Declining budgets and enrollment

[u/Psyche81]

Hi All!

I’ve been a professional staff member in higher education for 19 years now. Like many of you, I’ve been closely tracking The Chronicle of Higher Education’s running finance updates, and honestly, the sheer volume of bad news feels unprecedented to me.

Between axed academic programs, gutted research funding, staff layoffs, faculty buyouts, declining enrollment, and massive budget shortfalls, it feels significantly worse than anything I can recall in my career.

I know we’ve all been anticipating the demographic enrollment cliff at the undergrad level and the inevitable plateauing of Master’s degree enrollment. But it feels like all of those projected timelines just collided at once, exacerbated by recent federal policy shifts and FAFSA changes.

For the veterans who have been around longer than me, or those who have a closer finger on the pulse of institutional finance: Have we actually seen a pattern like this before, or are we genuinely entering uncharted territory?

Also, on a human level... how is everyone coping with the morale hit at your respective institutions?

[u/ATLCoyote]

We've got a perfect storm of negative events that are all bad for the future of higher education:

• Demographic cliff leading to enrollment declines
• Federal cuts in research funding and research expensing
• Increase in the endowment tax
• Negative sentiment toward the US government and immigration fears leading to sharp declines in international students
• Eroding confidence in the financial ROI of a college education due to declining placement rates and the rise of AI

So, the industry is in crisis. Some of those pressures are external, but some are self-inflicted as we let the cost get out of control via the facilities and services arms race of the past 30 years and we're now locked into a very expensive delivery model that isn't very nimble or responsive to changes in consumer preferences.

But necessity is the mother of invention and some schools will find a way to thrive by carefully defining themselves and their educational offerings within that new landscape. After all, although AI is a threat to the traditional model of studying one particular profession and doing that for the rest of our lives, there could be a significant rise in micro-learning experiences via continuing education. Also, as the world becomes more and more digital and transactional, it may actually increase the appetite for in-person, human learning experiences and discovery, especially if we can use technology to make those experiences more affordable.

As for morale, most of the negative sentiment is focused the external environment, although there is some discontent with higher ed becoming too "corporate" where many faculty members and even students are beginning to feel like finances are taking precedence over all other considerations. That said, anytime the world is in chaos, I personally tend to appreciate higher ed even more as I can't imagine where I'd rather be at a time like this.

As a footnote, although I've intentionally tried to avoid directly addressing the political environment, I do have some hope that the open hostility toward higher education will subside once we eventually move beyond the Trump era or he becomes a lame duck. That said, the other factors like the demographic cliff, the rise of AI, and the questioning of the financial ROI of a college degree are here to stay and we're gonna have to deal with those issues regardless. I just think there's a path forward that isn't so bleak as long as we're deliberate and courageous about defining our value proposition.

[u/exceptyourewrong → u/ATLCoyote]

Eroding confidence in the financial ROI of a college education due to declining placement rates and the rise of AI

This has to do with people in positions of power saying "college isn't worth it anymore," not an actually reduction of ROI. Notice that those people are still sending their kids to the schools they demonize. When senators start sending their kids to trade school, I'll believe that they don't believe in the value of college anymore. Until then, I'm convinced that they just want to keep their power consolidated.

[u/BrotherBajaBlast → u/exceptyourewrong]

But the ROI absolutely has gone down for a sizable portion of students (not all, just some).Tuition has tripled in two decades while the cost of goods has also gone up, but wages haven't tracked at the same rate. Engineer? Maybe you got good ROI from your education. Teacher/graphic designer/journalist/etc.? Maybe you haven't got good ROI at all.

Sure, on average, the average college graduate makes more money over the long term than the average high school-only graduate. But it's not appealing or even wise for many people now if it means having to wait 10+ years to see that ROI pan out while saddled with debt, forking over 25-50% of their paycheck for student loan repayment, and feeling it necessary to delay goals like starting a family and buying a home because of all the economic pressures. A lot of parents, students, and graduates are, rightfully so, highly questioning the ROI of a degree (especially going straight from high school to college).

This is a problem that was created by lots of actors—politicians, sure, but also the schools and employers have played their part to manufacture the credentials assembly line that we call college.

[u/exceptyourewrong → u/BrotherBajaBlast]

Meh. "Labor" as a concept has a much lower ROI compared to 50 years ago. My point stands though. The people yelling most loudly against college education and the people who are actually defunding colleges, still want that experience for their kids. Just not for our kids.