America’s colleges and universities are at a crossroads. The number of schools closing their doors continues to grow driven by the declining number of students pursuing a bachelor’s. This situation is expected to worsen because of a number of factors.
• Starting in 2025 the U.S. will face the so-called “enrollment cliff,” in which the population of college aid students will drop by 15% over four years. Colleges can expect to lose over 575,000 students over that four-year time span.
• The strong labor market has led more high school graduates to delay indefinitely their pursuit of a bachelor’s degree.
• Young Americans have become increasingly skeptical of the value of a college degree. The rising cost of college and the amount of debt students are required to take in order to graduate has re-enforced this viewpoint.
In the past when faced with funding shortfalls, colleges and universities have attempted to “grow their way” out of the problem. Many offered new graduate programs, including terminal master’s degrees (no doctoral option) and certificates. Purdue University, under former President Mitch Daniels, purchased the mostly for-profit Kaplan University in 2017 and turned it into Purdue Global, with approximately 30,000 online students paying full price. Other colleges and universities also began increasing their online offerings to expand their access to a larger number of part-time graduate students. But unlike Daniels and Purdue — who used the revenue to hold undergraduate tuition flat for a decade — most schools simply used the funds to avoid making tough choices such as cutting expenses.
Other approaches included the recruitment of international students interested in pursuing a degree at an elite American college, particularly wealthy Chinese students. At present, there are around 290,086 Chinese students attending university in the U.S., with another 199,182 from India.
But growth strategies won’t work as effectively going forward. Most leading universities now have extensive online programs and in recent years the number of international students coming to study in the U.S. has begun to recede as more options become available elsewhere. While some elite universities can increase the number of undergraduates they enroll, others, particularly those that are more tuition-dependent, will be forced to close or merge with other institutions.
There is another alternative, however, which is for schools to streamline their costs and pass some of the savings on to students in the form of increased scholarships, lower tuition, or a combination of both. Specifically, colleges could cut non-faculty positions by 1% per year over the next five years and use the savings to reduce tuition.
For several decades, higher education has experienced a significant upswing in administrative spending and it is projected to continue to grow by seven percent over the next 10 years, according to the Bureau of Labor Statistics. Non-instructional spending, which includes spending on administration and student services, outpaced instructional spending from 2010 to 2018, according to the Council of Trustees and Alumni. During that period spending on student services rose a sizable 29% and administrative costs increased 19%, while instructional spending only rose 17% by comparison.
Not only did spending for administration and student services increase, so too did the number of employees in those areas. Between 1976 and 2018, the number of full-time faculty employed at colleges and universities in the U.S. increased by 92%, during which time total student enrollment increased by 78%. During this same period, however, full-time administrators and other professionals employed by those institutions increased by 164% and 452%, respectively.
There is little evidence that the dramatic expansion in staffing for administrative and student services improved students’ academic experience. In fact, some observers contend that the explosion in non-faculty has made it harder for faculty to educate students. In part, because many of these administrators have to justify their existence by creating more regulations and processes. As Todd Zywicki, a law professor at George Mason University has noted, “The interesting thing about the administrative bloat in higher education is, literally, nobody knows who all these people are or what they’re doing.
