<p>“We are at a trend line that cannot be sustained,” says Matt Snowling, an analyst at Friedman, Billings and Ramsey, who covers the student loan industry. “Tuition must go down, or there will be limited demand at high-priced private schools.”</p>
<p>Perhaps we need something like the FDIC to arrange for shotgun weddings so that things like the records departments continue to live on. We have a number of what I’d call fifth-tier colleges that really teach middle-school, high-school and tech-vocational courses and maybe they will have to go. I can’t imagine that students will continue to pay huge amounts of money when the jobs that they can get will be pretty close to those not having degrees.</p>
<p>There will always be parents out there that can afford whatever their kids want but the number will decline. At the moment, we have a demographic bubble coming through so the colleges and universities have a few more years of high demand though at lower prices. We’ll see how good they are at long-term planning.</p>
<p>I have always found it remarkable that college tuition does not correlate with college quality. Many mediocre private colleges charge the same tuition as the top echelon private universities, and frequently give less financial aid. I wonder why people don’t instead go to lower-priced, higher quality public schools.</p>
<p>The one factor that drives people to pay for “lower ranked” privates is personal attention. Not everyone is an A student, but that does not mean both parents and students want the larger state university enivronment, even the ones in the 8000 range. Some states, such as Washington, provide a public liberal arts college, but these are rare.</p>
<p>^
DW is in the middle of this question as her mid-sized LAC/university/professional-development-center struggles to restructure itself for the anticipated conditions of 2015. It’s still unclear how this metamorphosis will turn out, but it’s clear that diversification away from tuition-centric revenue is a key issue. A couple years ago the University of Richmond decided to head up-market by significantly boosting tuition. Not all schools can do that.</p>
<p>When looking at schools for DD, I think I’ll start looking into how large their endowment is. I don’t want her to attend a school that suddenly has to scale back programs massively or shut down altogether.</p>
<p>singersmom, I had the same thought as in your post. What follows is purely an intellectual speculation: perhaps the widespread availability of financial aid has helped to drive up college costs. Because financial aid allows students to attend schools at prices they otherwise couldn’t afford, colleges have less incentive to hold down costs and scale back on the “luxury” facilities that are all the rage. Of course financial aid for the truly needy is a great thing, but for the many families who could afford to pay $25 - $30k for college, but go ahead and pay $40K+ for college because they can get low-cost loans… if the loans weren’t available, demand for the $40k plus school would drop, and they would have to trim costs somewhere. Again, I’m not advocating the end of financial aid or loans, I just think it’s an interesting point of discussion. Clearly colleges to this point have had almost NO incentive to cut costs or scale back on luxury buildings & programs, since there are still plenty of families willing to pay for them. (I have no room to talk, DS is at a $45K LAC and DH and I will be going the HELOC route to finish paying when the 529 money runs out. I guess I’m part of the problem).</p>
<p>This would be expected by economic theory, and it is the generally observed result in practice. Third-party payment makes “buyers” who aren’t paying out of their own pockets less sensitive to value considerations when they are buying, so sellers can afford to gold-plate their products.</p>
<p>I agree with Post #11 that a school’s endowment is a valid & valuable consideration when evaluating college choices among privates and hybrids (such as Michigan & Cornell).
Rice University is a leader in pricing tuition costs in accordance with a healthy endowment; hopefully others will follow. The trend, however, is to increase financial aid by using endowment funds to avoid federal mandates on endowment spending.</p>
<p>I just finished reading the article. Interesting, but I disagree with respect to the need for any significant merger activity among the top 1,000 or so name schools, and I disagree with speculation that country club facilities are going to hurt colleges.
The future for US colleges & universities is in expanded foreign enrollment–just as US boarding prep schools have been doing for years by increased marketing in Asia, which, in turn, better prepares wealthy Asian students for top tier US colleges & universities. Thus, the rich schools get richer, while the second tiers have to devise a marketing plan to increase foreign enrollment as well. With the explosion of wealth in China, US universities have a market 4 times as large as the US market that is grossly underserved.
Some US universities are expanding overseas–primarily in the Mid-East.</p>
<p>While I agree with the premise that some private colleges will close their doors over the next decade, the Forbes article is one of the worst pieces of journalism I’ve seen on the issue.</p>
<p>For starters, using Antioch as an example of anything except mismanagement running a college into the ground is a stretch. I haven’t seen too many other colleges dilute their endowments by opening branch universities across the country.</p>
<p>Second, it is misleading to refer to the sticker price as the actual price of colleges. Colleges use the same variable pricing scheme as airlines: variable pricing to maximize the load factor and revenues. The actual average price paid at the country’s top private colleges and universities is in the $27,000 to $33,000 range for tuition, room, board, and fees. </p>
<p>There is almost nothing in the article that really shows the reporters understand the fiscal pressures that will lead to colleges closing. No talk of “equilibrium” or “tuition discount rate” or the indicators that concern college finance officers.</p>
<p>Back in the mid-1990s, there was a Thai restaurant that we liked to frequent in Cleveland Circle. The place was usually pretty crowded when we were there, with a lot of asian students. Then the crash in 1998 hit and shortly thereafter, the place was pretty easy to get into.</p>
<p>My guess is that many of these students attended Boston University as BU was very aggressive in marketing in asia back then.</p>
<p>The US dollar is up 18 percent in the last three months. The trend for the dollar has been down since around 2000 or 2001 and that’s made it easier for foreigners to attend college in the US. But the trend has reversed pretty sharply; should it continue, we might have a reversal of the growth in foreign enrollments.</p>
<p>A possible solution is pegging tuition prices to a particular foreign currency. In essence, a built in financial aid system country-by-country. This would also be attractive to domestic students. After all, the USA higher education “system” should be the Japaneese/Korean automaker of the education industry.</p>
<p>I never thought of Jesuit schools like Fordham and Georgetown as being particularly generous with financial aid. So if they have the money, they’re not giving it away! And I thought California was always having some sort of budget crisis.</p>