The annual stress of college application season is upon us. Students, Parents and high school counselors around the country are scrambling to decide where to apply and, at the same time, if they are admitted, where they should enroll. As they engage in this nerve-racking journey, it’s important to accept this fact: The College Apocalypse is nearly upon us. We have reached a tipping point where the number of college closures will accelerate in the coming years. Nearly 9 years ago, Clay Christenson of Harvard famously predicted that, “as many as half of American universities would close or go bankrupt in 10-15 years”. He was wrong as to the timing, but almost certainly correct in his wider prediction.
Many have dismissed his prediction as unthinkable, but that is analogous to saying, in 1996: “No one is ever going to buy anything on the internet, look at all these failed companies!” While that would have been correct at a specific moment in time, as there were a number of failed internet companies (Pets.com anyone?), it is clearly wrong in the larger historical scope of innovation and change. Similarly, it feels inevitable that 100s of colleges will close in the coming years. The question is no longer if, but when. With this in mind, how should parents and students incorporate this into their decision making process in choosing a college? At the same time, how should high school counselors assist families knowing that change in the higher education landscape is accelerating?
Today, it’s clear that we are at a tipping point: More than 50% of colleges missed their enrollment goals, college age students are about to fall off a cliff due to declining birth rates during the Great Recession, and Moody’s continues to downgrade the financial viability of a growing number of higher ed institutions. Just as a restaurant without customers can’t stay open forever, this day of reckoning is coming for colleges across the country. I’ve seen this from personal experience. In building Verto Education over the past 2 years, I have visited nearly 100 college campuses in 35 states. Many colleges are very, very healthy and will be here for generations to come. Others are in dire shape, much more so than prospective parents and students understand. I have never visited a college that doesn’t tout happy students, pristine facilities and top-notch faculty. However, the financial reality of the future of many institutions is starkly different than the external facade. I feel so strongly about this that Verto Education has started to carefully screen our partner schools. We say “no” to schools that we feel aren’t financially stable. This comes from an obligation to put the interests of our students first (one of our core values), and only partner with stable institutions, who are on a course to serve students and thrive.
If you’re a parent, what to do with this information? How should you incorporate this into your decision-making process? You don’t want to send your son or daughter to the next Mount Saint Ida, Green Mountain College, or Hampshire College. In the coming years, there will be many, many examples of these types of schools. If you’re thinking, “The schools I’m looking at are stable”, I’d say that many schools that are in danger would very much surprise you. Even public institutions will not be immune to closures, the University of Alaska is an unfortunate example of this. While public institutions are less likely to close their doors, dire financial circumstances will impact the quality of the student experience.
With the above in mind, I’ve used Verto Education’s experience to create a list of factors for you to consider in your decision-making process. Think of it as a “Higher Education Checklist” of questions for you to ask yourself, and colleges, as you make this important financial and very emotional life decision:
If you’re a parent, or high school counselor, here are the key questions to look at as you choose a college for your daughter/ son/ student:
What is your total freshman class enrollment for each of the past 5 years?
Answer to look for: Is enrollment stable? If you see declining enrollment, this is likely a major risk factor.
Do you have graduate programs?
Answer to look for: Yes. Graduate programs provide a diverse revenue source, and make it more likely that the institution will survive.
What is your 4 and 6 year graduation rate?
Answer you’re looking for: This is more a qualitative question than anything else. You want your student to attend a school with positive outcomes. A poor graduation rate is reflective of a lack of both stability and quality. The American Talent Initiative is a good place to look for this, as they only allow membership from colleges with at least a 70% 4-year graduation rate.
What is your discount rate?
Answer you’re looking for: This isn’t widely known in the public sphere. The “discount rate” is the percentage of tuition scholarships/ discounts given to each year’s incoming freshman class. Many schools have a discount rate in excess of 50%, and rising. Anything north of 60% is in the danger zone.
How much money do you have in your endowment?
Answer you’re looking for: A large endowment means the university has the stability needed to weather a financial downturn. It also may be reflective of a very passionate and engaged alumni base.
Consider geographic location:
What to look for: Certain colleges in the Northeast, which have declining population rates, are at higher risk. Schools in States with growing populations such as California, Oregon, Colorado, Florida and Texas are safer.
Do they partner with Verto Education?
What to look for: Verto is very careful when we choose partner colleges. The school needs to be financially stable, and there needs to be be mission-alignment. We also look at other important factors like job placement rates, student support services, and more. Our goal is that all our students have every opportunity to succeed in both college, and in life.
This is far from a comprehensive list, but I advise every parent and high school counselor to consider the above points before making a final decision and choosing a college. This can be an emotional, complex decision, and one of the most important choices in your life. You want an alma mater that you can have pride in, and that will be here and thriving for many years to come. When deciding on a college, trust your intuition, but know the facts. If the college admissions scandal taught us anything, it’s that our values are more important than admission to college. Treating this process with integrity and respect is the most important thing you can do. Taking that approach will ensure that you set the best possible example for yourself, and for your life. Ultimately, whatever decision you make, be sure to enjoy the journey.
Mitch Gordon is the CEO of Verto Education and loves hearing from parents, students and high school counselors. He’s passionate about creating opportunities for students, and a generation of caring, informed global citizens. He replies to nearly every email he receives, so feel free to reach out at Mitch@VertoEducation.org