I attend a small, all women’s, liberal arts, private college in upstate South Carolina. During the last week of classes, the president held a meeting to announce that a committee had been formed to research the possibility of the school transitioning from single gender to co-ed.
Students were outraged. They threatened to never donate and that their alumni relatives would pull their donations. They complained about other issues that should be fixed first before taking this drastic measure. But here’s the thing: private colleges across the nation are facing this same dilemma — adapt or close.
According to Ernst & Young, a Parthenon affiliate, there are several risk factors for small, private colleges. These risk factors include enrolling fewer than a thousand students, a lack of online education programs, tuition increases greater than 8 percent, tuition discounts greater than 35 percent and reliance on tuition for 85 percent or more of revenue.
Most private colleges, with the exception of the elite, rely on tuition for most of their revenue. Elite private colleges don’t have to rely on tuition because of their generous endowments. However, small colleges have modest endowments, with tuition increases that follow in size with the rest of the country’s institutions. In order to compete with other schools for enrollment, they offer large discounts to students, which decreases the amount of money they are bringing in.
On top of these issues, enrollment is expected to decrease dramatically in the next decade. In fact, this decrease has already begun. Since 2010, enrollment at small colleges (with under 1,000 students) has dropped by 5 percent. This is due to a decreasing demographic of college-aged students. There was a nationwide reduction in fertility during the onset of the Financial Crisis in 2008. As the economy improved after the Recession, fertility rates did not; they continued to drop through 2016.
This means that, in the coming years, there will be fewer college-aged students enrolling in higher-education programs. If these trends continue, it is projected that there will be a more than 10 percent reduction in college enrollments by the end of the 2020s. As fewer students apply, colleges will have to increase the number of discounts they offer, in order to remain competitive.
Another major issue is what Harvard Business Professor Clayton Christensen coined “disruptive innovation,” a business term that refers to an innovation that eventually disrupts an existing market and value network. Just as steam ships were to transatlantic travel in the 1810s, online education is now to traditional higher education institutions.
Larger institutions learned early on that offering online courses was critical if they wanted to remain competitive. However, many small, private colleges do not offer online programs. A lack of online programs prevents smaller colleges from reaching the adult, working demographic of potential students.
There are ways for small, private colleges to adapt and prevent this possibility. A 2016 Ernst & Young report outlines some of these strategies, mainly emphasizing collaboration between institutions. According to the report, “What is most needed for this new era is a change in mindset among higher education leaders: they need to stop thinking that the only path forward is one that they take alone.”
The report found that there are two motivations behind collaboration: survival and opportunity. Most small, private colleges that are struggling would be motivated by survival. These collaborations can sometimes mean an unequal partnership.
However, most of the time, there is a joint concern for both organizations to grow and to use the collaboration as a platform for growth. The main focus is also usually not financial but providing students increased access to academic resources. The report interviewed leaders at institutions who had collaborated and laid out a three-step plan for executing the process.
But what do closing and collaboration mean for students, and how can they get involved?
First of all, if your school is facing the possibility of closing, or a big change that you don’t want, then go to town hall and information meetings. Find out exactly why the change is happening and listen to your leaders. They are most likely just as scared about the change as you are. Then, do your own research. Look for other institutions who faced similar situations and find out what they did — or didn’t — do. Finally, get together with fellow students and let your voices be heard. Make sure to use the research you have done to back your arguments.
If your school does close, there are steps you can take to ensure your financial safety and finish your degree. To complete your degree, make sure you transfer whatever credits you can to another institution. Issues might arise with this if the institution doesn’t take certain credits you’ve earned or if you want to do a student loan discharge.
A student loan discharge is when your loans are cancelled upon the closing of your school if the closure prevents you from completing your degree. That is why, if you can transfer your credits, you can’t apply for the student loan discharge.
If your school closed due to fraudulent behavior, you can apply for a defense to repayment, which will forgive your loans. This applies to both currently enrolled students and graduated students.
Unfortunately, there is no solution to those who have private student loans. However, if the school closes because of misconduct, there may be legal action that you can take, which comes with its own consequences.
There are more options, but each student’s situation is different. Do research to find the solution that is right for you.
The changing dynamics of higher education is scary but if schools and students are able to adapt and collaborate, then they will be able to work themselves out.