If the US Federal Government was to stop issuing student financial aid to private colleges and universities, what would be the impact to those institutions?

nukeman
2021-03-21T17:43:07Z

Posted this over on r/highereducation, thought it might be interesting here.

I've been thinking a lot about this lately, especially in the context of "free college" proposals. Subsidizing private colleges and universities would be a political non-starter. I'm assuming the government would have a "teach-out" style plan to transition schools off federal dollars. Regardless, the impact would be massive. I've briefly glanced at financial aid and revenue data for one R1 school, and it seems federal money makes up a significant (20-30%) portion of annual operating revenue. While that doesn't seem like much at first, I suspect enrollment would drop significantly at many schools if there was the alternative of going to a public university for free. Several thoughts come to mind:

What percent of schools would close or merge?

What would be some of the most surprising schools to close?

How quickly would schools close? Would they immediately shutter, close at the end of the transition period, or struggle on for a few years?

What is the breakdown of institution types (R1/2 vs SLAC vs engineering schools)?

What would be the impact on religiously-affiliated colleges, especially Catholic schools (there's already many little-known ones in the middle of nowhere)?

Of the schools that survive, what sort of strategies would they employ to remain solvent (lean heavier on foreign students, reduce admissions standards, have mandatory work-study programs to reduce administrative costs, create alumni contracts akin to tithing, invest more in the financial sector/Wall Street)?

Edit: Whoops, I thought I posted this in ~misc. Oh well.

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