Too many colleges

As I’m pretty sure I’ve written before, I believe that in general private colleges just do not offer enough better educational experience to justify the additional expense.  I do think an NC resident will get a better education at Duke than UNC, but certainly not almost three times better.  That said, if you’ve got a lot of money to spare, I think you can still justify the expense of an elite private university.  There’s just no matching the amazing education you’ll get at an Ivy, Duke, Chicago, Stanford, etc.  What has always seemed nuts to me, though, is spending a similar amount of money on a non-elite private university.  Yes, their classes are smaller, but I guarantee you your flagship state university has better faculty and all sorts of other advantages.

Thus, I was pleased to see Slate’s Jordan Weisman write that a number of small, non-elite private colleges are in financial trouble.  I daresay, they should be:

These are agonizing times for small, private colleges. Enrollment is falling. Debts are rising. Tuition is high as it can go. And since the financial crisis, schools have been shuttering more often than normal.

Now, Moody’s Investor Service, which analyzes the credit worthiness of more 500 public and private nonprofit colleges, is delivering this grim prognosis for the future.

“What we’re concerned about is the death spiral—this continuing downward momentum for some institutions,” analyst Susan Fitzgerald tells Bloomberg. “We will see more closures than in the past.”

And that, I will add, might be a very good thing.

Small private colleges aren’t necessarily nefarious institutions, but they’re not exactly the heroes of higher education either. For the moment, forget about elite schools Amherst or Wesleyan (they’re doing fine, anyway). Instead, consider places likeAshland University in Ohio, which Moody’s has called a default risk. These institutions often cater to iffy students and produce mediocre graduation rates. But because they don’t have much in the way of endowments, they tend to charge high tuition, and leave undergraduates saddled with debts that simply might not be worthwhile. When all the aid is factored in, attending Ashland still costs $21,000 a year, according to the Department of Education. Meanwhile, only 59 percentgraduate after six years. And so, according to Payscale, it offers one of the lowest returns on investment of any college in the country.

Forget ROI which I find very problematic when applied to colleges in this manner, but it just seems crazy to me to invest way more money in an inferior educational product.  The truth is we surely have too many small private colleges in this country (hello, inefficiencies of small scale) and higher education would be just fine with fewer.

About Steve Greene
Professor of Political Science at NC State

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