On Tuesday, March 3rd, Sweet Briar College announced it would close following the 2015 school year after 114 years of operation. The women’s liberal arts college first opened in 1901 and, in recent years, struggled to keep its doors open due to falling interest in women’s colleges. Low enrollment and a small $85 million endowment mostly tied up in specific use restrictions have led the college to “insurmountable financial challenges.” Shutting down, instead of running out the endowment, will allow Sweet Briar to help students make future plans and pay faculty severance.
It isn’t the only school fighting to keep its doors open. “Bloomberg Businessweek reported that small, private US colleges were in a ‘death spiral’ in light of dropping enrollment rates. This decline comes amid competition from cheaper online colleges and community colleges, which are enticing to students in a job market that’s weaker than it once was.” Schools are seeing enrollment drop by as much as ten percent, forcing staff and program cuts, and leaving students with a “choice between transferring or finishing degrees that may have diminished value.” Before 2008, around five private four-year colleges closed or merged per year. From 2008 to 2011, the number jumped to ten a year. Meanwhile, college tuition is increasing by nearly 2.5 times the inflation rate, forcing two thirds of undergraduates to take out loans or grants.
Mark Cuban, ‘entrepreneur and billionaire investor,’ predicts a “college implosion.” The current student loan debt in the U.S. is over $1.3 trillion. Eventually, probably soon, the debt students take on for rising tuition rates will outweigh the benefit of attending college, especially as the job market shrinks. This will lead to a collapse like the collapse of the housing bubble in 2008. He sums it up like this: schools continue to raise tuition in response to the willingness of students to take on loans and for lenders to give them. “It’s just a matter of time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. Students will stop taking the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research… Which will all lead to a de-levering and de-stabilization of the University system as we know it.” “Harvard Business School professor Clayton Christensen has predicted that as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years.”
This destabilization, however, has been put off as colleges receive a sort of bailout in the form of student debt forgiveness. The government, in an attempt to manage the trillion dollars of student debt, has put in place a new system of debt payment. “For public employees and those working for a nonprofit, so long as they made regular payments the debt would be considered settled after 10 years regardless of how much was owed or paid back. For private sector employees the debt would be settled after 20 years.” This only delays the inevitable collapse of colleges and continues to land students in crippling debt, essentially pulling them out of the economy after graduation as they struggle to make ends meet—“because of the forgiveness feature, students appear more willing to borrow; universities are advertising the forgiveness plan and seem poised to raise tuition to soak up the funds.” And making the situation worse, the future cost to taxpayers is estimated at $14 billion.
Higher education, known as America’s “great equalizer,” increases a person’s potential average wage by $32,000 per year. But to get an education now means taking on a debt as an 18 year old who doesn’t yet understand the implications of that debt. Loans are being given out too easily and schools are too willing to take the money and continue to raise tuition. Sweet Briar’s board of directors chairman said in reference to shutting down instead of trying to go co-ed, “We have moral and legal obligations to our students and faculties and to our staff and alumnae. If you take up this decision too late, you won’t be able to meet those obligations.” Colleges should also consider their other moral obligations to their students—raising tuition to absurd rates just because there are students desperate enough for an education and what they think it will bring them is manipulative, capitalizing on a society that believes education is the be all end all for a good life.