Death Spiral" - Harvard Professor Predicts Up To Half Of US Universities May Fail In 15 Years

<p>Dowling College (on Long Island), which got a failing grade for its financial resources from accreditors last month, epitomizes the growing plight of many small private colleges that depend almost entirely on tuition for revenue. It’s been five years since the recession ended and yet their finances are worsening. Soaring student debt, competition from online programs and poor job prospects for graduates are shrinking their applicant pools.
As the debt loads and poor payoffs finally meet market forces...</p>

<p>“What we’re concerned about is the death spiral -- this continuing downward momentum for some institutions,” said Susan Fitzgerald, an analyst at Moody’s Investors Service in New York. “We will see more closures than in the past.”</p>

<p>But Harvard Business School professor Clayton Christensen has much more dire warnings of the technological shift...</p>

<p>as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years. The growing acceptance of online learning means higher education is ripe for technological upheaval, he has said.</p>

<p>“I’m not sure a lot of these institutions have the cushion to experiment with how to stay afloat,”</p>

<p>...</p>

<p><a href="http://www.zerohedge.com/news/2014-04-14/death-spiral-harvard-professor-predicts-half-us-universirites-may-fail-15-years"&gt;http://www.zerohedge.com/news/2014-04-14/death-spiral-harvard-professor-predicts-half-us-universirites-may-fail-15-years&lt;/a&gt;&lt;/p>

<p>Surprise, surprise…</p>

<p>Sounds to me like market forces at work.</p>

<p>Rather than “failing” if the trend is toward more online offerings, I would think that many colleges would figure out how to capitalize on that demand. </p>

<p>I checked out the college mentioned in the article – Dowling – it’s a small commuter college. More than one-third of its students opt not to return for a 2nd year; only about a third manage to graduate after 6 years. So it’s not doing particularly well as a 4-year traditional college as it is.</p>

<p>But it offers an aviation program in conjunction with the local airport – which is somewhat unusual (only about 30 colleges nationwide with similar programs).</p>

<p>It has an early college program geared to local high schoolers. </p>

<p>It has a business school with an MBA program geared to non-traditional students.</p>

<p>It has an education school that offers a doctoral degree (Ed.D) in education management.</p>

<p>So maybe it survives by specializing more and trimming back or eliminating some of its more general program, along with riding the wave toward more on-line and distance offerings. </p>

<p>I don’t know anything about the school beyond what is on its web site, so maybe those ideas don’t work – for example, maybe the specialty programs are actually a drain on their finances and they need a different plan. But bottom line, when the going gets rough for any business, it’s time to make changes. Some schools will probably be very successful in modernizing in ways that keep them afloat --though 20 years from now they may look very different than they do today. </p>

<p>We are, as we are all aware, in the beginnings of the education revolution.</p>

<p>Check out this online CS degree from Georgia Tech.</p>

<p><a href=“http://www.omscs.gatech.edu/”>http://www.omscs.gatech.edu/</a></p>

<p>Many well regarded schools offer on line courses and degrees that employers readily accept.</p>

<p>With all the open courseware and the additon of certificate programs people can acquire their skills without the traditional education path.</p>

<p>I think employers are drifting closer to looking for employees with set skills that they can prove. Many already give more extensive tests during their numerous interviews to make sure the applicants actually have the skills they state they have learned.</p>

<p>Our traditional on campus college 4 year degree may or may not survive intact as we move forward.</p>

<p>I know someone whose company is footing the bill for his online EECS at GT. It is a more traditional program though where he watches the lectures, takes proctored exams and communicates with the prof via email. It costs the same as if he was on campus, has the same admission requirements ( high scores) and is the exact same degree as those on campus receive. </p>

<p>And Microsoft just introduced their in real time Skype translator which is the future so we can take courses from anywhere in the world.</p>

<p><a href=“http://www.cnet.com/news/microsoft-readies-real-time-language-translator-for-skype/”>http://www.cnet.com/news/microsoft-readies-real-time-language-translator-for-skype/</a></p>

<p>So,so very exciting!</p>

<p>Colleges and institutions of higher learning need to be changing and changing quickly to survive.</p>

<p>What form education takes is anyone’s guess.</p>

<p>I hope the vast majority of these “failing” colleges are for-profit diploma mills.</p>

<p>I hope so this education system needs to change.</p>

<p>I thought this would happen by now, but it takes a lot more than what has happened in the last 15 years do that. I think maybe 20% will fall. But there will be changes in a lot of the colleges. The prices will more reflect demand directly. Though supply and demand does work, there is that element of time, and it’s taking a long time.</p>

<p>Here is the full Bloomberg article. This one explains better what is happening with Downing College, calmom. It seems the aviation program was the bulk of the college’s debt.</p>

<p><a href=“http://www.bloomberg.com/news/2014-04-14/small-u-s-colleges-battle-death-spiral-as-enrollment-drops.html”>http://www.bloomberg.com/news/2014-04-14/small-u-s-colleges-battle-death-spiral-as-enrollment-drops.html</a></p>

<p><a href=“http://www.nacacnet.org/research/research-data/College-Openings/Pages/College-Openings-Results.aspx”>http://www.nacacnet.org/research/research-data/College-Openings/Pages/College-Openings-Results.aspx</a></p>

<p>Check out how many colleges still have unfilled spots. There are some surprising names there.</p>

<p>@Picapole – thanks for that info – but my point still stands. The college needs to evaluate which of its various offerings are revenue producing, and which are a drain on resources, and make the changes needed. So that may mean investing more dollars in technology and less in physical infrastructure. I don’t know, but the first step is some fiscal accounting to figure out what to trim and what to focus on for the future.</p>

<p>I’m not saying that everything will be rosy for all colleges – I do think that many more marginal colleges will fail, and the survivors will be those that can move forward. In a world dominated by the internet and social media, it’s hard for me to see the benefit for students to commute to a physical location when they can access a better quality of choices online for lecture based classes. There is obviously some benefit to the live, participatory format of a seminar or discussion section – but maybe down the line the format will change. For example, maybe small regional colleges can partner with major universities for a lecture/discussion format where the lectures are prepackaged and available online, whereas the local college provides the classroom discussion environment and proctored exams. So perhaps, down the line, it will be possible for students to be able to get a 4-year degree taking many of their classes from 4 year universities, via services offered at their local community college. </p>

<p>Ga Tech has also had online masters degrees as well, for some time now. <a href=“http://www.dlpe.gatech.edu/dl/degrees/”>http://www.dlpe.gatech.edu/dl/degrees/</a></p>

<p>There is s specialized development program at GE for select entry level employees canned the Edison Project. They use the online Ga Tech Masters program <a href=“http://www.ge.com/careers/culture/university-students/edison-engineering-development-program/united-states”>http://www.ge.com/careers/culture/university-students/edison-engineering-development-program/united-states</a></p>

<p>^^There are many names on that list that surprise me, none more than the University of Florida. I also notice that there are several LACs of a progressive political bent, such as Evergreen St, Eckerd, Sarah Lawerence, Hendrix, etc.</p>

<p>The University of Florida surprised me too but I noticed that there are no openings for freshmen there; only transfers. Still surprising because so many kids in FL are dying to go there but can’t gain admission.</p>

<p>Are Wesleyan, Tuskegee & Albion progressive?
Im not that familiar with schools in other parts of the country.
Auburn University, Azuza Pacific & Clark University are ones Ive heard of.
Im surprised to see Gonzaga, Seattle University & Seattle Pacific on that list. ( Actually a ton of the schools on the list are religious)
I do notice that several of the schools are branch campuses.
Im wondering if these schools are just learning to develop their admission process and perhaps had the bar set higher than their student body warrants.
Also when the popular schools expand their freshman classes every year, wouldnt that leave more seats at slightly less well known schools?</p>

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<p>Regarding Sarah Lawrence, that’s probably due to a combination of high expense, strengths overwhelmingly in arts and humanities fields, it’s current status as “unranked” in USNWR being taken as a sign it’s dubious, etc. </p>

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<p>Wesleyan is definitely progressive. The early '90s movie PCU was based on the Wesleyan undergrad experience of the writers of the script. </p>

<p>^ The Wesleyan referred to in the link about openings for college students is Wesleyan College in Macon, Georgia: <a href=“http://www.wesleyancollege.edu”>www.wesleyancollege.edu</a> , and is not the one in Connecticut, which probably falls into the category of “definitely progressive.” I cannot say whether Wesleyan College (or Tuskegee) is “progressive” in the sense that emeraldkity4 used it, as I have no knowledge of those schools. Albion College, in Michigan, is a school affiliated with the Methodist Church; I would describe it as “middle of the road.”</p>

<p>“Up to half” could be 1 university. </p>

<p>I believe him. I am very confident not more than half of universities in the US will fail in the next 15 years. </p>

<p>^^ And the Auburn University is not the one in Auburn, it is their satellite campus in Montgomery, AL.</p>

<p>Nah, i don’t buy the "up to half’ either. There are plenty of great little colleges plugging along filling their classes, have supportive alumni, OK endowments and churn out graduates year after year. They may not be the darlings of CC but they are rock solid in their regions, produce grads that get jobs and have happy alumni and you don’t see them on the “list” in May ever. There’s also plenty of directional colleges on the list that are ALWAYS on the list, they are always looking for more students and will find housing for them if they come. </p>

<p>The schools looking for transfers have nothing to lose. Most "older’ students don’t live on campus and it’s not that difficult to add a few seats to classes. It really isn’t rocket science. I don’t know, but if I were an admissions officer at a college that wasn’t bursting at the seams, I’d at least throw my hat on the list to pick up a transfer or two if i was out of dorm space for freshman. Zero effort. </p>

<p>We hear the rich-don’t-pay-enough-taxes so much that I’m curious why we don’t have a lobby demanding the government taking income from the rich non-profits and provide welfare for the poor ones. If Harvard can provide 90% assistance for its students with 6 figure family income, a small select set compared to the whole country’s student population, why isn’t some money, say 40% of their endowment income, taken from there to provide relief to students in poorer universities? Somehow I suspect many who feel rich individuals and corporations are getting off too easy won’t feel the same way towards the rich and poor universities.</p>