More Students Opting Out of College Path

Ben Casselman, the economics writer for FiveThirtyEight, nicely summarizes the declining enrollment in postsecondary education among our nation’s youth in this post yesterday. Casselman observes that “among all 16- to 24-year-olds, school enrollment experienced its biggest decline in at least two decades.” The good news is that the primary driver of this decline appears to be the improving job market.

I’m firmly in the camp of thinking everyone should obtain some type of postsecondary education or advanced technical training. The opportunities for those with only a high school diploma are few and the number is bound to continue to shrink in the years ahead. So the fact that more students are choosing not to pursue any further education or training after high school is troubling.

Lessons Learned from Virginia Intermont

Virginia Intermont College (VI), a small liberal arts college in south-western Virginia, is gasping for breath in the aftermath of its failed merger with  Webber International University. I’ve written about VI in earlier posts (see this, this, this and this post) and will try not to repeat myself here. But for those interested, I will recommend this article that appeared over the weekend at TriCities.com.

VI’s failure to consummate the merger didn’t come as a surprise. It was obvious when VI’s president first announced the merger discussions that there were major barriers to hurdle before any deal was to be struck. In the end, the barriers proved to be too high. Again, it’s not surprising.

VI was in a tough spot. It’s in a state with a plethora of small, less-selective liberal arts colleges. In other words, the competition for students in its market segment is intense and, by and large, it was competing for students who weren’t able to lay out large sums for a private college experience. Indeed, within the state’s private college sector, only Washington & Lee and Richmond have significant pricing power and both have endowments that put them in a league by themselves.

Therefore, VI’s only chance for survival rested in its ability to keep its costs low and to present a sufficient value proposition to ensure full enrollment. Continue reading

Student Debt is Drag on the Economy

Tim Logan of the LA Times penned this story in today’s paper concerning the impact of student debt on home buying. To state the obvious, there is only so much money to go around and each dollar spent repaying student loans can’t be used to buy homes or make other purchases that fuel our economic engine. And exactly why we think it’s a good idea to foster a system of massive debt creation among college students, I can’t tell you.

A Millennial’s Perspective

I invite you to read the entire essay of Tim Donovan on Salon’s website. The title will give you a flavor for its tone: “Boomers are humiliating themselves: Why their pandering to millennials is so sad.”

I spend a fair amount of time with Millennials, yet I don’t claim to speak for them or to understand fully their perspectives. Naturally, there are differences in values and perspectives within their generation. Yet there is much in common with respect to their experiences, values and perspectives. It behooves the rest of us to listen.

For those disinclined to follow the Salon link, here are some excerpts from Mr. Donovan’s post:

[T]he truth is that young people in America are struggling mightily: We face a massive, persistent unemployment and underemployment crisis, particularly for the 70 percent of millennials who either won’t attend or finish college, and now face the largest wage gap (compared to their college-graduate peers) in modern history. Meanwhile, those young people lucky enough to hold degrees face higher rates of student loan debt and greater risk of default than ever before. Home and car ownership has subsequently plummeted, and demographers have seen significant delays in the age when we’re getting married and having kids. Real solutions, large enough to meaningfully address these problems, can only come from the federal government, and yet we’re completely held hostage by a political system that’s so dysfunctional it’s essentially impossible to pass any measures that will adequately address these problems.

Corporate America consistently ignores these fundamental, practical challenges to succeeding in the world today, which probably goes a long way to explaining why millennials, as a generation, are so unmoved by the vision of America that they’re trying to sell. Who can blame young people for not relating to a mainstream media that constantly proclaims — with little evidence — that this is a uniquely great country, in which anyone who’s willing to work hard and follow the rules can find success? (Particularly considering there’s so much evidence to the contrary.) Even when a congressperson or the president announces triumphantly that this is still the greatest nation in the world, do those bromides ring true to ears of a generation who’ve lived their entire lives under the long shadows of political dysfunction, economic malaise and fast-expanding inequality? While polls often show millennials to be the most optimistic age demographic in America, we’re also deeply disengaged with politics and fairly pessimistic about the direction this country is heading.

      *          *          *

The world we’ve inherited, this plutocratic “free-market” horror show, is crushing millions of young people desperate for work — any work. This is the most obvious reason that millennials seem so prone to “whining.” It’s also why these accusations must stop. This brand of criticism is enormously ignorant and offensive — it trivializes the massive, systemic problems facing this country and this generation. Due to the profligacy and waste of older Americans, the economic problems that young people will face — massive federal debt payments, shrinking research and education budgets, crumbling infrastructure, a fast-changing climate — are crises that have no easy remedy. They’re also essentially ticking time bombs that, if not soon addressed, will wreak enormous destruction on our economy and our ecology for the decades, centuries, perhaps millennia to come.

Continue reading

Five Forces Reshaping Higher Education

The well-known and well-respected Boston Consulting Group (BCC) just released a report titled Five Trends to Watch in Higher Education. BCC observes that “[s]ome universities and college could go bankrupt if the trend continues.” Of course, BCC isn’t the first to share such an observation. In fact, some institutions have failed recently and more are clearly on the brink.

But some institutions have positioned themselves well for the present situation and, indeed, some are thriving. As noted in earlier posts, the gap between the haves and have-nots has been growing wider. It’s likely the distance between those two groups will continue to widen with those institutions in the middle continuing to struggle.

BCC goes on to highlight what it sees as five forces that are reshaping higher education. They are as follows:

  • Revenue from key sources is continuing to fall, putting many institutions at severe financial risk.
  • Demands are rising for a greater return on investment in higher education.
  • Greater transparency about student outcomes is becoming the norm.
  • New business and delivery models are gaining traction.
  • The globalization of education is accelerating.

There is nothing new or surprising in BCC’s observations. Each of these forces has been the subject of prior posts in this blog as well as extensive attention by others both within and outside higher ed. Yet it’s interesting to note there are institutions within the higher education  system that still think the current rough waters are temporary and that no fundamental restructuring of higher ed is occurring. Those institutions and the trustees who are responsible for their institutions’ futures are most at risk as the five forces noted by BCC continue to impact the system.

So, as I often do, I ask, what’s this mean for prospective students? Continue reading

Small Colleges Battle Death Spiral

For more on the continuing saga of poorly managed small colleges that are now in a death spiral due, in large part, to bad decisions, see this Bloomberg Businessweek story that posted today (and from which this post’s title was lifted). A quote from the story:

“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.”

This is what happens when you manage institutions for the world that was instead of the world that is and is unfolding.

As a prospective student, your job is to avoid institutions that are in financial distress and enroll at one that is likely to be around once the current restructuring of higher ed has run its course.

P.S. Choosing a College and Major during Times of Structural Unemployment

Here is a graph that should be on the minds of all college graduates:

Part-Time Employment

 

Yes, I realize I said I was done posting. And, in general, I am. Yet I’ve found it’s much harder to stay quiet in the face of harmful propaganda than I thought it would be. So I’m going to alter my position a tad: I’ll post when I can’t not.

So back to the graph I pulled from the U.S. Department of Labor’s website this morning. What is doesn’t show is that there were only 3.3 million part-timers in our country’s workforce prior to the 2001 recession. We never reverted to those levels after the 2001 recession, and we probably never will. And as you can see from the graph, the number of part-time positions skyrocketed during the Great Recession and remains about 7 million. Many of these positions are held by college graduates.

So what’s the point? It’s this: the mainstream media focuses almost exclusively on the unemployment rate. And there are even some within the financial world who are claiming (wrongly so) that the labor market is tightening to the point the Federal Reserve should raise interest rates. In short, the casual observer could get the impression the labor market is in pretty good shape. But it isn’t.

All you have to do is look at the above chart as well as data on labor participation rates and average hourly wages to know we’re a far cry from normal. As the chief economist for Goldman Sachs recently observed, the labor market is a lot softer than some people think. He’s right.

So what is a person to do? Continue reading

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