Skip to comments.Why your college could go bankrupt
Posted on 06/11/2013 6:26:30 PM PDT by SeekAndFind
As the higher education system in the U.S. faces rising costs and reduced state funding, many are asking, What will colleges of the future look like?
According to a recent cover story in The American Interest, some won't look like anything at all, because they'll cease to exist. Author Nathan Harden estimates that in 50 years, half of the approximately 4,500 colleges and universities in the U.S. will go belly-up.
How could this happen? Through technology, he argues. Virtual classrooms, lectures through streaming videos, online exams — we've already seen these innovations crop up at major academic institutions, but they'll only proliferate on a much larger scale and disrupt the higher education system as we know it.
Harvard and MIT already have the online education venture edX, while Stanford has Coursera and has formed agreements with Penn, Princeton, UC Berkeley, and the University of Michigan to manage their online education programs. Harden also predicts that as online education becomes more widespread, a college-level education will soon be free (or cost just a minimal amount) for everyone in the world, and that the bachelor's degree will become irrelevant.
"If a faster, cheaper way of sharing information emerges, history shows us that it will quickly supplant what came before," he argues. "We may lose the gothic arches, the bespectacled lecturers, dusty books lining the walls of labyrinthine libraries, but nostalgia won't stop the unsentimental beast of progress from wreaking havoc on old ways of doing things."
Prestigious institutions, he says, will be in the best position to adapt, while for-profit colleges and low-level public and non-profits will be the first to disappear. "Universities of all ranks below the very top will engage each other in an all-out war of survival. In this war, big-budget universities carrying large transactional costs stand to lose the most. Smaller, more nimble institutions with sound leadership will do best," he writes.
While Harden takes the extreme outlook, signs of the traditional university's bumpy future are already apparent. Moody's Investors Service recently gave a negative outlook to all U.S. universities, citing "mounting fiscal pressure on all key university revenue sources," as a number of states continue to cut higher education budgets, endowments fall, and enrollment numbers and tuition dollars dwindle. Long-term debt at not-for-profit universities has been growing at 12 percent a year, according to consulting firm Bain & Company and private-equity firm Sterling Partners. For-profit colleges, booming businesses only a few years ago, have seen their enrollments fall 7 percent from 2011 to 2012 (compared to a 1.8 percent decline for all higher education institutions), despite efforts to offer generous tuition discounts.
Other colleges have gone into survival mode — some are deferring billions of dollars of maintenance needs, cutting staff, and combining resources with other nearby schools. Minnesota's St. Olaf College and Carleton College, for example, have begun discussing combining libraries, technology infrastructure, human resources and payroll — and possibly even their academic programs.
While many students and parents worry that an online education won't offer the same quality or formative experience as a brick-and-mortar school, Harden cites research at Carnegie Mellon's Open Learning Initiative and Ithaka S+R, an academic research and consulting service, which looked at machine-guided learning combined with traditional classroom instruction. They found that students who receive computer instruction do equally well on tests as traditional students, but can learn material much faster.
Other experts have come out recently on the traditional university's doom: Billionaire investor Mark Cuban compared the current higher education system in the U.S. to the newspaper industry. Harvard Business School professor Clayton Christensen also predicts "wholesale bankruptcies" among standard universities over the next decade due to online technologies.
As Harden puts it, "Why would someone pay tens of thousands of dollars to attend Nowhere State University when he or she can attend an online version of MIT or Harvard practically for free?"
See also here:
Moody’s Investors Service now has a negative outlook for the entire U.S. higher education sector, the rating agency said on Wednesday, citing “mounting fiscal pressure on all key university revenue sources.”
Uh, it’s NOT “my college”.
Let the Creative Destruction commence.
I remember the college student union building. I loved the peace and quiet. I could go there between classes and study stretched out on a sofa or a comfy chair — much nicer than the library. Sometimes I would engage a fellow student in a game of chess. I always got my butt kicked but learned with every game.
One day I entered the building and there was a crowd of zombies staring blankly at a brand new large screen television which was blaring a commercial. I knew at that very moment that higher education was in decline.
Idiocracy is a documentary.
It’s still the rite of passage for a typical American kid graduating from high school.
It’s still the rite of passage for a typical American kid graduating from high school..
Where the hell are kids going to party?
I was the starting quarterback on our virtual university’s football team. I threw for thirty simulated touchdowns. I was going to be a first round draft pick for the virtual professional football league, but I got hurt in a game. I have a trick thumb.
The same thing could be said for pre schools, and K-12 schools too.
Are you on injured reserve for the season?
We will thrive with a 50% cut in the number of colleges. We can only hope.
The bubble is about to burst.
Couldn’t happen to a more deserving bunch.
"Big Education" is a major source of funding for Democrats.
No way they let it suffer much of a haircut.
Yes, but I’ve hired a trainer to help get my thumb back in shape. He was a hitch hiker for thirty years.
Let’s see what happens to unionize college professors and instructors when they are not given raises. Some may be able to make the leap to the private sector/real world, but most will be utterly lost. I bet the cost of college adjusts and unions will have to go along with it or not survive.
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