February 22, 2018

HIGHER EDUCATION BUBBLE UPDATE: U.S. Colleges Are Separating Into Winners and Losers: Schools that struggle to prepare students for success losing ground; ‘The shake-out is coming.’

For generations, a swelling population of college-age students, rising enrollment rates and generous student loans helped all schools, even mediocre ones, to flourish. Those days are ending.

According to an analysis of 20 years of freshman-enrollment data at 1,040 of the 1,052 schools listed in The Wall Street Journal/Times Higher Education ranking, U.S. not-for-profit colleges and universities are segregating into winners and losers—with winners growing and expanding and losers seeing the first signs of a death spiral.

The Journal ranking, which includes most major public and private colleges with more than 1,000 students, focused on how well a college prepares students for life after graduation. The analysis found that the closer to the bottom of the ranking a school was, the more likely its enrollment was shrinking. . . .

“In the same way the bookstores fell when Amazon took over, now it’s higher education’s turn and it’s been coming for a while,” said Charles Becker, Concord’s vice president for business and finance. “The shake-out is coming. It’s already here.”

Demographics and geography have some influence on which side of the fault line a school lands, but quality is also a big factor. The Journal uses 15 metrics to determine quality and rank. They include return on investment, student engagement and academic resources.

At Clemson University, the Journal found, graduates on average earn $50,000 a year 10 years after entering college and the default rate on student loans is 3%; the average Concord graduate earned $32,000 and the default rate is 15%.

Richard Vedder, the director of Center for College Affordability and Productivity and a teacher at Ohio University, believes dark days are ahead for the nation’s poorest ranked schools.

And it will be no picnic for those higher up, except perhaps for the very top.

All is proceeding as I have foreseen.

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