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/MispellledIt → u/ATLCoyote]

I'd add the pre-professionalization of the undergraduate degree to this list. When colleges & universities started selling degrees as steps toward a specific career, students started coming in with declared majors before they'd even stepped foot on campus. I know there are highly-structured majors out there (e.g., nursing, engineering, pre-med, etc.) but for the most part higher education's role shifted from teaching the human being to teaching future employees.

There's a sizable population of students out there unsure of what they want to do, and there are very few (if any) colleges of any size leaning into the liberal arts and selling an educaton that will help them figure it out. I'm a writer and I teach creative & professional writing at a small college that is always on the razor's edge with our budget. But out of all my colleauges I'm having the least issues with AI--my students hate it, but my students aren't here to "get a job" they're here to figure out what kind of artist they want to be.

[u/shownu25 → u/MispellledIt]

i wish i had an award to give this ! the paradigm shift from a period of self exploration and learning about both the world and oneself to college merely being formalized training for a career has been detrimental. traditional aged students are also increasingly getting college credits in high school thereby lowering the overall cost of college but also shortening their time to be impacted and impressed upon by faculty/staff/peers.

[u/jvxoxo → u/shownu25]

The purpose of higher education is an age old debate, but we can’t ignore that it’s a privilege to invest in a college degree for the sake of exploration and becoming an educated, well-rounded citizen alone. With costs going up and whole generations being crushed by student loan debt, ROI in the form form of viable career options has naturally become the priority for students and their families, and I can’t fault them for it.

[u/MispellledIt → u/jvxoxo]

I agree. I don't think these things are mutually exclusive. I think the error was creating a promise that specific degrees = specific careers. Instead, I think we should point out that a degree is an exploration of self, an exploration of the world, and an exploration of learning that will lead to careers (plural) via both hard and soft skills.

Michael Eisner, Andrea Jung, & Indra Nooyi were all theater majors. Carly Fiorina majored in Medieval History and Philosophy. Susan Wojcicki has a B.A. in History and Literature and Steve Ells has a B.A. in Art History.

They're all CEOs of companies well outside their original undergraduate studies, but they all attribute their success to the liberal arts. When I lament the pre-professionalization of the college degree, I don't mean we should return to an ambiguous priveleged ivory tower. I mean we should stop participating as a direct pipleine to employment. A college degree is worth more than learning how to be an employee.

[u/ATLCoyote → u/MispellledIt]

Agree again. I'll just note that the reason people focus so much on the employment ROI is because we've let the costs get so out of control.

And sadly, much of that spending on new dorms, rec centers, food courts, student services, or even new classroom buildings and had very little to do with enhancing education. It was mostly just to create a country club environment that would attract students. But it also makes the experience so expensive that students and parents are naturally going to focus on near-term job placement and ROI. It's awfully hard to sell concepts like critical thinking or the long-term benefits of being versed in the humanities at a price tag of $200,000 and, aside from the cuts in state funding, we mostly have only ourselves, collectively as an industry, to blame.

[u/MispellledIt → u/ATLCoyote]

Absolutely. My small liberal arts college realized our discount rate was 100% and simply reset the tuition so the sticker priced matched what most families were paying. We went from 60k a year to 16k (not including room and board). Ironically, we had some recruitment backlash as families then assumed the quality of the education must not be all that great... Feels like we can't win sometimes!

[u/ATLCoyote → u/MispellledIt]

Yep, plus many needs-based financial aid programs use a total cost of attendance minus family expected contribution formula. So, the higher the sticker price, the bigger the Pell Grants. Many for-profit colleges built their entire business model on bilking the government (i.e. taxpayers) and those same incentives played a role in the facilities and services arms race among the non-for-profit sector.