Trouble in the College Market

Two-thirds of all US universities are expecting enrollment to decrease in Fall 2020, with obvious impacts to fiscal revenues. For universities already reporting growing fiscal deficits from the initial COVID-impact in the Spring 2020 academic term, the loss of revenues can further compound the sustainability of the modern American university. 

According to the latest statistics from the National Center for Education Statistics, in 2017-18, 94% of all private university revenues were generated from tuition and fees. And, public universities and colleges may also experience greater fiscal woes, as Pre-COVID state subsidies were already shrinking and are forecasted to further decrease in 2020 given the waterfall drop in economic activity is generating less tax revenues. 

Case in point, George Washington University (GWU), a private institution, is reporting a 17% drop in enrollment, nearly 1000 students less than a year ago, and the loss of all their attendant revenue, as reported in Bloomberg News. And, as ZeroHedge aptly confirms our previously asserted forecast:

Bloomberg underscores that it’s “an early indication of the impact of Covid-19 on U.S. higher education” given that families are struggling with the combination of paying pricey tuition and fees for a college experience severely regulated by masks, coronavirus tests, plexiglass barriers, and harsh rules that prevent spending time with groups of friends. 

Perhaps, GWU is just the canary in the coal mine, so to speak, and the entire American higher education landscape may be on the precipice of a fundamental reordering of the modern university institution from which quality will be improved and all stakeholders can benefit. Though in the meantime, a final note of caution.

For those in the marketplace for higher education, be heedful in these times of great disruption. University officials who in an effort to meet enrollment quotas, often offer greater financial incentives, in the form of merit scholarships or grants, to your son or daughter upon gaining admission. Families would be wise to perform due diligence when investigating the fiscal health of universities, even enlisting the advice of professionals, to reasonably predict the risk of closure either during the student’s matriculation or after graduation, which could potentially tarnish the credibility of their degrees before accepting any offer of admission

Top graph from National Association of College & University Business Officers

For more information about how to both plan for and navigate the complex college admissions process in order to minimize the risk of educational malinvestment, contact Creative Marbles Consultancy 

Tagged , , , , , , , , , , , , , ,

About Jill Yoshikawa, Ed M, Partner of Creative Marbles Consultancy

Jill Yoshikawa, EdM, Harvard ’99, a seasoned, 25 year educator and consultant, is meticulous in helping clients navigate all aspects of the educational experience, no matter the level of complexity. She combines educational theory with experience to advise families, schools and educators. A UCSD and Harvard graduate, as well as a former high school teacher, Jill works tirelessly to help her clients succeed.
View all posts by Jill Yoshikawa, Ed M, Partner of Creative Marbles Consultancy →