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The recent closure of Mount Ida College in Massachusetts has caused journalists and policy makers to raise yet again the question they frequently ask about the long-term financial health of small private colleges: Does this represent the beginning of the end for such institutions?
The answer is unambiguously no. Every year for the past 15 years, even during the 2008-9 recession, the number of private four-year nonprofit colleges that closed has remained in the single digits, according to the most recent Digest of Education Statistics. While the closure of even one college is a genuine loss for the institution, its community, alumni, employees and students, it’s hardly cause for sounding the alarm that all private colleges are about to go over the cliff.
This misguided concern, however, can influence not only immediate public perception but also important public policy choices. While journalists perhaps can be forgiven for sensationalizing the short-term news of a college’s closure, government officials are expected to take a longer view, guided by both experience and principled conceptions of the public good. Unfortunately, state policy makers often overlook the record of access and success by private colleges over many years, as well as the important and expanded role they can and should now play in providing opportunities for higher education to state residents. Instead, officials often take a shortsighted approach and overinvest in public institutions to the detriment of both students and taxpayers.
The Impact of Changing Demographics
To understand the nature of the problem, it’s important to review the impact of changing demographics on public as well as private higher education. In the 1960s and 1970s, as the baby-boomer generation entered college, enrollments soared nearly everywhere. In some states, massive construction programs added new facilities to existing campuses and whole campuses to the public higher education system.
New campuses multiplied well beyond demonstrated or predicted need. New York, Ohio and Pennsylvania were especially aggressive in locating new public branch campuses in close proximity to viable private colleges. Ohio State University-Lima opened in 1960, just 16 miles from Bluffton University, in operation since 1899, and 13 miles from Ohio Northern University, which began in 1871. Similarly, Penn State University-Beaver was created 1965, only eight miles from Geneva College, founded in 1880, and 17 miles from Robert Morris University, established in 1921.
For a while, overall student enrollment continued to grow. In the 1990s, however, the number of Americans in the traditional college-going age bracket began to taper off. Many state budgets became hard-pressed, and state government support to public universities gradually declined. With the recession of 2008, state support of public universities dropped even more sharply -- by 24 percent -- just when family incomes also declined, unemployment increased and family savings to send children to college were tapped for more immediate costs of living. The prevalent view became that a college education was a private or individual good, not a public or societal one.
Although funding levels began to rise modestly in 2012, state governments provided almost $2,000 less per student in 2017 than they had in 2001. Many public colleges and universities, facing underenrollment, eliminated administrative and faculty positions and sometimes whole programs, as well as increasing tuition.
Private colleges, meanwhile, raised unprecedented quantities of nongovernmental money for scholarships from alumni and other donors -- to a level that in recent years has been six times as large as the total federal financial aid that students at these institutions receive. Even so, private colleges sometimes also had to increase tuition -- although usually by lower percentages than their public counterparts -- and cut costs in ways that weakened programs.
It did not take long for both public and private colleges to consider more radical solutions. Discussions of mergers and other forms of collaboration among colleges cropped up in many locations, with the goal of eliminating duplicate programs. In Pennsylvania in 2017, an open debate took place in the state Legislature about closing several severely underenrolled public universities in the rural northern and western parts of the state.
But politics dominated. As the debate in Pennsylvania revealed, a public university is about more than educational opportunities for residents of the state. It is also about construction, jobs, tourism and football. Those public universities are still open, trying to offer a high-quality education despite severe shortages of state money and no near-term prospect of increased enrollment.
Private Colleges and the Public Good
The Pennsylvania Legislature did not consider that these regions also are home to many underenrolled private colleges that could easily absorb most of the students affected by the closures. In fact, while disinvestment in state universities can hurt both public and private higher education, the failure to recognize that private colleges contribute to the public good reflects too narrow a vision of how to serve the residents of a state. A student who enrolls at a private college, not a state university in Pennsylvania, saves the state $4,182. If even half that amount were given to the private college, the results would be good for the state, the student and the private college.
Recent research has shown that state governments could save money and enlarge access to higher education for state residents if they relied on underenrolled private colleges much more than they do at present. In 2017, the Council of Independent Colleges commissioned a report from two scholars not connected to private higher education, William Zumeta, a professor of public policy at the University of Washington, and his colleague Nick Huntington-Klein of California State University-Fullerton. They prepared simulation studies for 24 states that explored the effects of increasing by just $1,000 the portable tuition grant that most states now offer state residents. Zumeta and Huntington-Klein found that this modest increase would encourage many students to choose a private college over a public one and thereby reduce state appropriations in 22 of the 24 states they studied, while educating the same number of students and increasing the baccalaureate degree production in 19 of the states.
Zumeta showed that, in return for the increase in the amount of the portable grant, a state would gain more college-graduate residents ready to enter the work force. And the decrease in enrollment in public colleges would save the state money in the formula funding that it gives to a university for each enrolled student. If the shifts in enrollment were large enough, they would also provide savings in capital expenditures and new opportunities to decommission buildings and reduce personnel at the public universities.
In New York, the overall annual savings to the state government operating budget was estimated to be $159 million, while at the same time producing 490 additional bachelor’s degrees annually. In Pennsylvania, the estimation was $3.7 million in savings and 739 additional bachelor’s degrees annually. In Ohio, the overall annual savings to the state was estimated to be $136.7 million with 886 additional bachelor’s degrees awarded statewide each year.
Policy makers, however, did not follow the logical implications of this research. Instead, New York State announced that, with certain conditions, undergraduate study at the state’s public universities will be made available free of charge. This initiative will be a big expense for the state budget in future years, adding to residents’ burden in an already high-tax state. New York spends more than most states per full-time-equivalent student enrolled in public universities --$8,640, which is more than twice what Pennsylvania allocates -- and has 109 private colleges and universities, the most of any state. Many are underenrolled and could absorb more low-income students, with far less subsidy required by the state government than underwriting the full cost of education for them at state universities. Half the $8,640 per student would be a meaningful help to students at private colleges and would lead to significant savings in New York State’s budget.
Inevitably, as some students opt for free public college, the enrollment decline in New York’s private colleges will hurt the small towns where those institutions are often the largest employers and main suppliers of educational opportunities as well as sports and cultural programs. In New York State, the total economic impact of the independent college sector in 2015 was about $79.6 billion, and total employment generated by private higher education was 406,300 jobs.
The free college idea is under consideration in about a half dozen additional states. Will the largest unintended consequence of the free college idea be its undermining both private colleges and the economies of the communities in which the private colleges are located, especially small towns?
The Strange Case of Massachusetts
Which brings us to the strange case of Massachusetts, which also has a large number of private colleges -- several of which are internationally distinguished, such as Harvard University and the Massachusetts Institute of Technology. Most of the private colleges, however, are small and feel the same effects of demographic shifts that other states in the northern half of the country are experiencing. Declining numbers of 18-year-olds live in most of those states, and the trend is for students to go elsewhere to attend college. In 2016, 64,754 Massachusetts residents entered college nationwide as first-time, full-time degree-seeking students, but only 43,591 enrolled in Massachusetts colleges.
Even so, private higher education is still a major industry in the state, and because such education was so dominant in the 1960s, Massachusetts did not need to follow other eastern states with burgeoning college-age populations and expand the public university system exponentially. It established only the University of Massachusetts at Boston, which became just the second system campus.
It was therefore puzzling to watch Deval Patrick, Massachusetts governor from 2007 to 2015, as he worked to increase the capacity of the public universities in his state, especially in locations where private colleges already had the ability to enroll more students. The current governor, Charlie Baker, has continued that expansion, even though the Massachusetts Department of Higher Education has reported an overall decline in enrollment at its public universities from 196,847 in 2013 to an estimate of 181,088 in 2017.
Private colleges have also felt the effects of increased competition for a shrinking pool of students. Mount Ida College tried to address its difficulties in many ways -- including a possible merger with nearby Lasell College. The merger talks failed, however, which led to the announcement that Mount Ida would close and its students would be steered to transfer to UMass Dartmouth, which is about 60 miles away, near Cape Cod. At the same time, the valuable Mount Ida campus property would be acquired by UMass Amherst, which is more than 80 miles away. The disservice to Mount Ida’s students by these arrangements is all the more baffling because Mount Ida is only about 15 miles from UMass Boston. Equally mystifying, UMass Boston’s Faculty Council issued a statement that the UMass community “found out about the acquisition deal from the press.”
The state government, meanwhile, through UMass Amherst, also acquired Mount Ida’s debt and the costs of managing the property, borrowing additional money to complete the purchase. Students are now being pushed to enroll farther away from home than is necessary. And the private colleges located very near Mount Ida were given no assistance in enrolling Mount Ida’s students.
What explains these decisions? It is worth underlining that in none of the discussions was it decided that the state could subsidize students to transfer from Mount Ida to Lasell College or other private institutions. Such an arrangement could cost the state government far less than the $7,230 it appropriates for each FTE student at a public university. There are more than 40 private colleges and universities that are all located closer to Mount Ida’s campus than UMass Dartmouth and could have accommodated all of Mount Ida’s students, utilizing only a fraction of the generous state government subsidy per student.
With blinders on as they repeat the 1960s and 1970s experiences in New York and Pennsylvania, public officials in Massachusetts appear determined to undermine one of the state’s signature industries -- private higher education -- thereby weakening the sector’s contributions to the economic prosperity of the state while adding to the burden on residents to support more public higher education than is needed. If, even in Massachusetts, a private college can be allowed to shut down with the state government not working for a financially sound solution that includes coordination with other public and private colleges, what hope is there for a cost-effective way of providing access to college for the next generation of college-goers?
Clearly, a longer-term, more strategic approach to state higher education planning is needed. State officials who do not understand that many private institutions today enroll large numbers of in-state students will waste tax dollars if they do not include these colleges in plans to meet the state’s need for more student places in higher education. And state officials who ignore their fiduciary duties and prop up state universities that are not needed should be challenged. Which state with a large private higher education presence will be the first to plan rationally and cost-effectively for improved college access by its residents, relying on both public and private institutions?