Harvard Prof Predicts Up To 50% of US Universities May Fail In 15 Years
File this story under “Death Spiral”.
Soaring student debt, competition from online programs and poor job prospects for graduates are shrinking the applicant pools for many universities and, as Bloomberg reports, the National Association of Independent Colleges and Universities warns “there will clearly be some institutions that won’t make it…through these difficult steps.” Rather stunningly, Moody’s found that expenses are outpacing revenue at 60 percent of the schools it tracks even as many try to slash their way to balanced budgets,” and concluded “what we’re concerned about is the death spiral… this continuing downward momentum for some institutions.”
As Harvard professor Clayton Christensen has warned, as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years, and is “not sure a lot of these institutions have the cushion to experiment with how to stay afloat.”
Dowling College (on Long Island), which got a failing grade for its financial resources from accreditors last month, epitomizes the growing plight of many small private colleges that depend almost entirely on tuition for revenue. It’s been five years since the recession ended and yet their finances are worsening. Soaring student debt, competition from online programs and poor job prospects for graduates are shrinking their applicant pools.
As the debt loads and poor payoffs finally meet market forces…
“What we’re concerned about is the death spiral — this continuing downward momentum for some institutions,” said Susan Fitzgerald, an analyst at Moody’s Investors Service in New York. “We will see more closures than in the past.”
But Harvard Business School professor Clayton Christensen has much more dire warnings of the technological shift…
as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years. The growing acceptance of online learning means higher education is ripe for technological upheaval, he has said.
…“There will clearly be some institutions that won’t make it and there will be some institutions that will be stronger because of going through these difficult steps,” said David Warren, president of the Washington-based National Association of Independent Colleges and Universities.
"Death Spiral" - Harvard Professor Predicts Up To Half Of US Universities May Fail In 15 Years (Zero Hedge)
Comments
Higher ed priced itself out of the market place. This is self-inflicted. Technology will finish the job. When admissions offices totally control who gets accepted, some truly gifted may be left out. Add in all the diversity and affirmative action programs combine with increased debt from loans, useless majors and biased profs and what we have left is not worth the time and effort. Alternatives will replace those majors that are useful in the marketplace.
Welcome to the next big government bailout. Wholesale failure of the state’s priesthood will never be allowed.
Lets end government funding and push them over. In the ruins, the states and parents can take control of the new Higher Education away from the academics and educrats and create institutions that act rationally.
Sorry, “Let’s”.