American higher ed is overbuilt

Why is so much of American higher education ailing?

Because it’s overbuilt.  Let’s explore that idea by starting with a quick round-up of recent news.

We can start with campus declines and cuts.  The president and CEO of the Thurgood Marshall College Fund now thinks that “too many HBCUs [historically black colleges and universities] may face the threat of closure within the next decade.”  A Forbes article mentions major enrollment drops for universities in Michigan, Ohio, and Oklahoma. West Virginia is considering merging or closing at least two universities.  Middlebury College is asking selected staff and faculty to retire; if not enough agree to do so, involuntary cuts are on the table (“an elective, incentive-based separation plan for staff as well as a set of elective, incentive-based retirement and separation plans for faculty”).

At the state government and politics level, enough closures and threats to institutions have driven “several arms of [Massachusetts]’s government… [to] explor[e] regulatory changes to try to minimize future damage from colleges that run out of money.”

Turning to graduate programs, some law schools continue to suffer, even as a trickle of new student numbers drops into the epochal enrollment collapse.  The University of Minnesota’s law school ran a big enough deficit that it had to get a cash infusion from its parent campus.  Vermont Law School has stripped tenure from the majority of its tenured professors.

How about queen sacrifices, when campuses lay off staff and tenure-track faculty? Western Illinois University’s queen sacrifice is proceeding, with faculty and staff being axed, the former apparently from these departments:

  • English – 7 Unit B
  • Liberal Arts and Studies – 3 Unit A
  • Mathematics and Philosophy – 2 Unit B and 1 Unit A
  • Political Science – 2 Unit A
  • Biology – 2 Unit B
  • Curriculum and Instruction – 2 Unit B
  • Geography – 1 Unit A
  • Psychology – 1 Unit B 

That’s a pretty standard queen sacrifice departmental pattern there, with the surprising exception of biology.

Turning to financing education, student debt continues to rise, with a twist.  (Remember when total student debt was less than one trillion dollars?  Good times.)  The New York Times finds that debt held by students seems to have plateaued, while parental debt keeps rising.

Good news for those students, right?  No: it looks like they’ve simply maxed out what they can borrow from the feds, so some of them have had their parents increase their share of the burden.

And a tv show has launched, the prize being paying off the winner’s student debt.

So what do we take away from these stories?

First: many, but not all, of the suffering institutions are being hit with enrollment decline.  That stems from several forces, depending on the situation.  Demographics is a huge one – note how many reeling campuses are located in areas with aging and/or no-growth populations.  Another force is a crisis of confidence in some sectors of higher ed, notably law schools, but also rising unease about student debt.  One additional driver of dropping student numbers is the shock of declining international interest, thanks to Trump and the spectacle of school violence.

Second, we’re still dealing with America’s decision* to financialize higher ed.  That is, we moved from having a majority of our colleges and universities generously supported by state governments to a situation where debt is the prime mechanism for paying for post-secondary experience.  This happened across the nation, in red states and blue.  (It also happened in other sectors of the economy, as part of the transition away from a large manufacturing labor base, but that’s for another post.)

Nothing is slowing down the debt machine, except the occasional free public tuition effort.  It’s only happening in a few states so far, and the national option is, to put it mildly, unlikely.

Third, and perhaps most important, I fear American higher ed has overbuilt across the board.  We have created more teaching capacity than there is now demand in many areas and sectors, and so this has become a classic business supply and demand problem.  At best we’re experiencing a market correction.

At the same time a swath of higher ed is more expensive to operate.  Yes, America decided* to shrink tenure, shifting the faculty profession to a majority of part timers, which not only constitutes a humanitarian disaster, but saves an institution money.  But at the same time we ended tenure with the Baby Boom generation, we also grew other costly things beyond those budgetary savings.  We expanded the total numbers of faculty of all kinds in order to teach the then-growing numbers of students.  We added some administrative elites and their mini-empires.  We seriously grew non-faculty staff, from IT to student life to regulatory compliance officers to grants offices.  Residential campuses engaged in the amenities arms race.  Meanwhile, health care costs have soared – this is something every campus leader complains to me about, because it’s a serious budget item and one that feel they can’t do much about.

That’s what I mean by “overbuilt.”  Some people say they “have too much house.”  We now have too much university.

How does a nonprofit respond to this problem?  One can either seek to increase interest (in economic terms, demand) or cut costs.  Increasing demand is something higher ed has been literally banking on since the 1980s, using a variety of methods, including emerging popular wisdom (the BA/BS is the new high school diploma, etc.).  You can see some of this still happening with multiple governors urging more of their states’ residents to get post-secondary credentials.

The other response is to cut, and I’ve been documenting this for years, as my readers know.

There’s one more emerging dimension to this, and that is a widening partisan divide.  Increasingly Republicans express dissatisfaction with, or hostility towards, academia.  There are all kinds of well known reasons for this which I don’t have time to dive into right now (anti-elitism; persistence of creationism; some regionalism; fears of student and faculty politics; some populism; some culture wars attitudes towards gender and race).  My point here is that we might see Republicans taking a larger public role in demanding higher education cuts in a variety of ways: state funding to public universities, federal tuition support, cuts to some federal research programs, etc.  Hypothetically some Democrats might return to old, old habits of arguing in favor of higher ed.

What does this mean for the future of higher education?

First, we could expect more efforts to boost student demand.  That means more lobbying from universities, colleges, and associations… which means more “administrative bloat,” as lobbyists and marketers need to be paid.  We could see more support for open education resources, open teaching, and open access in scholarly publication as ways of getting the pro-academia word out there, especially worldwide.  Some might use social media to reach more eyeballs.  Perhaps we’ll see more culture war battles break out in popular culture.

Second, unless student demand returns and rebuilds, we should expect more cuts across higher ed.  Not everywhere – most of the elite remains protected by established reputation and wealth, and some states (Texas, Arizona) are enjoying old school demographics – but broadly.

For several years we have been sliding down the wrong side of peak higher education.  When do we reach bottom?  How do we best cushion the landing?

*I speak of decision, and sometimes people protest this language.  “I didn’t want to reduce state support for higher ed!”  “I never voted to financialize the American economy!”  Unfortunately these protests miss the point.  The changes I described happened with a consensus, either openly discussed or quietly assumed.  Protests either didn’t occur or failed to win traction.  And we carried on these courses for years.  The decisions weren’t imposed upon America from outside.  They weren’t natural disasters or the actions of aliens.  They weren’t secret.  We did them to ourselves, with our eyes wide open.

(thanks to Greg Britton, Aaron Dobbs, and the hard-working Recession Realities blog)

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10 Responses to American higher ed is overbuilt

  1. American Higher Education Has Excess Capacity and Students are Heavily In Debt – Is Socialist Outsourcing A Solution?

    Currently, there are two big problems with higher education in the U.S.: 1) Students have been saddled with debt to cover the cost of their education. and 2) Schools have an excess capacity and now face declining enrollments due largely to demographics.

    To address the first problem, some progressives have embraced the idea of tuition-free public higher education. This may sound attractive to prospective students, but many non-profit schools fear this solution. They are used to competing with public schools that charge some tuition, but they are afraid that they will not be able to compete with “tuition-free” public schools. This would only exacerbate the problem of excess capacity.

    A friend of mine, Bryan Alexander, recently posted a very nice article on what ails higher education. His diagnoses is that higher education in the U.S. is overbuilt – i.e. it has excess capacity.

    I agree with his diagnoses of the problem, but I was puzzled by one of his two solutions.

    First, his two solutions are as follows: 1) schools should find ways to increase demand for their services or 2) they should find ways to cut costs.

    One way to increase demand, in his view, would be for schools to develop Open Educational Resources. This puzzled me since I’ve always thought of things such as Open Textbooks as a way of reducing the cost of education.

    Since I’ve written about ways to finance the development and maintenance of online textbooks and online courses before, I thought I’d say a few words about this after summarizing Bryan’s article.

    The subtitle I came up with – The Cost of Higher Education, Outsourcing, and Core Competencies – looks at the logic of outsourcing and how outsourcing relates to the notion that institutions (both for-profit and non-profit) have a set of core competencies that help define (or should help define) their business model.

    My response to Bryan’s article is that it lacks a discussion of outsourcing as one means of cost control. Further, my thesis places the development of Open Educational Resources under the heading of cost containment. Finally, it looks at two ways to go about outsourcing content development and maintenance: 1) the traditional capitalist approach of outsourcing to a for-profit vendor such as a textbook publisher or, a more recent idea, an Online Project Management provider and 2) a socialist approach of outsourcing to a government sponsored mega-university. I’ve long touted the latter, but without much success. Maybe my idea will catch on as more politicians consider the related idea of tuition-free public education.

  2. Describing US higher ed as “overbuilt” reminded me of US railroad history. Surely not coincidentally, both Morril and Pacific Railway Acts were signed 1862 and supported by land grants. Religion and mining, respectively, are earlier contributing factors. NM and Colorado (and no doubt other Western mining states) are full of abandoned feeder lines connecting mines to main rail lines. Decentralization is another factor affecting both.

    I recall reading a related article some years back on the geographic density of local colleges throughout the US (and compared to relative lack of density in Europe). I think (sincerely hope) I bookmarked it and others from the same binge search.

    Then there’s Frank Donoghue — and. before him, Stanley Aronowitz. It’s been on the way for some time. Didn’t Ray Schroeder start his blog in 2008? If it still displayed archives by year and month, those alone would tell quite a story.

    • Bryan Alexander says:

      Ray’s been doing this for a while. (And no, he doesn’t want to be on the Forum; I asked.)

      I love the RR comparison. Upstart new tech. Political challenges. Boom and bust. Popular love and dread.

  3. Bob Goldstein says:

    I prefer “individualize” rather than “financialize”. That is, the cost is increasingly born by the individual (and family) rather than society. Either because the value of education is increasingly seen as accruing mostly to the individual, or because various governments put a higher priority on other services (pensions, prisons, police, …)

    Anyway, there is demand from individuals, which depends on demographics, ability to bear cost, and perceived value of return. And different demand from society, in the form of government support for institutions or support for individuals (scholarships).

    I agree with your notion of “overbuilt”, but it seems the dynamics are more complicated than a simple market correction from Econ 101.

    Do you see any parallels to the airline industry with substantial fixed costs? Or any parallels to the housing bubble, where collateralized debt obligations made it increasingly attractive to lend and thus to borrow?

    • Bryan Alexander says:

      Interesting term change, Bob (individualize). Some use the word “privatize,” which carries a similar charge. Chris Newfield refers to a shift from seeing higher ed as a *public* good (think of post-Sputnik investment, the GI Bill, etc.) to viewing it as a *private* good (college boosts one’s earnings).

      I like your airline industry parallel. I’m not sure if online learning is like a cheap airline (Southwest, Ryanair) or something new. My preferred parallel is health care: opaque pricing, rising costs, growing bureaucracies, complex finance.

  4. And this week I read about my former employer (where leadership was kind enough to take my recommendation to bring you in as a speaker) pursuing more of the amenities arms race.

    And I’m trying to decide if this is the sign of a suffering institution resolving some backlogs now that they’re in the black, an attempt to continue the amenities arms race in a separate ploy to draw more of the dwindling student population, or an attempt to make good on the implicit expectations of a campus trying to move into a different tier of prestige and peers.

    • Bryan Alexander says:

      Without knowing too much more about the specifics, it could be any of those.
      Many colleges use sports as marketing.

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