Clemson University, one of the schools cited by the WSJ as a winner. Photo Credit: Yousef Abdul-Husain, CC BY-SA 4.0
The Wall Street Journal has been doing great work digging into the pending crisis hitting may colleges, particularly small non-selective liberal arts schools. In today’s paper they have a piece on colleges sorting into winners and losers:
The diverging fortunes help explain how U.S. higher education is shifting. For generations, a swelling population of college-age students, rising enrollment rates and generous student loans helped all schools, even mediocre ones, to flourish. Those days are ending.
According to an analysis of 20 years of freshman-enrollment data at 1,040 of the 1,052 schools listed in The Wall Street Journal/Times Higher Education ranking, U.S. not-for-profit colleges and universities are segregating into winners and losers—with winners growing and expanding and losers seeing the first signs of a death spiral.
The Journal ranking, which includes most major public and private colleges with more than 1,000 students, focused on how well a college prepares students for life after graduation. The analysis found that the closer to the bottom of the ranking a school was, the more likely its enrollment was shrinking. (There were 12 ranked schools that didn’t have full enrollment data, so they were dropped from the analysis.)
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“In the same way the bookstores fell when Amazon took over, now it’s higher education’s turn and it’s been coming for a while,” said Charles Becker, Concord’s vice president for business and finance. “The shake-out is coming. It’s already here.”
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Richard Vedder, the director of Center for College Affordability and Productivity and a teacher at Ohio University, believes dark days are ahead for the nation’s poorest ranked schools.
“You’re going to see, over the next five years, a real increase in the number of schools in serious trouble,” Dr. Vedder said. “A degree from a top school is a still a pretty good signaling device [to employers]. It means you’re smart and hardworking. But a degree from one of these lower schools doesn’t mean much of anything.”
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Because the demographic dip is so pronounced in the Midwest and Northeast, low-ranking schools there are the most vulnerable to enrollment declines. Schools in Pennsylvania, Ohio and New York made up a quarter of the 237 schools that saw a 10% or greater decline in enrollment between 2011 and 2016.
Click through to read the whole thing (subscription required).
Right now the problems seem to be limited to the bottom 20% of schools, defined using criteria such as student loan default rates and average salary after graduation. This is something to keep an eye on.
Didn’t read the article, but it’s becoming clear that the distance between the various higher education tiers is getting wider. Ivies at the top, Ivy-equivalent private schools next, followed by public elites, small private liberal arts schools, big public/land grant schools — and then the rest. At some point states can (and must) do their share to help the public elites and land grant types, but I’m concerned about the future for small private liberal arts schools and the “directional state” schools.
Wouldn’t slashing support for “directional” schools be a state cutting off its nose to spite its face? Where is the state going to get teachers, accountants, nurses, and other professionals to support communities and work for businesses in the area? From out of state?
@P Burgos – I don’t think cutting off support for directional schools is a good thing… but the problem is that it has happened already (particularly in places like Illinois), so it’s already a “here and now” problem. That support has been cut off for public elites and flagships, too, but they generally have larger endowments and research grants to maintain their programs. The educational marketplace seems to be reflecting the universal economic marketplace where there’s a flight to quality and there is a critical mass of winners and an even larger critical mass of “losers” with very little in between. People will pay for top private and public universities if they believe they’re getting a premium education and they’ll also pay for community colleges and MOOCs when they are pure cost savings mode, but that huge mass of colleges in the middle is at risk. In essence, the middle class ranks of colleges are going to be hurt worse than anyone in the same way that the middle class of society overall doesn’t really exist anymore outside of political campaigns.
To be sure, it makes sense in a certain way and we see it play out all of the time in Illinois. When an Illinois resident doesn’t get into the University of Illinois and then has a choice between going to Eastern Illinois or, say, the University of Missouri for not much more in tuition price, that person is choosing the latter more than ever before since that out-of-state flagship has a bigger brand name, higher academic rankings, power conference sports, etc.
Within the State of Illinois, note that we recent went through over 2 full years without a state budget, which essentially meant that there wasn’t any higher education funding from the state at all during that period. While this wasn’t good for the University of Illinois or Illinois State University, they were still able to ride it out and even increase enrollment because of their larger endowments, wealthier alumni and higher academic reputations. The “directional schools” in Illinois, though, got absolutely pummeled since they suffered the double whammy of not receiving state funding (which they are much more dependent on compared to U of I and ISU) and enrollment AKA tuition revenue (which they are also much more dependent on compared to U of I and ISU) dropped severely. This can (and almost assuredly will) happen in other states. Illinois is just the canary in the coal mine in this respect.
What have local students outside of the Chicagoland area been doing? I thought that the main pull of the so-called “directional” schools is their proximity to students, so that students could stay in the their communities and not have to pay room and board to attend college. My impression is that most people in “directional” schools are choosing to major and focus careers in areas that don’t have superstar effects, and that local businesses rely upon those graduates, so that “directional” schools are still a pretty good deal for the locals.
@P Burgos – Those directional schools still have issues outside of Chicagoland because even to the extent that local students stay in town, that pool is dwindling because the number of high school students from those smaller towns is dropping even faster than the rest of the country overall. At the same time, most of the directional schools *aren’t* set up to be commuter institutions – these are generally residential colleges that depend upon full-time students living on campus. They need both tuition revenue AND room and board revenue to pay their bills.
To that point, it’s instructive that the directional schools that have retained their enrollment levels better over the past couple of years are Northern Illinois University and Southern Illinois University-Edwardsville, with the former on the very far western fringe of the Chicago area and the latter directly in the Illinois side of the St. Louis metro area. So, the budget impasse impact at those schools were mitigated a bit by their geographic advantages of having direct access to the two largest population bases in the state and could have more commuter students as you’ve noted (although NIU is still largely residential and SIUE is actually adding more residential students). Eastern Illinois, Western Illinois and Southern Illinois don’t have those geographic advantages and they have suffered a much more significant negative impact – those have always been almost purely residential colleges, so they’re definitely losing students to competing schools in Indiana, Iowa, Missouri and elsewhere.
What are “directional state schools?”
…here it’s Northern Illinois, Southern Illinois, Eastern Illinois, and Western Illinois. Usually 2nd third and fourth tier semi-urban to rural residential settings.
Oh..you mean the names. Does Ohio have such schools?
Yes, lot of them. The Ohio schools don’t have a direction in their name, but think schools like the University of Akron.
Bowling Green, Kent State, Cleveland State, etc. See: http://www.opuac.org
Ohio U, UC, and Miami are also public but probably in between TOSU and the others.
Pennsylvania has a 2 tier system with Penn State, Temple, and Pitt at the top and the former state teachers’ colleges (now universities) below.
I had no idea it was a “system.” How tidy.
Only formally for about 10 years. The “University of Ohio” system.
Ohio State is clearly the flagship and second to none among the state’s public universities. It is the undisputed “Tier I” public university in Ohio.
I’d place University of Cincinnati in “Tier 1.5” as a university aggressively aspiring to be a flagship of its own, but not fully equivalent to OSU for a few reasons, not the least of them being that OSU has lobbied over the years to protect its claim to sole state flagship status. But if UC isn’t quite on OSU’s level, it stands at least on the shoulders of what would constitute the state’s Tier II public universities.
Tier II: Ohio U, Miami, Kent State. Universities that are both competitive and comparatively strong in-state and regionally for what they are and for their respective offerings, but there’s no real conversation between them and the next tier up.
Tier III: The “budget” class–University of Toledo, Bowling Green State University, University of Akron, Wright State, Cleveland State, Youngstown State. These are in many cases the public “also-rans” who for one reason or another were poorly positioned to ascend to a higher tier (e.g. Toledo, BGSU, Youngstown), got into the game too late (Cleveland State) or else made one or more serious strategic blunders (Akron) that damaged their prospects and outlook. Each of the universities in this tier are looking at a dubious future that likely will involve consolidation, or in the worst case scenario, closure.
It’s worth noting here that Ohio’s previous governor, Ted Strickland, floated a serious proposal around 2009/10 that was aimed at consolidating NE Ohio’s universities–Akron, Kent, Cleveland State, and Youngstown State–into a “University of Northeast Ohio” system in which each would specialize in some area. Although Akron and CSU’s leaders in particular were game for it, Kent balked, fearing a loss of their identity and standing relative to that of the others. (In retrospect, that might not have been a bad notion on Kent’s part.)
The plan itself was shelved when Strickland lost re-election to John Kasich, who, for his part has done little to acknowledge the near-term challenges facing Higher Ed and how these will impact the state’s system. It’s likely at this point that that his successor will be the one who has to dust off the consolidation proposal for NE Ohio’s public universities and implement similar plans for the state’s other regions.
The University of Cincinnati, with 45,000 students, is much bigger than most flagship state universities. It has a medical school, law school, and pretty much everything else. Ohio State has lobbied endlessly to keep it out of the Big 10 or any other major conference, which is the main reason why it has little national exposure.
When I was a wee baby Millennial snowflake, it was conventional wisdom among the Boomers that if you got a degree – any degree – you’d be set for life. Boy, do you not hear that anymore, and good riddance.
In Illinois, always ahead of the curve in boiling our shoes to eat the leather, a proposal is being floated to close a lot of lower performing schools and transfer the money to the flagship University of Illinois Campus and the University of Illinois at Chicago, the latter of which our Republican governor has had grandiose plans for for a while. The universities in the crosshairs are some commuter schools in Chicago and the suburbs, as well as the three directional schools downstate that mainly serve the local small-town and rural population (Southern, Eastern and Western). So it’s not just airy-fairy liberal arts schools who are gonna have to take a haircut.
Source: http://www.chicagobusiness.com/article/20180209/BLOGS02/180209870/close-some-state-universities-consider-it-watchdog-says
Correction: Boomers’ CW was “any degree is better than no degree”, which probably isn’t true any longer, but lifetime earnings studies did reinforce the idea 20 years ago.
Alas, we Boomers did not account for administrative inflation driving the all-in residential cost of a top flagship state school in the early 00s (when the first Millennials started school) to the constant dollar equivalent of Ivy school cost in the late 70s and early 80s.
@Chris Barnett – In the aggregate, it’s still true that “any degree is better than no degree” – if anything, the Great Recession showed that the income and unemployment rate gaps between college grads and non-college grads widened more than ever. Now, there’s going to be a wide variance from person-to-person, but the overall statistics of the advantages of a college degree are very clear.
Of course, if we’re evaluating whether “any degree AT ANY COST is better than no degree”, then we’re getting into a different territory. Taking out loans for an art history degree at a non-elite university is different than taking out loans for an art history degree at an Ivy League university, which in turn is different than taking out loans for an engineering degree at in-state tuition rates. We just have to be careful with the narrative that a college degree is somehow worth less today than 20 years ago (which clearly isn’t the case). It’s just that it’s now an entry-level credential as opposed to a special credential today in the same manner that a high school degree was an entry-level credential for prior generations.
Agreed. I tried to get there but you said it clearly: any degree at any cost is probably not better than no degree.
First, we should note that have winner and loser colleges isn’t going to do anything to bring college costs down — in fact, they will keep getting more expensive. The more that employers (often mistakenly) use a college as a shorthand for “already trained” (so they don’t have to pay to train anybody), the more the cost of the most desirable schools will go up — and the more other schools’ costs will go up, too, to have a sticker price that shows them as desirable.
Now, as others have noted, this shakeout is already starting with a decline in college-age kids and state support for colleges. Being in Chicago, my kids are hard targets for out-of-state college recruiters because they know, for example, that the sticker price of a state school in Ohio is only a few thousand more than one in Illinois, and that you’re going to pay $38,000 a year out-of-state for a Big Ten school such as Iowa rather than $30,000 a year in-state for a directional school. (And in many cases the Big Ten school is just as close.) SEC schools are recruiting Chicago particularly hard, especially Alabama. Suddenly I see Alabama stuff all over, and I live in Oak Lawn, in a perceived (but not true) lesser educational area.
The other issue is that with Trump being Trump, there’s a big risk that the international student population dips, which would kill a lot of schools that use them — and their full-price payments — to underwrite everyone else.
I don’t see any scenario where it’s good for the country to have people funnel, or attempt to funnel, to the same few schools. I’m still a big believer that unless you’re going to a basket case like, say, Chicago State, you can get a great education if you’re willing to receive one, and be competitive with anyone else out there.
@rkcookjr – Agreed on pretty much all of your points. I live in Naperville and can tell you firsthand that SEC schools like Alabama, Missouri and Kentucky are aggressively recruiting students here and offering large merit scholarships (which is what a lot of people in this area are concerned about as opposed to need-based aid that they don’t qualify for) that are based on a transparent factors such as ACT scores and GPA (so it’s predictable to know the true cost of college ahead of time).
One of the Naperville public high schools does put out a list of colleges where at least 4 members of its graduating class matriculate. (The graduating class is about 750 students and it’s almost always in top 10 non-selective enrollment schools in the state in terms of test scores.) Last year, predictably, the University of Illinois and College of DuPage (the local community college) had the highest number of matriculators along with perennial out-of-state Chicago area favorites like Iowa, Indiana, Wisconsin and Purdue. However, there were definitely some out-of-state public schools that have reputations of providing great merit aid that were also on that list (and would have rarely seen 10 years ago) such as Alabama, Missouri, Iowa State, Minnesota, Ohio State, Miami (Ohio), Wisconsin-Whitewater (*not* Madison) and Kentucky. To be sure, it wasn’t all cost-based since there were plenty of notoriously expensive schools on that list, too, such as Northwestern, Michigan (huge out-of-state tuition), Berkeley (ditto) and Colorado (ditto again). However, the pool of out-of-state options that have become “hot” in this area due to competitive tuition pricing has grown very quickly over the past decade.
All-in-all, out of the 30 schools that had at least 4 attendees from this class at a Naperville school, there were 3 in-state public universities on that list: University of Illinois at Urbana-Champaign, University of Illinois at Chicago and Illinois State University along with 1 in-state public community college (College of DuPage). Meanwhile, there were 15 out-of-state public universities and 11 private universities on that list.
Who wasn’t on that list? Not a single one of the Illinois “directional” schools. NONE. That would have been unthinkable 10 years ago, but that’s becoming the new reality (and while this is just one example, you’ll see that similarly-situated suburban school districts are showing the same types of matriculation patterns).
There is also a lingering perception, unspoken, that the Illinois directionals are unofficially, if not in actual admission numbers, catering to minorities from Chicago and have-not suburbs to the supposed detriment of the academic climate and perhaps the campus social scene. This may be a slow-motion parallel to the University of Missouri situation of the past few years.
NIU has bucked the trend, but it has been in my time considered a suitcase college. Does COD (your local junior college) have a University Center setup like College of Lake County (http://www.ucenter.org), where one can enroll in one of several far-away 4 – year institution while attending physical classes on the Grayslake IL campus? If so, this might be siphoning some of the remaining middle income household students and even many of the upper bracket for whom 2-year community college before finishing the undergrad degree elsewhere has become a sort of financial mantra.
@urbanleftbehind – COD has a “3+1 program” where it has fully integrated programs with certain universities to spend 3 years at COD and then the 4th year at the partner universities. It’s a bit different than the University Center at CLC, which is generally more of a centralized satellite location for a lot of universities where you’re directly enrolling with those universities as opposed to CLC itself. (My wife took took masters classes through NIU there when we lived in Libertyville.) However, the Naperville/Wheaton area does have quite a few satellite campuses that are directly owned/controlled by their respective universities (e.g. U of I, DePaul, NIU, IIT), so that may explain why COD doesn’t have a similar centralized setup like CLC.
Re directional Illinois schools: when my oldest son was looking at Northern for a time, I had someone tell me it was full of street gangs. Nope, no racism there.
But it is true the directional schools are more geared toward lower-income and first-generation college students, and that population is getting crushed by the schools’ lack of state support in every way, including scholarships. Especially when the competition is a fairly robust community college system that is reasonably priced, and guarantees free tuition if you’re in the top 10 percent of your high school class. (Although that is changing next year to also take need into account, so it won’t be automatic.)
Really, Illinois State is the only public university in the state most parents, counselors and students take seriously as an alternative to a U of I-affiliate school. No wonder out-of-state schools recruit extensively in Chicago. (By the way, I have son who goes to Ohio University, and a daughter at the University of Iowa.)
And a P.S.: private schools are also much more aggressive in recruiting, and off the bat are offering scholarship deals that essentially take the price down to what you’d pay for a public school, or even less. (Augustana in Rock Island would’ve been $5,000 a year less than Northern if my son had gone there.)
This is further evidence of the stratification of society. Truth be told, I’d be very leery of sending my child to any university in this country outside the QS global top 100.
Agree with your first point but would argue that if you need a degree as a licensing requirement or to obtain membership in a professional guild (neo-union) of some sort, what matters most is that piece of paper and whether the granting institution is at least minimally qualified to do so.
Well, it does speak to opportunity, and I agree with Will that garnering elite opportunities requires a degree from an elite institution. (It really always has, even for Boomers, though we may have exacerbated the rush.)
The accounting degree from Directional State U. probably will prepare you for the CPA exam and a job with a local or regional firm. For the Big Four path, though, the best bets are probably Wharton or Michigan.
LIkewise with law. If you want to be a white-shoe law partner, federal judge, prosecutor, or bureaucrat, its Ivy (or service academy) for undergrad or law school and Elite Private U. for the other. If you just want to make partner in a second tier city, State U. Law will get you through the bar exam.
If you want to go directly from school to the Big Four accounting firms, a degree from a strong accounting program is probably a pre-requisite. But the Big Four also have high enough turnover that they poach talent all of the time from regional firms.
@P Burgos – I’ve spent stints in both the Big Four and Big Law and I’d definitely say that the Big Four is definitely more egalitarian by comparison (albeit concentrating on the tier just below the elite level). For accounting, the recruiting is actually fairly similar to computer science where the top target schools are generally the large state flagships (e.g. Illinois, Texas, Indiana, Wisconsin, etc.) that can provide large scale classes with great training (as they constantly need new people due to the high turnover that you speak of). At the Chicago office of a Big Four firm that I worked at previously, we would go down to Illinois and Indiana and hire 20 or 30 students from each every year. The large size of those schools was actually a great benefit because we could fill dozens of positions by visiting just a handful of schools. We’d still also hire a handful of grads from non-target schools, although they seemed to be more token hires.
It actually wouldn’t be much of an advantage to go to Wharton or Michigan (which is a large state flagship but has an Ivy-level elite undergrad business school) and major in accounting. The main value proposition of those places is to provide access to high finance jobs in investment banking/private equity/hedge funds or top level management consulting firms (e.g. McKinsey, Bain, BCG) that truly are limited to the very elite schools.
Similarly, Big Law, is getting even more elitist by the year. I attended a decidedly second tier (or even third tier) law school and I was very fortunate to obtain the Big Law job that I had (which in turn led me to my current in-house position). In today’s legal job market, I wouldn’t have ever received that type of opportunity. Personally, I wouldn’t ever advise my own children to go to law school unless they get into a Top 14 law school considering the time and expense. (Top 14 is specifically significant because the US News has had the same top 14 law schools ever since they started doing law school rankings. The rankings within that top 14 have switched over the years, but it has still always been that same top 14 overall. Every Big Law firm knows this very well.)
Frank, my age is showing. In my day, the Big Four (then the Big Eight) recruited and hired very heavily at Wharton undergrad both for accounting and consulting. As did McKinsey, Bain, and BCG, but for consulting they were looking for finance, econ, marketing, and management majors and not just accounting.
Also recruiting heavily were the then-Fortune 50. IBM, GE, RCA, the oil majors, Eastman Kodak, General Foods, Kraft, Heinz, P&G, Dow, and many of them still hired people into rotational training programs.
Hard to believe today, but the old-line investment banks were not as frequent a destination for Wharton grads back then. You had to be well-connected already to get one of those gigs. (Finance was just beginning to become something other than the hidebound Glass-Steagall regulated investment banks in those days. Michael Milken and the junk bond/LBO crew were getting rich by shaking things up, and Wharton was just starting to become the pipeline.)
According to a survey of more than 400 higher ed institutions by the institute of college business officers, the average discount for freshman tuition has risen from about 34% in 2005 to about 49% in 2016. That means that across the board, the real tuition is about half of list price. Any industry that has to mark things down by half to clear their inventory has real problems. It would be really interesting to see how the discount rates correlate with rankings.
There are lower-cost alternatives out there to bricks-and-morter education, but they are so different that they get little press. One of these is Western Governors University, which, in terms of attendance, may now be the largest US university. This is a distance-ed institution accredited in about 20 states for which the final cost of a degree is about 15% of typical four-year university. The program focuses on disciplines for which there are ready jobs, such as teaching and nursing. In 2014, the National Council on Teacher Quality ranked the education program number one for secondary education.
The problem with alternatives to the traditional model is that until employers stop increasingly skewing their hiring to a few select schools, those alternatives will never take hold. The traditional hiring strategy is not rolling the dice on someone with potential. It’s getting someone with name-brand credentials so if the person flames out, everyone involved in the hiring process has plausible deniability. No one is ever going to blame the person who hired out of Harvard.
The alternatives are taking on in two fields that need lots of labor, nursing and education, for which the employers have set up proficiency tests. Distance ed may work for accounting and other proficiencies that lend themselves to test, but not for more management positions..
One other alternative, long popular in California, and now increasingly here in Washington State, is community college programs that lead into the major universities. Students are doing this as a way of saving on tuition and getting the basic courses out of the way. I know several people who did “Running Start” in high school to get community college credit, and then parlayed those credits into the first two or three years of credit towards are four-year degree from the University of Washington. A friend of mine with a PhD from Stanford started her higher education at a local community college before transferring to Berkeley for her bachelor’s degree
One third point is that here in Washington State, the community colleges are now empowered to offer four-year degrees. They’ve already been in partnership with the state universities, but now they’re using the programs they set up in those partnerships to offer the bigger degrees. That change in the law was put in place by a former president of Washington State University who helped set up Western Governors University.
What’s the pricing on the 4 year degrees from the community colleges?