The Wall Street Journal has been doing great work digging into the pending crisis hitting may colleges, particularly small non-selective liberal arts schools. In today’s paper they have a piece on colleges sorting into winners and losers:
The diverging fortunes help explain how U.S. higher education is shifting. For generations, a swelling population of college-age students, rising enrollment rates and generous student loans helped all schools, even mediocre ones, to flourish. Those days are ending.
According to an analysis of 20 years of freshman-enrollment data at 1,040 of the 1,052 schools listed in The Wall Street Journal/Times Higher Education ranking, U.S. not-for-profit colleges and universities are segregating into winners and losers—with winners growing and expanding and losers seeing the first signs of a death spiral.
The Journal ranking, which includes most major public and private colleges with more than 1,000 students, focused on how well a college prepares students for life after graduation. The analysis found that the closer to the bottom of the ranking a school was, the more likely its enrollment was shrinking. (There were 12 ranked schools that didn’t have full enrollment data, so they were dropped from the analysis.)
“In the same way the bookstores fell when Amazon took over, now it’s higher education’s turn and it’s been coming for a while,” said Charles Becker, Concord’s vice president for business and finance. “The shake-out is coming. It’s already here.”
Richard Vedder, the director of Center for College Affordability and Productivity and a teacher at Ohio University, believes dark days are ahead for the nation’s poorest ranked schools.
“You’re going to see, over the next five years, a real increase in the number of schools in serious trouble,” Dr. Vedder said. “A degree from a top school is a still a pretty good signaling device [to employers]. It means you’re smart and hardworking. But a degree from one of these lower schools doesn’t mean much of anything.”
Because the demographic dip is so pronounced in the Midwest and Northeast, low-ranking schools there are the most vulnerable to enrollment declines. Schools in Pennsylvania, Ohio and New York made up a quarter of the 237 schools that saw a 10% or greater decline in enrollment between 2011 and 2016.
Click through to read the whole thing (subscription required).
Right now the problems seem to be limited to the bottom 20% of schools, defined using criteria such as student loan default rates and average salary after graduation. This is something to keep an eye on.