Private Colleges in Peril: Financial Pressures and Declining Enrollment May Lead to More Closures
Financial pressure is leading to more and more colleges closing or considering closure. To those who work closely with the financial health of their financial institutions, closure is becoming a genuine possibility. Between 2016 and 2018, the confidence from private college’s CFO’s about their institution’s financial future dropped from 54% to 44%.
Where is this financial pressure coming from, and why are the student’s not enrolling? There are many factors contributing to these two issues, and it doesn’t look like there is a single solution for both problems.
Affordability and Recruitment Efforts
Public colleges are not receiving substantial funding, and their budgets are shrinking. So how are they still attracting more students and at lower prices? The model they’re using is playing on a concept that is so hard for private colleges to understand.
Lower tuition prices bring in more students. It’s like ordering higher education off the dollar menu. However, the affordability isn’t the only contributing aspect to consider in this bit. Public colleges are also able to put more effort into recruitment.
Where private colleges may advertise online, through content marketing, or even on TV, a public college has an entire region. They have the name of the state behind them, are often deeply connected with high schools throughout the area, and they reach students before they graduate. Their recruitment efforts make it seem like the natural next step for high school students.
The Free Tuition Movement
Even throughout the early 1960s, tuition was affordable in most states. Now, almost 50 years later, tuition has hit an unattainable amount. Students who graduate now will live in debt for years if not decades. It’s gotten so extreme that many politicians who remember the days of affordable higher-education, are trying to make changes.
Numerous states are involved in setting the stage of a free-tuition movement. New York, leading the nation, began offering “tuition-free” education for lower and middle-class students.
Do Private Colleges Stand a Chance?
While there have been significant fluctuations in private colleges ability to thrive before, they may likely bounce back from this decline. However, financial management is only one aspect of repairing the private college’s standing.
Not only do private colleges need to put greater consideration into their financial management but they also need to keep their tuition affordable as well. These contradicting needs put CFO’s and other financial managers in a tight spot.
Many recommend that private colleges increase their efforts in recruitment and become more involved with their students and high schools in the region. Working with local schools will no doubt increase exposure, but it also means entering a highly competitive market.
While private colleges struggle with navigating these troubled waters, there seems to be little hope for their recovery.