Cost of Degree, Educational Consulting, Graduation Rates, Understanding the Market

Avoiding the College Closure Trap

If you’ve been following reporting on colleges and universities, you’ve probably noticed increasingly frequent reporting on small colleges closing down and sometimes on a few big ones. About a week ago, Michael Vasquez and Dan Bauman reported on data gathered by The Chronicle of Higher Education on college closings in “How America’s College-Closure Crisis Leaves Families Devastated.” The situation is so dire that “in the last five years, about half a million students have been displaced by college closures, which together shuttered more than 1,200 campuses.” That’s over 1200 campus closings displacing 500,000 students in the last five years alone. We have a crisis indeed. I’m going to explain here how you can spare yourself from the pains of a college shutdown by seeking out a little bit of information that isn’t that hard to find.

First, this data follows a pattern: for-profit colleges are largely the culprit. 88% of these shutdowns were of for-profit colleges, who account for 85% of all displaced students. So the first and most obvious thing to do is to avoid for-profit colleges. Their initial, large growth coincided with the rise of online education, which met a legitimate need: more students than you think have accessibility issues when it comes to attending college, either because of their own mobility or because of location, as not everyone has even a community college nearby. Furthermore, online education is attractive to working adults because of their busy schedules. Even if a college is nearby, sometimes it’s very difficult to make it to a scheduled class meeting. But the landscape of online education is changing now, and more and more state or otherwise non-profit institutions are getting into online education.

But why are for-profit colleges particularly at risk? To start, because they’re being run for profit. That means the owners of these institutions aren’t investing in endowment funds, which can protect the school from drops in enrollment and temporary budget shortfalls. And being run on a profit motive causes a host of other problems too. First, if the budget shortfall is bad enough, investors are far more willing to quickly cut and run to minimize losses. In some cases, the decision to close a for-profit university was made within a week, with no advance warning for students, and at times in the middle of a semester. These practices reveal that there’s little sense of obligation to students at many for-profit institutions, just an obligation to investors’ bottom line. Prospective college students, working adults, and military personnel should be wary of for-profit colleges because they’re vulnerable, and because they have some of the worst numbers for employability, retention, and graduation. According to the National Center for Education Statistics, “The 6-year graduation rate was 59 percent at public institutions, 66 percent at private nonprofit institutions, and 26 percent at private for-profit institutions.” For-profit colleges see students through to graduation at less than half the rate of their non-profit peers.

Furthermore, because the purpose of the institution is to generate profit for investors, faculty tend to be demoralized, underpaid, overworked, and lack any real say in how the institution is run: there’s very little in terms of shared governance. And it’s just going to get worse. By all indications, the Trump administration is loosening up oversight on the for-profit sector, so they will be able to engage in predatory admissions practices more easily than they did under the Obama administration.

So I’d like you to consider the following as major red flags when you’re considering a college of your choice:

  1. Low endowment
  2. Low faculty governance; mostly or completely untenured faculty (getting common everywhere, though)
  3. Low six-year graduation rate
  4. High acceptance rate (make an exception for community colleges, which are typically open enrollment by law)

And I’d like you to take one more step. While you can be sure that any for-profit college will fit all four of the above criteria, you should also know that many small, private non-profit colleges and universities do as well, especially small private colleges in rural areas. So wherever you apply, ask admissions officers the following questions:

  1. What percentage of your classes are taught by full time faculty? Don’t just ask what percentage of their faculty are full time. Those numbers can be fudged.
  2. What percentage of your full time faculty are tenured or tenure track?
  3. What percentage of your faculty have terminal degrees?
  4. What’s your six year graduation rate?
  5. What’s your endowment?

Of course you’ll want to know about sports, dorms, extracurriculars, and everything else, but college admissions officers who can’t answer the questions above probably don’t want to, and those are the questions that matter most to the quality of education at any given institution and to its long term stability. Most of this information is available online at a variety of sources, and services like Bright Futures Educational Consulting can provide unbiased, researched information about the best colleges and universities to attend for your major and your budget. Contact us if you’re unsure of your own research on these colleges and you’d like help navigating this minefield.


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