These are agonizing times for small, private colleges. Enrollment is falling. Debts are rising. Tuition is high as it can go. And since the financial crisis, schools have been shuttering more often than normal….“What we’re concerned about is the death spiral—this continuing downward momentum for some institutions,” analyst Susan Fitzgerald tells Bloomberg. “We will see more closures than in the past.”
And that, I will add, might be a very good thing.
Small private colleges aren’t necessarily nefarious institutions, but they’re not exactly the heroes of higher education either.
|Look out! A Death Spiral!|
He quickly exempts Wesleyan (where I went) and Amherst and the other giants, schools charging 50,000+ and loading their campus with athletic palaces and gourmet food (I am seriously bitter that I missed the era of gourmet campus food. The food at Wesleyan when I was lousy institutional fare that was really bad for you). They are not all doing “fine,” as Weissmann says, but they are not in danger of closing. They do, however, create this top cap that other schools feel they have to compete against, sinking their money into amenities rather than educators. More on that later.
Instead, he singles out Ashland University in Ohio as a model of the school we should celebrate going under:
Instead, consider places like Ashland University in Ohio, which Moody’s has called a default risk. These institutions often cater to iffy students and produce mediocre graduation rates. But because they don’t have much in the way of endowments, they tend to charge high tuition, and leave undergraduates saddled with debts that simply might not be worthwhile. When all the aid is factored in, attending Ashland still costs $21,000 a year, according to the Department of Education. Meanwhile, only 59 percent graduate after six years. And so, according to Payscale, it offers one of the lowest returns on investment of any college in the country.
That might have been sustainable in a pre-Great Recession world. But as Moody’s has found, the business model of asking middling students to pay exorbitant prices for an education they might not finish is beginning to creak and fail.
I want to highlight three problems here:
One – Payscale provides an interesting, but flawed metric. Read Cedar Reiner on this. Basically it’s a fairly flat measurement of tuition against average salary, not taking into account the complexities of student population and expected outcomes given that. We do know that students from lower incomes, from many minority groups, first-generation students, and so forth, are less likely to graduate AND less likely to have the means to pursue highly remunerative jobs. Reiner writes:
There are (at least) three classes of factors that could predict a high school student’s future salary. First, a student’s individual characteristics such as preferences, abilities, motivation and even demographic variables such as race and gender affect their future salary. Second, that person’s education and training of course influence what they earn. This is where college fits in, but it might also include high school preparation as well as out of school preparation. Third, students future salaries are dependent on the labor market they enter as they leave college. As many unemployed or underemployed PhD’s are now discovering, someone can have great achievements in the other two factors, but if there are few to no jobs, one’s salary is severely constrained. The PayScale rankings understate these factors in comparing salaries of graduates to the median salary for someone who has only a high school diploma.
It’s not a surprise that many historically black colleges emerge on the Payscale list as the worst ROI and to simply blame the colleges, even while admitting one’s metric is flawed, is to lie with statistics. Reiner writes:
The advice is not “Don’t be black, because structural racism will still hurt your progress” or “Don’t be poor in the south, because intergenerational economic mobility there is very low” or “don’t find value in art, because your society doesn’t support that,” but rather: “Watch out for these schools, they waste your money!”
This brings me back to Weissmann’s latest piece (in which, even though he has admitted Payscale is flawed, he continues to mine their data for columns):
Here’s two: There is a genuine problem here to which Weissmann is pointing. There are schools which do a poor job graduating their students and a poor job preparing them for a better career even given their population pool. Is Ashland one of them? I honestly have no idea (if I were doing a formal column, rather than a blog post, I’d go find out). I do know that Payscale is not an accurate means of assessing it.
There are college rankings out there that look at “bang for buck” – trying to measure the quality of education against the cost of education. That’s a difficult multi-variable problem. I like the way that the Washington Monthly, for example, looks at expected graduation rate (taking into account the status of each student) against the actual graduation rate. I can’t assess their exact formula, but it seems to be asking the right questions at least.
Weissmann, on the other hand, seems to assume that the market is rational and the bad actors will be pushed out. I see no evidence for this. Schools close for all kinds of reasons – one of them, surely, is a poor rate of return given costs, but there are all kinds of external factors in terms of changing demographics, bad administrators, poorly structured institutional debt, and who knows what else. A school closing does NOT mean it offered a bad product, as Weissmann seems to assume. It might, but there are so many other factors.
He writes: “If the demise of a few schools can make the rest of higher ed a bit healthier, then let the death spiral whirl.”
I see no evidence that such demise will make higher education healthier. Rather, I think it’ll push schools to try and get leaner by hiring more adjuncts, by focusing on marketing, on branding, on corporatizing – not on teaching.
Three: The assured cruelty of Weissmann’s prose is distressing. “Let the death spiral whirl,” he says.
I’ve been trying to think about an analogy. Across the country (and beyond), newspapers are closing, journalists laid off, magazines shuttering. There’s been a huge disruptive force moving through the world of media, one that surely Weissmann recognizes. Many people believe that this is a necessary byproduct of the internet age and perhaps not a bad thing, but it’s been hard on a lot of good, talented, folks.
I can’t imagine EVER saying, “let the death spiral whirl,” when watching newsroom layoffs. The
URL (no idea whether Weissmann gets to make his own URLs) reads: “small_private_colleges_are_in_crisis_the_rest_of_us_should_celebrate.”
No one should celebrate job loss, economic hardship, or this kind of industry disruption. Even if the results are positive for students. In this case, I think the results will be more online, more adjuncts, and less opportunity.