April 4, 2014

HIGHER EDUCATION BUBBLE UPDATE: More Colleges Are Feeling The Pinch.

Even with tuition rates soaring, many colleges are still searching under the proverbial sofa cushions to paper over gaps in their operating budgets. As the Chronicle of Higher Education reports, some are downsizing staff, while others are slashing athletic programs and even selling off buildings. Over the past six months alone, ten schools have cut hundreds of positions, and it appears likely that more schools will follow their footsteps as the year progresses.

Budget woes are particularly acute at small, mid-tier private schools, which lack the massive endowments and guaranteed stream of top students of their more prestigious counterparts. In an effort to compete with higher-profile competitors, many of these schools borrowed heavily to fund expensive construction projects during the early 2000s, only to see their endowments shrink when the financial crisis hit. Making matters worse, tuition revenue has dwindled with declining enrollment.

College presidents may be losing sleep over this, but it’s not necessarily a bad thing from a student’s perspective, especially if it convinces colleges to trim the fat from their budgets.

In particular, I’d like to see downward moves in the administrator-to-student ratio. Maybe even a shift to adjunct administrators.

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