Wednesday, March 04, 2015
Gradually, and Then All at Once
I miss a few days of blogging, and a college goes under. Honestly, I turn my back for one minute...
Sweet Briar College’s announcement that it will close this summer reminded me of Hemingway’s description of going broke: gradually, and then all at once. Although Sweet Briar still has an endowment that many small colleges would envy, and is still respected in the sector, its discount rates have reached levels that it has decided it simply can’t sustain. In the past few years, its discount rate has been over 60 percent. (In other words, the typical student at Sweet Briar receives a discount of more than 60 percent from the listed tuition.) At that level, tuition increases are basically theoretical, since you wind up giving most of the increases back. Without enough full-pay students, you’ve hit a revenue ceiling.
If Sweet Briar were an outlier, the story wouldn’t have landed with such force. But it isn’t. It’s a slightly more extreme example of a common trend. That’s why the industry has responded with a collective version of Scooby Doo’s “Ruh Roh.”
Sweet Briar has a few traits that most colleges don’t. It’s a selective liberal arts college for women in rural Virginia. As a liberal arts college outside of the top ten or so, it’s fighting for distinction. As a women’s college, its appeal is limited. And rural Virginia, like much of the Northeast and Midwest, is losing population. The combination of unfavorable local demographics and increased alternatives put a squeeze on Sweet Briar that it handled for a while by giving money away. But you can only do that for so long.
What it did not do was rethink either its business model or its educational model. It decided, for reasons of its own, that its identity was set. After a while, there was nothing left to do but to go down with the ship.
Geographically, colleges and universities in America are clustered in ways that reflect where the population was fifty or more years ago. They’re much more clustered in the Northeast and Midwest than the country is. That doesn’t matter much for the elites; I don’t imagine that Harvard or MIT is particularly nervous about being in metro Boston. But for enrollment-driven institutions that tend not to draw nationally, it’s an issue. The high school seniors who used to populate, say, central Pennsylvania are now in North Carolina or Texas. That’s bad news for small colleges in central Pennsylvania.
Worse, the economics of private colleges are increasingly becoming the economics of public ones. When tuition and fees comprised relatively small percentages of public college budgets -- at one time, they were zero -- a demographic crunch like the current one wouldn’t have mattered as much. But after several decades of states and counties reducing their share of budgets, and students increasing theirs, public colleges are now subject to the same pressures as private ones. Sweet Briar’s dilemmas are familiar.
In regions without demographic tailwinds, I’d expect to see more stories like Sweet Briar’s in the near future. Denial catches up with you gradually, and then all at once.
For those of us who care deeply about preserving the mission of higher education, I hope Sweet Briar’s decision provides momentum to get past some of the stalling tactics that colleges have been using to avoid uncomfortable decisions. Regional shakeouts aren’t pretty; the ones that survive, other than the elites, will be the ones that are willing to change in ways that they haven’t always been willing to consider in the past. The playbook that worked well for a long time is showing signs of exhaustion.
Farewell, Sweet Briar. Thank you for the gift of a wake-up call that you’ve given us all. I hope we don’t waste it.