This Week In College Viability (TWICV) for November 11, 2024

Gary (00:01.55)
It's this week in College Viability News and Commentary for November 11, 2024. More importantly, it's Veterans Day 2024. Service to country is the highest of honors.

So the red guy won and the blue lady lost. I'm guessing most of us have read and or listened to countless stories about the outcome of and the potential future impact of last Tuesday's national elections. Here is a prediction for you. The elections impact on higher education was going to be materially insignificant.

no matter whether red or blue won, materially insignificant, no matter who won last Tuesday. Yes, Project 2025 will impact higher education. Yes, yes, student debt relief will impact higher education. Yes, cultural college wars will continue and will impact higher education. however, those are all side stories. The material, as I've said over and over,

The materially significant change in higher education in the United States is market driven and will continue to be so. There are simply too many colleges and not enough students willing to pay to go to those colleges. I have said that countless times. I am sure I will say that countless more times. And until some sort of equilibrium approaches, that dynamic will play out with more consolidation.

And of course it will be in the form of closures and mergers, partnerships, holding hands, whatever that's called these days. And certainly college leaders will wring their verbal hands over all these political and federal and state and local conditions. They will blame them when their demise appears inevitable or in the near future in whatever form or fashion that it takes. But it is the market. It is supply and demand. It's not going to change.

Gary (02:12.386)
Layoffs and cutbacks, Eastern Illinois University. Now, it's not really a layoff. They updated, had an update on their fiscal year and on building reinvestment. I presume that means capital equipment. I know it does. It was written by Jason Cullum, who's a student government reporter, and it was late last week on November 8th in the Daily Eastern News. And I only bring up this story because it was either so poorly written, probably,

and the folks who were quoted in it so poorly expressed. And if this student's writing was a stellar example of teaching at Eastern Illinois University, side note, that is my undergrad alma mater. If this student's writing was a stellar example of teaching at Eastern, that's not good. Or probably even worse, if the leaders who gave him quotes are representative of the leadership at this university also, probably not good.

And in my assessment, Eastern Illinois appears to be in somewhat better financial shape than the public university across the state that I've talked about many times at Western Illinois University. Probably both are going to have to shrink enrollment and staff and the use of space accordingly. There's just not enough students in Illinois willing to go to regional public colleges. And Western Illinois, Eastern Illinois, to slightly smaller extent, Northern and Southern Illinois are going to fall into those categories.

as Eastern and I presume the others fight to stay viable. I trust they will find some ways to improve on their teaching, at least our journalism students or student government students. Page two. States are taking on fewer college costs. Who is picking up the bill? And this is a November 5th story election day from Ben Unglesby at higher education.

to get back higher education dive and the gap between what states and students pay toward higher education shrunk from 2008 to 2022. And this is from the State Higher Education Executive Officers Foundation, SHI-OI, think is the acronym for that. And here's the brief from Ben. Student share of higher education funding will hit lowest levels in more than a decade in 2022. It's about 30, not quite 38 % of the total comes from students.

Gary (04:34.702)
it still remains higher than what students paid at the outset of the Great Recession back in 2008-2009. State funding share has risen in recent years after almost 40%, but that rate is still below the almost 50 % levels, 49.2 seen back in 2008. And since then, Ben Unglesby reports, and higher education died, the proportion of funding from grants

which includes Pell Grants as well as discounts and allowances, as well as discounts and allowances, I'll come back to that, has steadily ticked upwards. By 2022, the number stood at almost 16 % compared to a little over 9 % 14 years earlier in 2008. The share of grants, in whatever form it took, increased nationally by more than six points after 2008.

That was through 2022, I guess. Accounting for the increase, this is the summary part, this is the important part. Accounting for the increase in total grants are other kinds of aids such as tuition discounts and other institutional allowances. Now, let me define institutional allowances. As I've said many times, these are unfunded institutional grants. You and I call them merit aid.

and you I call them scholarships, most but not all scholarships. So what's happened here? Tuition discounts, the tuition discount rate has hit the publics. It's been hitting the private colleges for a long time, and it's now hitting the public colleges. And that's, as I've said, good for students, really good for students. They can get a lower tuition price for whatever the source. It's not so good for the colleges, not so good at all because they still have to pay salaries.

and all the other items needed to keep the lights on. This is a mixed bag. It's good for the students. It's probably good for the states, but I don't know that it's that good for the colleges. We will of course follow that in the coming months and years. What's Trump's victory? Part one, what Trump's victory means for higher education? And I talked about this a little bit in the lead. And this is from Liam Knox and in Inside Higher Education the day after the election on November 6th.

Gary (06:55.07)
And says a second Trump administration will likely ramp up scrutiny of colleges and universities. Well, maybe. I'm not convinced that the federal government will care about what goes on in 90-some-odd percent of the colleges. The focus of the mega-folks and whatever form or fashion that takes will be on the big boys that everyone talks about. The Ivies, the land grants, all those kind of places.

I don't believe at all that the feds will use up much political oxygen at all in the regional publics and non-selective privates. Now that may be different at the state level, that may be different at the county level, but I think at the national level, there's not gonna be that much preponderance of colleges. And here's why, Trump did not make higher education a primary focus of his campaign, back in 2020 I think it was, but in the intervening four years, in the last four years,

political battles over higher ed have intensified and Mr Knox is saying, that may continue in Trump's second term. Yeah, but not for those that impact most college students. Page three, part two, Project 2025, which again was part of what we saw in the news in the last many months as it relates to the 2024 election. Project 2025 would radically overhaul higher education. Here's how.

This was from Katherine Knott, also inside higher education. This was back in July of this year. So she had looked at the project 2025 and and summarized many of the things I'm talk about a couple that might happen should Trump have been elected and now he of course he has been. And the first is undoing the education department.

Well, okay, maybe. But now that I can gamble in Missouri, and by the way that proposition only won by 5,000 votes last week, now that I can gamble in Missouri, I am betting that the closure of the Education Department does not happen. It will almost certainly be reined in with lower budgets and certainly targeted for political pressure. Absolutely. It just seems...

Gary (09:11.79)
Nobody's going to spend that much effort to dilute, to cancel an established apartment, for better or for worse. You may agree or disagree, but that's my betting number for that one. The second thing that Ms. Knox talked about was reigning in the accreditors. Now this one, of course, I'm all over.

Gary (09:30.138)
And Ms. Knox quotes from her story, the accrediting agencies that monitor the quality of colleges and universities have become de facto government agents that impose ideological preferences on institutions according to Project 2025. Thus it concludes, they must be reigned in.

The conflict of interest that the accreditation agency have, since their clients pay their salaries, the conflict of interest is probably more worthy of evaluation than the ideological stuff. Certainly, certainly, the accreditation agency's ability or interest in timely assessment and communication of a college's financial health, most especially those in dire straits, their ability or interest in assessing those is

is on the miserable side of things. They're not doing what needs to be done, either looking at the finances or when they do on frequent occasion know something, they don't communicate hardly at all. Of course, that's a project I'm working on. There will be more of that in the coming weeks and months as well. Loan forgiveness is the last one I'm going to talk about. Loan forgiveness, you know, how many of us get our loans forgiven for cars or our loans forgiven for computers that we buy, our homes that we buy?

We don't, of course. It's tough to make the case, to be consistent, it's tough to make the case that borrowing for college degree should be any different. Page four.

Gary (11:08.994)
page four some North Carolina colleges charge only five hundred dollars for tuition. And this is from WUNC radio Brianna Atkinson publishes back in October, October seventeenth.

Gary (11:24.206)
It could cause the rest of the headline reads it could cause a six million dollar deficit. And here's the story for public universities and with the North Carolina Promise, it's five hundred dollars per semester, so a thousand dollars per year. The low tuition has created such demand, duh, that now there is not enough public funding at these four public colleges and universities in North Carolina. And there's a mix of both in-state and out-of-state North Carolina students, I guess, about 26 percent.

as reported in this story are out of state. Their cost is $2,500 per semester. All right, a little bit more makes sense, $5,000 per year. here's, so free is a good thing, you know, because we don't have to pay for it, but you get what to pay for. So free is good and really low pricing is also a really good thing in whatever context you may put it. College is included.

But again, you've heard me talk about economics before and let me do it again.

You lower the price of a service or a product below the market rate. You lower the price and the demand for whatever it is will go up.

It can be gasoline or bread or houses or computers or college educations. And that's what's happening here. And this doesn't even address the issue I brought up last week. Colleges with reduced tuition programs are now reporting overworked employees. This is a story I had on last week's podcast. Yet the relatively small amount of revenue that they get from these programs isn't enough to hire a workforce

Gary (13:06.456)
to support the growing number of students enrolling in these low cost programs. And again, betting in Missouri is now illegal. So I'm betting that's what's happening in North Carolina. And inevitably, there will be scenarios where a or private organization starts a subsidized loan program. Doesn't even have to be an education. Only to see it run out of funds at some point. I didn't research this, but I guess it's happened many times over the years. It runs out of funds at some point down the road.

And here's my rhetorical question. What happens? What happens to those students caught at the end of the rainbow of low tuition costs? It's probably not going to be good. can't, you can't, ladies and gentlemen, boys and girls, college presidents, college professors, college staff, students, families, stakeholders, you can't beat market forces for forever at least in almost all cases.

Net revenue and net tuition revenue must at some point at least cover the costs of providing a college education. North Carolina is experiencing trying to change that market force, trying to change that market economic dynamic, and it just can't be done. So let's do a wrap. So I don't do politics on this show or anywhere. I don't do sex and I don't do religion on a show or even in the conversations with others. They are personal choices in my mind.

There are personal choices that, like most choices, are made on the margins. Again, marginal analysis from Economics 101. And as I said at the top of the podcast, higher education will not be materially impacted by either a red or a blue person. It is market-driven, as is everything else Americans do.

If blue had won the election, the markets would have adjusted. Now that red has won, likewise, the market will adjust. Some will be for better, some things will be for better, some things probably not so much. And to wrap this up, the knowledge learned and the documentation, the degree will always have market value, always, always, always. It's going to vary from degree to degree, we know that. The college education will still be the successful goal.

Gary (15:28.384)
of millions of Americans today, tomorrow, and in the foreseeable future. Will there be enough college graduates to fill the needs of industry and government? The market will dictate that, not the government, no matter what they try and do. It is an individual decision. Going to college is an individual decision made on the margins. Some of those margins are really small.

leading many to choose something other than a college education. And some are really large margins, meaning that college is a foregone conclusion at birth, or at least early in a child's life. They're going to college. So the marginal decision is really large. It's going to happen. College, as I've said before, I think I did last week with the College Manifesto as I wrapped up the podcast, college is really, really good. Go if you can.

Absolutely. And most colleges will survive. Many will not. The challenge is to identify, we help do that, the challenges to identify which of those are at the highest risk for not surviving. Hey, thanks for making time to listen. As always, I am grateful. I'll be back next Monday with another podcast episode of This Week in College Viability. I'm Gary Stocker. We'll talk then.