The Financial Woes of Higher Education

By Watson Scott Swail, President & CEO, Educational Policy Institute/EPI International

While I typically write about the affordability problems related to higher education, this week I am tackling the other side of the dilemma: the infrastructure and financial problems facing institutions and systems of higher education in the United States.

Just yesterday, two articles appeared in The Chronicle of Higher Education regarding financial issues. The first about the 180 private colleges and universities on the US Department of Education’s Financial Responsibility list. The second about the failing infrastructure of our two-year public institutions.

Both issues have implications for the future of higher education, because both will increase the financial strain of the system, putting even more fiscal pressure on students. The 180 private colleges and universities who failed the financial measures of the Department—150 of which are non-profit institutions—should send a signal that perhaps our institutions of higher education (IHEs) are not meeting the level of fiscal responsibility that we need. The National Association of Independent Colleges and Universities (NAICU) is arguing that the measures are imprudent and unfair, and, who knows, maybe they are, but the fact that 180 private institutions are failing this measure, and my belief that many of the public institutions probably are, too, is disturbing. We have over 4,000 public and private two- and four-year institutions in the US. Too many in my books. But it is what it is. We massified in a big way, and now we have to deal with it. However, the cost of expansion and the increased cost of trying to educate more and more students (the access issue) using a format that is becoming prohibitively expensive should make us look seriously at the future of IHEs.

This of course, links with the second issue: infrastructure. As we continue to build more and more buildings, let alone colleges, we run into the same problem that our nation’s highways, roads, and bridges are currently in: they are falling apart. The bricks and mortar cost of US higher education is astonishing. As many of these colleges get older, we will continue to spend more money fixing windows, roofs, HVAC systems, and grounds at astronomical rates.  Fixing some of these old buildings is extraordinarily expensive, but is still less expensive than razing them.

You get my point. The cost of providing education is increasing exponentially. Infrastructure costs are rising and causing significant financial strains for IHEs. And the financial conditions for higher education have perhaps never been worse at any time in our history. All of this with less state support, on a per student basis, compared to the funding requires of students and parents, which, as a percentage, is higher than ever.

It seems that technology could help alleviate many of these issues. While we may require, and want, traditional higher education taught in bricks and mortar, the future of college access will depend largely on virtual learning opportunities. This, in turn, will help reduce some of the issues related to the number of “seats” available (understanding that there are still significant costs to virtual education) and reduce our reliance on building permanent infrastructure.

That’s all I have time for this week, but interested in your thoughts. Check out the articles and make your own mind up.

Have a great weekend.

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