Why lots of pricey liberal arts colleges are about to disappear

Barry Lenson

 Why lots of pricey liberal arts colleges are about to disappear

Why lots of pricey liberal arts colleges are about to disappearMany overpriced liberal arts colleges will disappear in the next 15 years.

I’m talking about schools that cost as much as far more exclusive colleges and universities – something on the order of $50,000 in tuition and other costs – and which graduate students who can’t get jobs in the marketplace.

I don’t want to name names. But Newsweek does. It recently published a slideshow of “Least Affordable Schools.” If you scroll through it, you will see what’s happening with many of them. Most of them charge top-tier tuitions. (Some cost “only” around $35,000 in yearly tuition and fees to attend.) Most offer a ton of financial aid, yet somehow manage to graduate students who owe a lot of money anyway. Then their graduates can only command bottom-tier starting salaries after graduation – usually something on the order of $40,000.

Here’s a profile, chosen at random, of one of the institutions that made the Newsweek list . . .

  • Total Price (on-campus): $51,274
  • Percent of Graduates with Debt: 74 percent
  • Average Debt of Graduate: $32,582
  • Percent of Full-time Undergraduates Receiving Financial Aid: 93 percent
  • Average Amount of Grant Aid: $17,179
  • Starting Median Salary: $46,300
  • Mid-Career Median Salary: $84,800

There’s a sad story behind many of these schools. As recently as 10 years ago, there was a valid reason for students to attend them. They welcomed students who lacked the credentials to get into more exclusive colleges. When those students graduated, jobs were waiting for them. But the economic sands have shifted under these colleges today, and many are about to sink.

How have some of these schools managed to stay afloat even this long? One college I know, for example, has a relatively small endowment of less than $200 million. Annual alumni giving is small. It costs more than $50,000 a year to attend this school, yet it offers financial aid to more than 80% of the students it accepts. A little searching online, such as reading reviews of the college that graduates have posted on TK, reveals that graduates of this school are having a very hard time finding jobs.  In order to entice new students to apply, the college is currently building a very expensive new student center. So . . . where is all that money coming from? To date, the school has managed to invest its endowment dollars wisely, and that is keeping the ship afloat. But the whole enterprise, built on wise investment of insufficient endowment funds alone, seems shaky. How will this school survive?

And then there are many other colleges out there that don’t have the advantage of well-invested endowments. Many of them took a big financial hit in the recent recession.

Before such colleges disappear entirely, I predict that we will see them try to merge with other colleges, go co-ed (if they are not already), sell off their collections of books and art, and sell off real estate. Most of them will have to cut costs by herding more students into more cost-effective lecture courses and computer labs instead of costly small seminar rooms.

It isn’t going to be pretty, that’s for sure.

In future posts in this Going, Going, Gone series, I’ll take a look at other trends that will drastically affect the shape of American higher education in the next few decades.

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