Inside Higher Ed conducts an annual survey of college and university business officers. The point of this higher education survey is to reveal the business climate within education, and connect it to the issues of stability and reputation of higher education institutions.
Throughout the past few years, private college officials have been concerned about the financial viability of their institutions. This year, they are slightly more optimistic. Public universities, on the other hand, are feeling more pressure than ever.
Dan Greenstein, chancellor at Pennsylvania State System of Higher Education, said: “Let’s give it a name. It’s called terminal financial decline. Let’s give it a duration. It’s got about seven to ten years. Every choice we make has a consequence.”
With that, Mr. Greenstein summed up the findings of the ed survey. But we’ll get into more detail.
This universities survey is important for measuring the financial health of educational institutions and working towards a better model, which would work for the students, the government, and private schools.
It’s a Tough Financial Environment for Colleges and Universities
Many students complain about the massive tuition fees. They have every right to do so. They pay thousands of dollars per semester, so most of them have to take jobs in order to afford higher education. Since they spend a lot of time on the job, they have less space for academic projects and end up hiring an essay writing service when they need help. This is a big problem that affects their success at college, and it has a financial background.
But students often fail to realize the other side of the coin. Universities don’t impose higher fees because they like to. They do it because it’s the only way for them to stay financially viable. We’re often talking about the ways technology will change education. The change is great, but technology costs a lot of money for universities. They have to provide it, and they have to afford it.
47% of the business officials at private baccalaureate colleges and 30% of those at private nonprofits said that they had drawn endowment funds above the normal spending policy over the past year. 25% of the colleges that had drawn funds said the amounts were between $5 million and $30 million over five years. This is a clear sign of the financial distress these institutions feel. The higher tuition fees do not come close to covering their expenses.
When asked if they expected the economic downturn to negatively affect their institutions, only 17% of the respondents were confident that their schools would remain viable. 59% of the business officers said they were worried about the impact of the declining economy. When divided between community and private baccalaureate colleges, the concern was clearly greater among private institutions (75% vs. 47%).
When asked about potential solutions, a merge came out as a favorable option. 18% of business officers agreed that their institution should merge within the next five years. Comparing with the results of the 2018 education survey, that percentage stayed the same. 28% of the respondents said they had a serious internal discussion about administration/academic consolidation. 62% agreed that their colleges should share administrative functions.
How does this solve the problem? A successful merge can produce the revenue, marketing strategy, and financial reserves for a college to stay viable. That’s why 70% of the respondents from private nonprofit institutions said that their colleges should at least share academic programs.
What Does This Mean for the Students?
Unfortunately, we’ll continue seeing higher tuition fees for the years to come. 38% of the survey respondents agreed that the current tuition discount rate at their institutions was unsustainable. When compared to the 48% from the 2018 survey, we’re at a better position today. Still, the tuition fees are not likely to drop. Only 7% of college business officers said that the tuition rate dropped, and 23% had only considered doing that. 71% haven’t considered a reset, since it wouldn’t benefit their institution at all.
The results from this survey make us ask the same question all over again: is this educational model sustainable? Public institutions seem to struggle less, but they still experience financial difficulties. For private colleges, the struggle is real. We see less confidence in future financial stability, and the final burden will definitely fall on the backs of future generations of students.