year, and not proportionally, 73% of those with an undergraduate degree don’t even have a job within their major’s field. Degrees are steadily losing their value in relation to the past. This has created a major drop in interest with 43% of high school students wanting to go to a four year institution, a 23% drop from just 2019.
The pandemic has also only served to make this issue worse. 56% of students said they lost the ability to afford college in 2020, 49% of those students said it was because of COVID. This is no surprise when 36% of parents used part of their children’s college funds to weather the financial impacts of the pandemic. It was a big decrease in many people’s finances.
Community college has consequently become much more popular, with 28% more people saying they’re wanting to attend compared to before the pandemic. This follows from the fact that most four year institutions have taken on major financial restraints and many have increased their price because of that fact.
And the rising costs of college aren’t consequences of the greed of these institutions. Colleges operate at notoriously thin margins, Lasalle University having a 2.6% margin for example. While some colleges, like Yale, can afford to have higher margins and enrollment prices. Not every college is going to be as prestigious as an Ivy League, nor should they be.
Many colleges have large endowments to help keep their operations running smoothly, these are financial assets that the college should not aim to spend much of. Spending less than 5% shows the good health of a college, spending more shows the bad health. It’s the endowment funds that go towards important things like research and financial aid though, so it’s a hard balance to strike.
Colleges spending more, lowering their tuition, and offering self-defeating benefits to new students are typically not in a good place. Colleges may typically shutdown over a few months or years, but it’s not unheard of for it to happen immediately. It’s important for every student to look at their colleges health and understand the risks.
Although most colleges aren’t at risk of closing within the next year, or even the next few. There is a general downward trend for higher education. People are unhappy with how much they’re paying compared to how much they’re getting out of their degrees. This is not unfounded. COVID was a big factor in the downward trajectory of many colleges but many are not seeing a proper return to form. Higher education may just need a reevaluation in current day society.