Will half of all colleges close?

By:  Diane Benjamin

Since Bloomington-Normal is a college town, this is an article that needs to be read.  It was printed in Forbes

Will Half Of All Colleges Really Close In The Next Decade?

Harvard Business School Professor Clayton Christensen consistently turns heads in higher education by predicting that 50% of colleges and universities will close or go bankrupt in the next decade. Christensen and I made a more measured prediction with more nuance in the New York Times in 2013: “a host of struggling colleges and universities—the bottom 25 percent of every tier, we predict—will disappear or merge in the next 10 to 15 years.”

Some higher education media have, in turn, used the predictions to lampoon the idea that disruptive innovation has a role to play in creating more affordable, accessible and convenient higher education options for people who would otherwise have no educational option.

But the truth of the matter is that disruptive innovation is only part of why Christensen originally made his prediction.

The prediction arose out of an observation that the business model of traditional colleges and universities was broken.

Many colleges and universities are increasingly unable to bring in enough revenue to cover their costs. Indeed, the average tuition discount rate was a whopping 49.9% for first-time, full-time freshmen in 2017–18, according to the National Association of College and University Business Officers. That means that students are paying roughly only half of what colleges and universities say they charge. A tuition discount rate above 35% puts a college in a danger zone, particularly when it is heavily dependent on tuition. Many institutions have discount rates far above that now.

What makes this even worse is that the natural pressure in higher education is for costs to increase—thanks to the lack of economies of scale and the complexity of higher education operations.

According to Moody’s, at least 25% of private colleges are now running deficits. At public colleges, even in a good economy, expenses have outpaced revenue the past three years. And Moody’s examines only the stronger players in higher education—the 500 or so that issue debt through the public markets.

On top of that, demographics are beginning to work against traditional colleges and universities. The pool of 18-year-olds is starting to decline—with precipitous declines in certain regions forecast to begin in 2026. That’s a recipe for disaster for two reasons.

First, in the competition to attract students, colleges and universities will continue their arms race. For many, that will mean implementing copycat sustaining innovations— more faculty, more extravagant facilities, more administrative positions—that add cost. But this will further strain their business model because they are already struggling to bring in enough revenue from a mixture of tuition, government funding, endowment returns and donations. For those institutions that are largely dependent on tuition for revenue and have small endowments, they will be in big trouble.

Second, for those that can’t keep up and those that experience enrollment declines, their large fixed costs—thanks to tenured faculty, debt payments associated with financing their many buildings, and associated building-maintenance costs—place them in peril without an easy ability to adjust.

Against this turbulent backdrop ripe for colleges to fail, Christensen observed that the emergence of the first disruptive innovation in education since the printing press —online learning—could wreak even more havoc as students enroll in online learning experiences.

Continue reading:   https://www.forbes.com/sites/michaelhorn/2018/12/13/will-half-of-all-colleges-really-close-in-the-next-decade/#5d52df9b52e5

.

.

.

.

.

45 thoughts on “Will half of all colleges close?

  1. Thanks for posting this Diane. A subject that I have written about for a few years now. Thanks to many factors (including the horrible Normal leadership) Normal is now a ONE industry town… ISU. We all know what happens to one industry towns when the industry leaves or closes? And the Uptown debt will be paid off in 2041? Except for Mayor Koos and his elite clueless posse… is there anyone who still believes thousands of students will be herded into ISU’s classrooms in the year 2031 or 2041? And as ISU begins to decline, what will happen to the tax base and the economy of Normal? Mayor Koos and his unindicted co-conspirators have doomed the town of Normal into a future default on its debt. They bet everything on the presumption that ISU will ALWAYS be here bringing in student cash cows. This is not going to happen. ISU will be a museum long before the Uptown debt is paid off and Normal will become a mere shadow of what it used to be.

    Liked by 1 person

  2. ALL CORRECT Lawrence, except for ONE point! I.S.U. closed their 7 museums years back. THAT was the beginning of their “decline” They used to have regular hours at the Circus AND Doll museums in Williams Hall and the Funk Museum in Cook, and the Eyestone school and the Stevenson room. ALL that is NOW (so they say) in storage.. That’s ANOTHER story
    As for colleges being “institutions of learning, I BELIEVE the “core” classes will survive, Science Math, Technology.
    WHY? Because it IS these filelds that people learn and then go into the private sector and sooner or later ONE or TWO of them makes it BIG. Or, a group of them do, hence they give endowments! But the”university studies” classes will just be what they are today-electives, something you take that you like or that is a hobby. But then again, ONE of the core folks MIGHT make it big in their hobby, which is “rare talent”.. Basically, colleges NEED to start teaching intelligent classes to intelligent people and make them READY for the FUTURE world NOT what it is NOW. Anybody remember Fortran or Keypunching? Yeah, THEY were the NEXT big thing..

    Like

  3. Many colleges actually teach (and demand that their students believe) things that are not true. They are also teaching students to be intolerant, hyper-sensitive, and “entitled” to so many things that these students become toxic to a normal workplace. Once a large portion of the workforce is comfortable and competent only in similar leftist institutions, how will we maintain the engines of prosperity: private businesses focused on production, profit, and competition? Then the government is there to step in. Leftists are good at tactics (esp long-term plans) but haven’t a clue about how to create prosperity, only how to redistribute other people’s money. Come on, Buffet/Zuckerberg,Bezos/Clintons, put your money where your mouth is and donate 100% of your fortune to the public coffers, no strings attached. You never would have made that money if your ideas were in vogue when you starting making your business, so hand it over. NOW, while you’re still alive. Then you can try to get ahead again under the new rules, like the rest of us little people.

    Like

    1. Bingo!

      All the Grad Students think they are entitled to $15.00 an hour on top of their tuition waiver. And SEIU has successfully gotten them to vote in favor of it. Not ONE GA I asked knew anything about back dues.

      I am FORCED to work with GAs and they have the WORST work ethic I have ever seen. I’m sorry buddy but you do NOT deserve to live in a luxury downtown apartment with your Green Top assistant manager wife when you are a college student. Guess who picks up all the slack and can’t have a voice to defend themselves less the students get triggered by acting like adults.

      Like

  4. Most of American’s colleges and universities have become so Marxist, so stridently anti-American, and so hostile to the core values that have made this Country (and frankly, Western Civilization) successful that, sadly, we would do better to CLOSE THEM ALL and substitute strictly merit based, skill specific training institutions. The “Liberal Arts Ideal” is dead, and has been largely perverted into Stalinist indoctrination camps, which, at enormous cost, leave many mush-headed millennials incapable of being patriotic, self sufficient or economically productive. Time to try something else. IT’S THAT BAD!

    Liked by 1 person

  5. Well nothing like a fact free diatribe against higher education. If you read everything in the article you’re selectively quoting: “Yes, the 200 most selective schools in the country are likely to be unaffected by these failures. Many institutions will find ways to innovate in the years ahead—although some of that innovation will likely be through clever mergers. Many will close individual programs (such as full-time MBA programs and law schools) and campus locations, while the institution remains open. Many colleges will likely even grow at the expense of those that fail. And yes, there will be some disruptors that grow significantly.

    And, we ultimately hope, many students will attend institutions better positioned to help them graduate and be successful.”

    So, some universities will consolidate, merge etc. Most will innovate and offer online degrees which many universities are doing right this minute. It’s curious that those who haven’t a university education are bashing higher education. A education in the liberal arts means that you become more liberal, not more closed minded and unable to understand how the world works. Going to a college or university should and does enlarge the imagination, rattles the emotions, and offers the promise that through the intellectual mine work of artistic and philosophical discovery, they might emerge from the pit of the mountain with something more valuable than silver, gold, or coal—the truth enhancing your life with knowledge.

    If you’re stating Buffett/Zuckerberg/Bezos/Clintons should contribute 100 percent to public coffers, why isn’t Trump? Isn’t he a billionaire? Oh, yeah That’s right, his Trump Foundation was closed down for fraud.

    Like

    1. Nicotime says this is a “fact free diatribe against higher education”? “Many institutions will find ways to innovate in the years ahead—although some of that innovation will likely be through clever mergers” “while the institution remains open” (Really?) So as part of the elite Koos posse you truly believe that very expensive brick and mortar education will survive the age of information and exponential technological change in the coming years?

      Now on to some things that you need to deal with since you believe this is a diatribe against higher education: Higher education has priced itself out of its own market and student debt is at an all time high. It is crippling an entire generation with debt. How long do you think this can continue?

      Dec 2018 article on the student debt: “US student debt levels set a new record in 2018—here’s how much the typical borrower owes” https://www.cnbc.com/2018/12/27/student-debt-levels-set-a-new-record-in-2018-heres-how-much-the-typical-borrower-owes.html?__source=facebook%7Cmain

      And now let’s look at another recent article about “Google, Apple and 12 other companies that no longer require employees to have a college degree” https://www.cnbc.com/2018/08/16/15-companies-that-no-longer-require-employees-to-have-a-college-degree.html

      Like many 20th Century institutions and companies, higher education’s days are numbered. They no longer have a lock on information or education.

      Please for everyone here… provide us with some proof for your claim that this is a fact free diatribe against higher education. Do you dispute the facts I provided in the two articles above? If so why? We are waiting for you….to answer.

      And FYI… Trump works for free… he doesn’t take a salary. Did you not know that? Best to turn off CNN (and the TV completely)…. it is messing with your perception of reality.

      Like

    2. Where is your rebuttal Nicoterm? Where are your facts to back up your statements? We are waiting for you….. Cat your keyboard? Now you are closed minded are you?

      Like

  6. And now we know what is perhaps the biggest reason why the Left is pushing “free” college for all. They need to preserve the jobs of their biggest supporters, who also indoctrinate the youth for them. Lane

    Get Outlook for Android

    ________________________________

    Liked by 1 person

  7. The biggest indicator of better income is a college education. Our founding fathers wanted a well educated population and well informed citizens. The land grant universities like ISU are part of that heritage of love of learning that our founders were thinking of at the start of this nation. Learning and knowledge are not “indoctrination”. If your “embarrassed” by your education at ISU, that’s your fault, not the university’s fault.

    Like

    1. I am embarrassed that you believe that brick and mortar education is the only way to educate yourself and prepare your skill sets for employment in 2019? So how long have you used the internet? The founding fathers? You are joking right? Yes you may be in a safe space (in your mind) but you are clueless to the reality of the 21st Century job market. And yes I too am embarrassed by the out-of-touch social justice warriors coming out of colleges today. Many believe really crazy things: Communism is great, there are 25 different genders, capitalism is evil, white people are the problem, black people are held down by institutional racism, men are the problem, etc. etc. etc….. Yes this is all part of your liberal arts education today… and it is embarrassing to me and everyone I know.

      Like

      1. Whether college or university is relevant and worth the money, is the energy and time you put in to it. The actual labor you put into your learning makes college something you use for the rest of you life. if you’re “embarrassed”, it’s your fault, college is an opportunity. And Lawrence, “brick and mortar” education IS important, it’s the friends you make, the experience you have as a college student that you wouldn’t have sitting with a computer. College is more than information on a screen. It’s also the exchange of beliefs and concepts with people you meet and learn to be tolerant of different ideas. Out of touch? It seems that you’re “out of touch”. When was the last time that you have actually been to either a college or a university? 35 years ago? With your attitude, I guess never. How exactly can you sit around critiquing students today? You can’t. Furthermore, you notions about students today is just bizarre.

        I don’t know anyone who thinks “communism is great” or that there is 25 different genders. Liberal arts education is learning literature, history, philosophy, science and most importantly critical thinking, which is something you seem to lack. As for the Founding fathers, it’s really sad that you think that their ideas of education is funny. They were quite serious about citizens being educated. Apparently ignorance is bliss. It’s also sad that you think justice is out of fashion, Perhaps you need a liberal arts education.

        Like

  8. A college degree itself does not magically confer all of the benefits that college grads typically enjoy (or these days expect) i.e. financial success. Further, there are material wealth disparities among college grads. Colleges and universities continue to peddle the fictitious narrative that unless you get a higher education degree you won’t be able to make a living, while ignorantly resisting any changes to their antiquated business model despite pressures from the market. Employers have begun figuring out that a college degree is not the best indicator of how well a candidate can do the prospective job and its reasonabilities. As an employer myself, I could care less if a programmer on my team has a degree. I need to know if he/she can do the job well and is a reliable team player. A degree tells me they did well in high school and then saw a commitment through for four years, showed up and did well enough to get a piece of paper. It’s something. A degree is not worthless…but is worth far less than it was years ago.

    Like

      1. Yes the poor thing went to the most expensive college in the country…. Brown University…. so much for their reputation. Talk about embarrassing Nicoderm… this girl makes you want to cringe when she talks…. clueless, uneducated and with a low IQ… OMG and elected to the United States congress?

        Like

    1. Hey Nicoderm… you didn’t answer any of my questions? So lets go through them again…

      1) So as part of the elite Koos posse you truly believe that very expensive brick and mortar education will survive the age of information and exponential technological change in the coming years?

      2) Higher education has priced itself out of its own market and student debt is at an all time high. It is crippling an entire generation with debt. How long do you think this can continue?

      3) Do you dispute the facts I provided in the two articles above? If so why? We are waiting for you….to answer.

      Nicaderm… your answers please if you have the intellect and the knowledge to do so? Yes I am betting that you don’t… but have at it!

      Like

  9. I was unsure about the current number…. thanks! One recent development that we will probably hear more about in the near future is: Pedophiles want to be included in the LGBQ community as people with just a “lifestyle choice” – Yes molesting children is something that should be accepted as “normal” and should not be discriminated against. I wonder what our ISU social justice warriors in the making would say about this? The answers would most likely shock even Nicoderm!

    Liked by 1 person

    1. Sorry didn’t Republicans in Alabama vote for child molester? Pedophile Roy Moore? People in glass houses shouldn’t throw stones

      Like

  10. LOG CABIN, TOM, NICOTIME, lol, one disappears another shows up. Lol, you don’t need a college education to see what’s happening here. Geesh!

    Like

      1. Calling you names. That’s rich. Your entire blog is built on calling people names. The fact is that you can dish it out but can’t take any criticism. You regularly delete comments you don’t like, even when they tell Inconvenient facts. I guess telling the truth is anathema to you. You’re a puritanical sanctimonious pearl clutching hypocrite who pretends your ears are so delicate that one mild expletive is a crime. It isn’t crime. The fact that you think so is both hilarious and a monument to your overall stupidity. Bring that comment to the police and be prepared to be laughed at. Bring that comment to court and watch thrown out as part of someone’s (mine) free speech.

        There is no evidence that half of all colleges are going out of business. There is also no evidence that I could find that there will be a gas tax bill being introduced tomorrow. In fact the Illinois Senate bill you’re talking about is dead in the water.

        You have at the most 10 to maybe 15 followers. That’s it. I’ll make your blog even more irrelevant by not commenting. The twin cities of Bloomington and Normal have survived without you for over some 180 years. The truth is that you don’t live in either city. They will be around long after this blog and you are history.

        Like

      2. I only printed your comments to show readers a tiny bit of the abuse people try to lay on me. This means I’m winning and you are losing. You would be shocked to know how many readers I have, but thanks for playing!

        Like

  11. I love how these folks with Trump Derangement Syndrome come on this site and think they can just say about anything because they are somehow better than everyone else here. You are supporting the Right Wing Blog, so you must be stupid and uninformed…They lash out with parroted talking points and act like they are superior in both intellect and knowledge. But when you ask them to support what they say? They are paper thin intellectually and very lacking in even the most basic understandings of the realities and facts behind their ideologically based assertions.

    Like

    1. And what you don’t have parroted talking points? I think you do. There is no Trump Derangement Syndrome. It something you stole from your own Obama Derangement Syndrome. When the economy collapses, I wonder how many Trump supporter there will be in the end.

      Like

    2. You know “people”. So what. Again, bring those comments to the police and they will laugh. The constitution is on my side. Apparently you’re such a snowflake that any criticism is an “attack”. Grow up. You have a blog on the internet. People who you don’t know are going to comment on your ratter silly and uninformed opinions.

      Like

  12. ISU is in zero jeopardy of closing. Are EIU, WIU, CSU (should absolutely be closed!), and maybe SIUC? Yes. Is IWU? Possibly. When these college do close, or merge, they will mostly be for profit and smaller liberal arts schools. Those of us who work in higher ed are keenly aware of what’s coming. The way students learn is changing, there are a smaller number of high school age students, and higher ed is too expensive! I’ll be the first to admit, higher education is not the end all, be all to a successful career – and I work in higher ed!

    As for the accusations that most higher ed professors are Marxists and brain washing students, that’s simply not true. You here from the small minority who make the most noise. I’ve worked with college students for over 20 years on two campuses. There are very liberal professors out there who have an influence on small numbers of students, but it certainly isn’t widespread, at all. The media paints all college students with broad strokes with paint from a very small bottle.

    I’m not worried, at all.

    Like

    1. It’s good that you are not worried… You remind me of the hundreds of store managers and CEOs of big box retailers a few years back. “We will always be here… online shopping will never threaten our continued existence….” Then all of a sudden…. 2017 – 2018 thousands of retailers go out of business! Who would have thought even 5 years ago that our mall would be dying today? No one… we are in an age of exponential technological change that far exceeds our ability to predict what used to be predictable. The slow linear upward change rate of the 20th Century now resembles a hockey stick in the 21st Century. My advice to you is: Get out now or hope you can get to retirement and remember what state you live in? Illinois is in serious financial trouble with pension liabilities that cannot continue to be met into the future. I suggest action…not whistling past the graveyard. When the student loan bubble bursts it is going to take 1/2 of the colleges with it. It is not going to be pretty and you most likely will be out of a job. This is as serious as a heart attack and should not be taken lightly.

      And as a side note… when can we expect the next downsizing from State Farm? The first week in February? They are being disrupted as we speak.

      Like

      1. I’ve been hearing that we’re going to be out of business in the next 10 years since the late 90’s. We’ll be around for the foreseeable future, even after I retire. When/if that bubble bursts, it won’t take ISU with it. Don’t worry. And, FYI, I don’t have a pension, I picked the self-managed plan. I’ll be moving out of state the day after I retire.

        I don’t really concern myself with State Farm, so, who knows.

        Like

  13. Devils Advocate. As I read this and the comments and remember that our last non collage educated President left office in about 1952, and as I see what we are going thru now, and all our leaders now have college degrees, I don’t see a whole lot reasons to have a degree. We are more governed by money and power than common sense. We lose.

    Liked by 1 person

    1. You are correct when it comes to governance. With our current president as the exception (who takes no salary and could be making more in the private sector) – politics is mostly about the money/power. There are other very good reasons (depending on your field) not to bother with a 4 year degree. Some of these reasons are:

      1) High cost
      2) Debt incurred (usually)
      3) Time it takes to get a 4 year degree (Devastating in a job market that is changing quickly)
      4) Antiquated curriculums that force students to waste time taking classes with no workplace/skill benefits
      5) Cost-Benefit (The cost no longer equals outcomes, usually)
      6) Colleges prepare student to be conformists not risk takers
      7) Google, Apple and 12 other companies that no longer require employees to have a college degree https://www.cnbc.com/2018/08/16/15-companies-that-no-longer-require-employees-to-have-a-college-degree.html

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s