The education racket keeps running although the bubble looks like it could pop any day now. A rather ominous sign for colleges is that enrollment declined by 500,000 last year. The other secondary effect is that students are eschewing private schools to go to cheaper public universities. This is also in the face of an incredibly tough job market. The media is doing a great job of talking about student loan debt while mostly avoiding the cause of it, runaway tuition increases. When will we know the great college dismantling or decimation has begun? Small, private universities start closing or drastically reducing size.
Public schools, while increasing in cost, are a cheaper alternative. The cache of private universities is gone unless one goes to an Ivy, a sister Ivy or a little Ivy. Very few universities fall into that group, so what still draws kids to Wesleyan University and force 200K out of their parents' pockets over four years? The Brahmin-SWPL crowd has fewer babies each year, so educational status as a good or virtue will have a smaller crowd. If the universities expect the surge in Hispanics to pick up the slack, well they better improve financial aid packages. That is the rub though. As easy money goes away or students stop taking out a mortgage to go to a small, private liberal arts school, the universities lose students who were from families not deemed able to pay for college, subsidizing the needier kids. Rich Arab girls come from families that pay in cash and donate to the university.
An even more dangerous competitor is the world of online schools. While this is a boiler room atmosphere for juicing enrollments, there are many Americans who use it for a cheaper path to a degree. These degrees are accepted by Human Resources departments as legit, accredited bachelor of arts degrees. When all that matters is having the piece of paper, it matters less how you got it and where you went. Yes, people make connections in university but think of the millions of graduates out there. Add in the millions wanting the stamp of approval for white collar jobs and lives. Along those lines, do not count out the unplugging of men from the university life and into trades as white collar work becomes the next realm of jobs off-shored or automated out of existence. Most Americans (most humans) take the path of least resistance. These numbers are not small, and have a big effect on universities.
How many students on the margin will it take to hurt one private university? What is the footprint of a small, private university like the College of Wooster in Ohio or Hanover College in Indiana? Both are "good" universities, but I doubt the number of New Englanders, Southerners or kids out west who know of them is large. The small law schools tightening up shop or closing outright will be great candidates. Some prescient lawyers have warned about the glut. What small, private universities have made major upgrades or fixed cost investments to compete for students in recent years, counting on growing enrollment or being able to hike tuition year after year. This could go on because besides endowments, schools have grants, and schools have alumni fundraising drives. maybe this can go on forever. Institutions are reluctant to change at all. There would be one more way to keep the party going and not change behavior. Borrow! Some schools already have started to borrow but the best have held out. Old, private universities sitting on great real estate with giant buildings as collateral would make great profiles for borrowing immense sums of money.