Tuesday, October 20, 2015

College Closures to Triple by 2017





By Professor Doom

     I daresay that higher education has reached a breaking point. Accreditation has deeply failed in its mission, by granting legitimacy to every place that wants to call itself a school.

      This didn’t just hurt our young people, many of whom have been lured into fake schools, which tricked them into deep loans, ruining their lives. Accreditation’s failures also damaged many legitimate schools, schools which didn’t sell out in the “growth over all” mentality of the fake schools, and instead tried to focus on offering real education to students.

      The party might not be over, but I think I hear someone shouting “last call” in the background.

Closure rates of small colleges and universities will triple in the coming years, and mergers will double.
Those are the predictions of a Moody’s Investor Service report released Friday that highlights a persistent inability among small colleges to increase revenue, which could lead as many as 15 institutions a year to shut their doors for good by 2017.


    Why is “persistent inability…to increase revenue” a problem? The government says there’s no inflation, so that can’t be it. The proverbial “one room schoolhouses” of the past were fine, and it’s a simple matter to find huge public schools that fail horribly. Why is increasing revenue necessary, then? Why can’t schools survive without that? It’s clear that this is the thing Moody’s believes to be important to a school, however.

     Now, I totally grant that way too many people are being sucked into college, sucked into debt by schools, particularly by schools whose only desire is more, more, more students, and care nothing for education.

      Unfortunately, the schools closing will mostly be the smaller schools…the ones that likely were doing the most legitimate job:

“…The main struggle for many small colleges -- which are defined by Moody’s as private colleges with operating revenue below $100 million and public colleges below $200 million -- is declining enrollment…”


     What’s happening here is the big schools are able to put on the glitz better, spending that education money on foolish things that can attract more students, like lazy rivers and such. Does anyone think maybe there’s something wrong that student loan money not only is going towards silly frivolities, but that moreover the money being spent this way is hurting the schools that “only” focus their money on education?

     I really can’t emphasize enough how much the student loan scam has hurt higher education.

    Then, of course, there is the next problem:

“…Meanwhile, the number of mergers is predicted to double, reaching four to six a year, up from the 10-year average of two to three a year…”


     Hey, mergers are good, right? Combine resources, economy of scale, the most efficient parts of both will be kept while the inefficient parts will be eliminated, and so on. At least, that’s what you’ll read in the papers. The reality is somewhat different.

     Having been a part of such a merger, allow me to explain why these are bad things. Mergers, like everything else of consequence in higher education, are arranged by the administration. The only way two schools can merge is if the administrations of both schools agree to it.

     Now, does the gentle reader suppose that an administrator will agree to a merger that will cost the administrator her job? No, of course not. So, the merger only takes place if no administrator loses her job.

      The merged schools then, will manage to keep all the miserable (and expensive) fiefdoms, will manage to keep all the insanely overpaid administrators. The “economy of scale” will come when classes get combined…faculty will be let go, and those that remain will see their workload increased dramatically (but no increase in pay, since, hey, the merger only happened because of a money problem). I’ve seen faculty positions disappear in a merger, but not once have I seen an administrator vanish…but I can only speak of what I’ve seen with my own eyes in this matter.

     The article really doesn’t understand what’s going on in higher education:
And a growing number of small colleges are experiencing revenue struggles, Moody’s found. The percentage of small colleges with a sustained three-year growth rate of less than 2 percent increased fivefold, to 50 percent, from 2006 to 2014.


      Slow growth doesn’t kill a school, unless the school is bloating out their administration…and that’s what’s been happening in higher education for years now.

     I again want to mention University of the People, a fully accredited university with tuition of around $1,000 a year. It does so, of course, by not having that massive hierarchy of ridiculously highly paid administrators. No, it doesn’t have a climbing wall, or a lazy river, either, or much else. Just, you know, the same online education other schools offer, with the same accreditation. I’m not saying online education is all that great…but in terms of price, it’s absolutely worth 5% of the price of “traditional” education.

      University of the People can provide entire 4 year degrees for $1,000 a year. Meanwhile, we’re supposed to accept that schools that charge $20,000 or more per student for a year of tuition just can’t get by with a few students, even with massive tax breaks.

     Now, obviously, the coming closures are just Moody’s prediction, and Moody’s track record is little better than a Ouija board, but the facts still remain:

1)    Student debt is at ridiculous record highs.

2)    Many of our campuses are still engaging in insane building sprees, leading to a huge surplus of on-site educational capacity.

3)    Many of our campuses, even the ones building like mad, are steadily (and often quickly) increasing their ability to offer online courses, leading to a huge surplus of off-site educational capacity.

4)    Accreditation has failed on every level, legitimizing even the most questionable schools, adding to the already huge surplus.

5)    The bulk of our citizens already go to college at some point, so there’s no way all our schools can continue to grow their student base.

     Put this all together, and it’s pretty clear something has to give. The only reason most of our educational institutions survive today is the student loan scam, which has allowed tuition to soar to pathologically high levels. Rather than using this money to build a sustainable school system, our leaders in higher education have squandered it all on huge salaries and benefits for themselves, sacrificing our youth for their gain. The overhead costs of our administrative caste cannot be sustained unless schools continue to grow, grow, grow.

     Even with the student loan scam throwing money at everyone who still wants to be a student, future growth just isn’t on the table. It’s clear that quite a few schools will have no choice but to dry up and blow away. 
 
      On the other hand, if we just get rid of the student loan scam, most schools will vanish overnight. Even the large schools admit, the only reason much of their student base exists is because the students are getting checks to show up on campus, even if they disappear after they pick up the check. Much like so many industries in the United States, higher education now runs on debt, and nothing more. With the national debt ever soaring, the time when the government can no longer borrow and lend is coming to an end. When that happens, the student loan scams (and quite a few other scams) will end, and many institutions of higher education will come crashing down.

      Don’t expect the huge schools to survive this, not all of them, anyway. On the other hand, the small schools that didn’t load up on overpaid Poo Bahs and administrative palaces? They might well survive the hard years coming, despite what Moody’s says.

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