Private University Enrollment Figures Reflect Paradigm Shift in College Education?

Given my interest in the history and development of universities and colleges, I found today’s article about private college enrollments interesting, though not entirely unexpected (see Enrollment to Drop at a Third of Private Colleges). According to Bloomberg:

Almost a third of U.S. private colleges expect freshman enrollment to decline in the 2009-2010 school year as families struggle to pay bills and hold down debt, according to a survey.

Fourteen percent of schools surveyed from May 18 to June 19 predicted new undergraduate student enrollment would fall more than 5 percent…Forty-four percent of the schools said tuition deposits for the semester that starts in September declined from a year ago.

…students are struggling to afford college because of the recession…

“This is the most nail-biting season in memory for the admissions staff of some of these places,” Tony Pals, a spokesman for the association [National Association for Independent Colleges and Universities], said in an interview.

These data are consistent with the sentiment that I expressed in December of 2008 (see The Future of U.S. Higher Education). At the time, I suggested that there might be a fundamental structural shift in demand for private university education.

…the cost of higher education, coupled with what I view as a fundamental shift in consumer behavior as a result of the recession, will…usher in a shift in consumption…Gone are the days of taking on exorbitant amounts of debt to send children to private institutions with tuition (not including living expenses) of $40,000 per year, or more. Instead, families will increasingly opt for public universities with tuition in the $10,000-$15,000 range.

For example, families in Texas might start asking tough questions like, “Is the difference in the price between Harvard and the University of Texas really worth the $120,000 difference?” I am not willing to argue that real differences between being educated at a private university and a public university do not exist; however, I am not sure whether those “benefits” (to the extent that they do, in fact, exist) justify the additional premium in all cases. And those considerations are likely to impact the decisions of consumers.

If frugality represents a fundamental structural shift in consumer mentality and behavior (as I believe it does), individual universities (private universities especially) would be well served to carefully consider what that might mean for their institution in the coming years, and prepare accordingly.

Disclosure: No positions

Comments

[DBB1946:]

Will for-profit universities gain enrollment if the trend for declining enrollment at private colleges continues?

DBB1946

Jul 21 07:42 AM

[John Galt:]

For example, families in Texas might start asking tough questions like, “Is the difference in the price between Harvard and the University of Texas really worth the $120,000 difference?”

You are going to read the same books and learn the same things at Texas as you will at Harvard but Harvard has the better name. You are buying the name ( for 120K, more when you factor in living expenses.) and you are "signaling".

"Better name" colleges suggest that you were smarter/more serious about school earlier, or that you came from money etc.

Jul 21 09:36 AM

[Robert Salomon:]

Two quick responses:

"Will for-profit universities gain enrollment if the trend for declining enrollment at private colleges continues?"

This will depend on the value proposition of for profit universities - e.g., whether they provide value for their graduates and/or tuitions are affordable.
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"You are going to read the same books and learn the same things at Texas as you will at Harvard but Harvard has the better name. You are buying the name ( for 120K, more when you factor in living expenses.) and you are "signaling"."

True enough. You are likely exposed to similar curricular material. But in addition to the pure "signaling" effect, there is also the networking effect. To the extent that your peers at Harvard will become Masters of the Universe, you can/may derive greater value from the social network.

Jul 21 11:23 AM