The enrollment decline at American colleges is causing an even bigger problem: lost revenue. Over the past couple years, almost 50 percent of the country’s colleges have seen the growth in tuition revenue fall below the rate of inflation. Given that tuition makes up the bulk of most college’s revenue, this could quickly become an existential issue for many of these schools.Ordinarily, these schools would have two obvious options available to turn things around: attract more students, or raise tuition. Unfortunately, it’s not at all clear that either of these things are going to work. A number of schools have been lowering tuition and increasing financial aid in an attempt to convince more students to come, yet enrollment continues to decline. This enrollment decline, in turn, makes it more difficult for schools to raise revenue by increasing tuition, as students are becoming more price conscious and are less likely to attend schools with high sticker prices. The WSJ reports:
“We’re all kind of holding our breath,” said James Edwards, president of Anderson University in Indiana. The private Christian school suffered a 7% drop in enrollment this year, prompting cuts to faculty and several majors, including theater, French and philosophy. “The really big question is, where is all of this heading?”This is the fifth year private schools have endured stagnant net revenue, and the impact has been compounding, as faculty wages are frozen and capital improvements and maintenance are put on hold, said Karen Kedem, the author of the Moody’s report that accompanied the survey. The drop is just now hitting public universities, amid falling state aid and research dollars. Public schools are significantly more reliant on tuition revenue than they were a decade ago.
The long winter for higher-ed is getting colder.[Library image courtesy of Shutterstock]