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?
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:
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What percent of schools would close or merge?
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What would be some of the most surprising schools to close?
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How quickly would schools close? Would they immediately shutter, close at the end of the transition period, or struggle on for a few years?
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What is the breakdown of institution types (R1/2 vs SLAC vs engineering schools)?
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What would be the impact on religiously-affiliated colleges, especially Catholic schools (there's already many little-known ones in the middle of nowhere)?
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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.
Certainly some privates would survive - your Harvard, Stanford, MIT's have the brand name and finances to exist unperturbed.
I think in general, Liberal Arts Colleges would just collapse as a class. Even the prestigious ones, apart from maybe something like Harvey Mudd, are already dying out and this would the nail in the coffin. You can even see this in the ivy league - there's a reason Cornell, despite being the meme of the ivy league, has by far the largest growth in the last decade while Brown and Dartmouth have declined.
STEM is the name of the game these days. Turns out when the sentiment everywhere in the States is "l o l humanities majors => starbucks barista", kids and the parents of those kids start to listen.
On that topic, I think the heavily engineering focused private schools should do okay, survive at least - your RITs, for example. But I do think that in engineering, flagship public schools are very competitive - so it will be unlike the past, and they may not have that much of a competitive edge to justify the cost.
In spite of the fact that I went to a private engineering school, and went through a “Le STEM Master Race” period, I actually don’t think SLACs would be quite as devastated as you describe. Certainly, they’d probably be the harder hit of the bunch, but they don’t need to have the physical infrastructure and lab space that tech schools require, nor the sheer size of an R1 or R2 university. I suspect you’d see a few private engineering schools go under, along with at least one R1 and a couple of R2s. I think the SLACs that are part of a consortium (e.g., the Five College in Western Mass, Tri-College in Pennsylvania, and particularly the Claremont Colleges in Southern California) would fare the best, as they can pool resources.
Perhaps a handful can survive in the immediate by cutting costs even more until they are as barebone as can be, but with the continual decline in the number of students interested in LACs, a trend with no indication of reversing, it's not looking up for them.
If I had to guess, most LACs are seeing a decline in enrollment and admissions, while a small number are seeing gains. However, that small portion isn’t enough to change the trend.
Ultimately there’s a lot of factors that are out of my depth (endowment size, tuition, retention, etc) which determine healthy vs not. I do think location will determine the fate of many. Who wants to go to a SLAC in Nebraska versus one in the Boston or Philly suburbs?
An Alternative Take (unsubstantiated);
It's feasible that a few of these universities will be forced to radically change to maintain their survival. As in changing how university is structured and how content is delivered. It's possible that these universities would seek to provide a competitive option through a cheaper access to education through mediums that have not been fully utilized by private universities. Because lets be honest here. Our universities kinda suck, and they're extremely inefficient. The private sector is the only sector that can fix this by leading by example...at the moment they're just milking the student loan cow and providing a service that is similar to the public institutions.
Think about online education. In it's current form it's really bad... but it has room for innovation as we can see from non-university focused products. You do not need a live presentation. Get one of your professors on payroll to design a course, get some animators to make it look presentable. Condense what are 50min lectures into 10min content packed engaging videos. You then have a course that can be delivered to essentially infinite amount of people...assuming you have the demand and the server capacity. In regards to courses that require lab work, you sell "lab kits" which will allow students to preform small scale experiments at home. It's even possible nowadays, that you can set up "VR" experiments, you put on a VR headset and preform experiment in a virtual setting. The concept of "VR" university seems exciting.... So much can be taught with a medium like that... you can be sent anywhere in the universe, at any size/time scale.This is can already be achieved quite well with video... but VR makes you feel like you're actually there. You would only see something like this come from a private university in America.
If you can get the above to "mass market" you can make a superior online education for costs that would be in the hundreds of dollars instead of tens of thousands. You can further tier it, and add advertisements to cheapen the costs further. Add in private tutors...I mean when I was in university I never used office hours...you can charge those who are struggling to have dedicated one on one meetings with a professor/educator, or charge a cheaper rate for email based support...and have community support (which can be pretty solid, especially if you implement a free forum that enrolled students can ask questions in...you can have a dedicate forum for any particular course and have it retained for decades) be the "free option".
You can even make the exam taking procedure to be an opportunity for income. You pay someone ~10-20$ (you can definitely charge more... but the only way you would make people choose your university over another is to insure affordability...I think you can reasonably charge 50$ per test on the high end...keep in mind students would be taking ~80-120 exams through their online degree) to mark your exam (assuming it's a written exam). It take less then 10min to mark a test, so if you have someone getting paid ~30$ an hour to mark exams (which you can contract this labor very easily, as tests can remain in a pool for a couple weeks to get marked, and you would mostly pay per exam marked. This would be a decent sidehussle for your alumni...you dedicate an hour a day after work and you can easily take home an additional ~600$/month ), you can still scrape a decent profit. And the idea is that you can write these exams as many times as you want to... you'll just have to pay again and again.
What you're describing already exists though maybe not exactly what you envisioned: Massive Online Open Courseware (MOOC). The group that I'm a part of has been developing online course content for various platforms for about the last 7 years. Some of their courses have completion rates in the millions. The vast majority of them are free for anyone, and you only pay if you want to certify that you completed it.
I am literally doing this right now! My team is currently developing VR experiences ranging from watching his chemotherapy infiltrates cells, to interacting with a working nuclear reactor. I've only been here a year, but there's a lot of exciting stuff!
also I get to play with a lot of cool toys
Is public university funding down significantly in Canada across the board? Or is this a location issue (i.e., nobody wants to study in Sudbury)? Or a combination?
Don’t forget alums who want their name on a shiny new building (that the university doesn’t need)!
Reflecting on it now, could I instead just subsidize the cost of the A/V equipment used to record and distribute lectures, pay a T/A an hourly fee for help if I need help, and then pay to have exams proctored?
Why does a university cost so much more than my local community college? If there were a 4-year community college that offered bachelor's degrees I 100% would have done that.
Community colleges actually have been expanding their degree programs over the past few decades. The offer more associate’s degrees and some actually do offer baccalaureate degrees.
That being said, those are still pretty rare.