Student Loan Blog : private colleges

Citing the Economy, Students Transfer from Private to Public Schools

Student Loan Girl — Mon, 09 Mar 2009 22:29:00 GMT

Public colleges and universities are experiencing a greater influx of transfer applications from private school students as the flagging economy heightens students’ concerns about their ability to pay for college, Bloomberg reports (“Rutgers Sees 50% Jump in Transfers as Economy Sours,” March 5, 2009).

“Students seem to be price shopping,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “People are hedging their bets financially. There is a real economic motivation.”

According to the College Board, students at four-year private colleges pay, on average, $34,130 for tuition, room, and board, while students attending a four-year public school generally pay only $14,340 — a price discrepancy prompting more students to switch schools as the recession lingers.

Schools See Sizable Jumps in Transfer Applications

Rutgers University is just one of a growing number of public schools, including state universities in Texas, Indiana, and Florida, that is seeing more transfer requests coming from students attending private institutions; this year it has received 632 transfer student applications, which is a 52-percent increase from the 416 applications it received last year.

At Florida Atlantic University, a public school where state residents pay just $3,662 in tuition for a 30 credit-hour semester and are eligible for state scholarships that cover 75 percent of their college costs as long as they maintain a B average, transfer applications have increased 37 percent for the summer term and 22 percent for the fall semester. For its summer session starting in June, the school has already received 265 transfer applications from students at private colleges, a figure that will easily surpass last year’s total of 277.

“I’d love to take credit for it all, but I know the economy has to have some part,” said Barbara Pletcher, Florida Atlantic’s director of admissions.

While admissions officers have noticed that transfer applications have increased more than in past years and that a greater number of them have come from students at private colleges, they are quick to point out that applications don’t always translate into enrollments. Students often don’t realize they can’t afford to pay for school until they receive their tuition bills, by which time it’s too late to transfer and too late to take out additional student loans to cover the expenses they didn’t account for.

“After they get their tuition bill, you’re going to see a group scrambling and we will be full,” said Jason Langdon, director of admissions at Montclair State University in New Jersey, which has received 22 percent more transfer applications this year. “The earlier in the process they can get everything lined up, the better off they’ll be.”

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Economy Takes Its Toll: Some Small Colleges to Shut Their Doors

Student Loan Girl — Wed, 19 Nov 2008 22:59:00 GMT

Americans could see more college closures, particularly among small schools with shrinking enrollment numbers as the slowing economy continues to claim more victims across every sector, The Associated Press reports (“College Closings Rare, but Could Rise in Downturn,” Nov, 17, 2008).

While the American Council on Education reported that only four out of 4,400 colleges closed in all of 2007, this year alone, four schools have announced they will either shut down certain branch campuses or close entirely by next school year.

Tuition costs that far exceed what state schools charge, diminishing enrollment numbers, and mounting debt loads have made it increasingly difficult for some small colleges, most notably those with religious affiliations, to stay afloat in recent years.

And now the same effects from the mishaps that took down the mortgage industry have bled into the higher education sector. Some schools may be discovering, much like many American consumers and homeowners, that the allure of low-interest loans caused them to take on more debt than they should have. The median debt of private colleges has increased 50 percent in the last five years, according to Moody’s Investors Service.

But now, like homeowners with variable-rate mortgages, some schools have seen their once low debt payments skyrocket to unmanageable proportions.

“Instead of holding long-term debt at lower interest rates, they have gotten stuck with short-term obligations at higher rates — a scenario [colleges] knew existed on paper but never expected to happen,” writes Justin Pope of The Associated Press.

Faith-Based Schools Hardest Hit by Economic Decline

Cascade College, a small Christian school in Portland, Ore. with just 280 students, announced it will be shutting down after the current academic year as it continues to struggle with a $4 million debt load. as will Pillsbury Baptist Bible College in Owatonna, Minn. and Vennard College in University Park, Iowa. Vennard, with just 80 students, will close its doors two years shy of its 100-year anniversary.

Taylor University in Indiana, another Christian institution, will shut down the undergraduate program at its Fort Wayne branch.

Paul Corts, president of the Council for Christian Colleges & Universities, said the financial crisis has become a “very serious” problem. “I think people are sensing that this is not short-term. It’s something that’s going to take a couple of years to play out.”

Enrollment at the council’s 102 member schools grew 71 percent between 1990 and 2004, and Corts said he doesn’t foresee that many of its schools will be closing.

He adds, however, that school closures may be difficult to predict because, “Nobody knows what the ultimate extent of this whole financial crisis is going to be.”

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Colleges With Highest Tuition Wary of Economic Downturn

Student Loan Girl — Thu, 06 Nov 2008 00:57:00 GMT

After years of ranking among the nation’s top five most expensive schools, Sarah Lawrence College — a private, liberal arts school in Bronxville, New York with a tuition price tag of more than $53,000 a year — is now the priciest school in America, beating out George Washington University and New York University, according to a new College Board report.

With such a hefty cost of attendance, the former all girls school, like many private colleges and universities, is concerned about its financial outlook in today’s economy (“Even at Costliest College, Unease Over Downturn,” The New York Times, Nov. 1, 2008).

Unlike public schools, which receive state and federal funding, private institutions like Sarah Lawrence depend on their tuition and fees, their fundraising efforts, and their endowments to pay for the bulk of their operational expenses.

Sarah Lawrence’s endowment, which the school uses to supplement its $80 million operating budget, has shrunk 16 percent from $77 million since May 2007. Yet, Sarah Lawrence still manages to offer 53 percent of its students some sort of financial aid — an expense that makes up 21 percent of the school’s budget.

While Sarah Lawrence has yet to see an uptick in the number of requests for financial aid this year, school president, Karen Lawrence, is wary of the economic pressures bearing down on the middle-and-upper-class families who may soon be or are already putting their kids through college.

“It’s really hard to tell how much we are going to be impacted,” Lawrence said. “Some students are struggling more because family finances are changes. We are trying to help them out.”

But, Lawrence said, the school’s small $65 million endowment, which pales in comparison to the $34 billion endowment of fellow liberal arts school Harvard University, is making it more difficult to help families meet Sarah Lawrence’s rising tuition costs.

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College Tuition, Student Borrowing On the Rise In Down Economy

Student Loan Girl — Mon, 03 Nov 2008 08:50:00 GMT

A new report has found that last year’s increases in college tuition were more on pace with rises in the Consumer Price Index — the measure of the average price of consumer goods and services. But despite the relative steadiness of college affordability, students still received record amounts of financial aid and borrowed more in student loans, according to findings of the College Board’s 2008 Trends in Higher Education Series.

The 2008 Trends in College Pricing report, which covers this academic year’s college costs, found that while the CPI rose nearly 5.6 percent this year, the average in-state tuition and fees at public four-year institutions increased by 6.4 percent to $6,585. Average tuition and fees at two-year public colleges jumped 4.7 percent to $2,402, and increased 5.9 percent at private four-year colleges and universities to $25,143.

“College prices are doing what other prices are doing. They’re not going up more rapidly; they’re just keeping pace,” said Sandy Baum, a senior policy analyst for the College Board and a Skidmore College economics professor (“Downturn Expected to Drive Tuition Up,” The New York Times, Oct. 30, 2008).

Lagging Economy Could Spark Increased Demand for Financial Aid

The concern among education experts is that while tuition increases were milder and closer inline with the CPI this year, these numbers may already be out of date. Since the data was gathered before the economy began its downward spiral, students at both public and private institutions may be in for even larger tuition hikes and even more borrowing next year.

The current economic crunch has led many states to slash their higher education budgets. In order to compensate for the loss of state funds, public colleges and universities in more than 12 states have been forced to raise their tuition costs.

But the flagging economy hasn’t just affected state schools; private colleges and universities have had difficulties raising funds from private donors — their largest source of financing — and have had to push any increased costs onto students.

“Private colleges face a real quandary,” Baum said. “Everybody’s going to have more people applying for financial aid, and it could really be that they’re going to lose enrollment if they can’t meet the need.”

According to the 2008 Trends in Student Aid report, part of the College Board’s Trends in Higher Education Series, graduate and undergraduate students received more than $143 billion in federal financial aid last year, and borrowed $19 billion from state and private lending sources — figures that are expected to rise as the cost of college increases.

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Struggling Colleges’ Predicted Dilemma: Merge or Close Up Shop

Student Loan Girl — Tue, 26 Aug 2008 22:58:00 GMT

Over the next few years, more small, private colleges may be faced with the decision to either merge with another school or close their doors as rising energy costs, increased competition for students, and the lingering credit crisis eat away at these private colleges’ profit margins, according to an article in Inside Higher Ed (“Will More Colleges Merge?,” Aug. 25, 2008).

The economic downturn that is threatening both families’ ability to pay for college and donors’ ability to continue financially supporting schools to the same extent they have in the past, may mean that “colleges in difficulty are going to be willing to try more ambitious solutions such as mergers,” says Richard Ekman, president of the Council of Independent Colleges. This month, Woodbury College in Vermont announced it would merge with fellow state school Champlain College. In July, California schools John F. Kennedy University and National University joined together.

Ekman wonders if other small colleges, which have typically “found amazingly imaginative ways to thrive” under financial hardship, may also be on the verge of merging or closing. Other industry experts contend that the private sector of higher education has always been in some degree of flux with colleges constantly having to adapt to demographic changes and students’ shifting interests.

“There will be a handful of colleges opening, closing or merging [every year],” says David Warren, president of the National Association of Independent Colleges and Universities. But Warren sees “no compelling evidence that we are entering a new era of consolidation in private higher education.”

Private Colleges Experiment With New Ways to Stay Afloat

Still others argue that the number of colleges officially merging may understate the extent to which small colleges are considering radical changes in order to survive, writes Inside Higher Ed reporter Scott Jaschik. More colleges are turning to collaborative partnerships with other universities to keep their doors open.

Last year, Shimer College, a small independent liberal arts school that bases its education model on small class seminars and emphasizes the study of classical literature, relocated 40 miles away to the Chicago campus of the Illinois Institute of Technology. This year, Shimer also started a joint B.A./J.D. program with the Chicago-Kent College of Law.

The moves were needed, Shimer officials say, to help the “great books” college, which was struggling to keep enrollment at 100, attract new students. This year, enrollment at Shimer is up by 25 students.

Robert Zemsky, CEO of the Learning Alliance for Higher Education, an organization that advises colleges and universities on market strategies, predicts that mergers may grow in their appeal among both small, cash-strapped colleges and financially secure schools that see merging as a better way to grow enrollment and diversify their offerings.

This merger trend could be a blow to the U.S. system of higher education, Ekman says. “The diversity of the types of American colleges and universities has always been the wonderful strength of the American system,” he says. “To me, it’s a shame when any college goes out of business or needs to sacrifice its distinct identity.”

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