This article made me think of the University of Idaho falls below 5 percent target for reserves and the fact that enrollment is significantly down.
Could the UI be one of these universities they are predicting?
The great higher education shake-out is underway, writes Michael Horn, chief strategy officer for the Entangled Group, in Forbes.
Newbury College, a liberal arts college in Brookline, MA will close at the end of the school year.
In 2013, Horn and Clayton Christensen, a Harvard business professor, predicted that the bottom 25 percent of colleges “will disappear or merge in the next 10 to 15 years.” Half of colleges and universities will close or go bankrupt in the next decade, Christensen now predicts.
Many colleges and universities are offering big tuition discounts to fill the seats: On average, students pay half the advertised rate. That puts tuition-dependent institutions in the danger zone, writes Horn. Furthermore, “the natural pressure in higher education is for costs to increase—thanks to the lack of economies of scale and the complexity of higher education operations.”
According to Moody’s, at least 25% of private colleges are now running deficits. At public colleges, even in a good economy, expenses have outpaced revenue the past three years. And Moody’s examines only the stronger players in higher education—the 500 or so that issue debt through the public markets.
In addition, college are running out of 18-year-olds with “with precipitous declines in certain regions forecast to begin in 2026.” Colleges, which tend to have large fixed costs, will have to compete for students.
As brick-and-mortar college enrollment shrinks, “enrollment in online learning continues to rise, Horn writes. “Nearly 20 percent of students are now enrolled in a mostly online program. And many students enroll in unaccredited online programs, as well as last-mile blended-learning bootcamp programs, which are not counted in these statistics.”
The for-profit sector is shrinking rapidly, he writes. “According to Education Dive, more than 100 for-profit and career colleges closed between 2016-17 and 2017-18 alone,” and the trend is continuing.
However, closures have accelerated in the public and non-profit sectors too, Horn writes. In addition, some state university systems are consolidating campuses.
Some colleges will “grow at the expense of those that fail,” he concludes. Most non-elite institutions will need to restructure themselves or innovate to survive in the new era.
https://www.joannejacobs.com/2018/12/how-many-colleges-will-fold/