Applications Drop at Top LACs as Economy Sours (Bloomberg)

Parent Cafe
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<p>With 25 players on the average hockey roster you need lots of ringers to get to a 3.0 average. Hard to do that and win a NC. They compute team averages every semester. </p>

<p>[2007-08</a> Athletics Academic Summary - UWBadgers.com](<a href=“http://www.uwbadgers.com/sport_news/acsrv/headlines/story.html?sportid=102&storyid=14352]2007-08”>http://www.uwbadgers.com/sport_news/acsrv/headlines/story.html?sportid=102&storyid=14352)</p>

<p><a href=“http://www.uwbadgers.com/sport_news/acsrv/headlines/story.html?sportid=102&storyid=14592[/url]”>http://www.uwbadgers.com/sport_news/acsrv/headlines/story.html?sportid=102&storyid=14592&lt;/a&gt;&lt;/p&gt;

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<p>“Swimmies”… I like that!</p>

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<p>One school my D looked at offered a scholarship for chearleading. Their way to comply with title whatever, they now have 3 seperate chear teams (fball, bball and competitive) – minimal cost sport.</p>

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<p>There has not been a meaningful correction in higher education since the 1950s. Why, because there has been a steady increase in demand at every level of quality especially at the highly competitive, highly selective levels such as LACs and Ivys. This is reflected in their pricing power. High single digit rates of tuition increases far outstrippng inflation.</p>

<p>Even now, with endowments roiled, Tufts just announced a 3 % increase in tuition for the coming year, describing it as the lowest increase in any year since WWII.</p>

<p>The jury is out as to whether we are at a significant inflection point. Will this downturn in the economy result in a real correction both in terms of number of applicants and prices.? This depends on how severe this downturn is. Should the downturn last (and none of us pay for anything other than a quick economic recovery) then Universities will be faced with tough choices and tradeoffs…</p>

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<p>FYI Wesleyan’s applications are up 22% this year</p>

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<p>There was a major correction in the 1970s following the end of the baby boom. The rapidly shrinking applicant pool was somewhat offset by all of the male-only colleges accepting female applicants as an economic move.</p>

<p>The effects of the 1970s demographics and recession hurt more than a few colleges.</p>

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<p>Anybody left to admit?</p>

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<p>It takes a crises to focus the mind. Universities are jamming through salary and hiring freezes this year – will they be able to do it next year… and god forbid the year after that. At some point a serious evaluation of match between mission and resources will result in choices with institutions deciding in favor of shoring up strengths and shedding weak departments. A LAC which admits 600 to 750 students may not be able to offer engineering major as Trinity College in Connecticut does. More arrangements such as between Wellesley and Olin and MIT will become the norm. LACs will have to learn how to SHARE resources and swap strengths with each other. So, perhaps an innovative dating game between institutions will ensue… competitors at one level (for students) but cooperating in offering better choices to each other’s students.</p>

<p>Public schools too will face choices. For starters, the difficult task of getting into the right classes in the right sequence will get more difficult. For the UCs it is easy to look into the mirror and see what will happen – a replay of what’s already happened at CSUs where students routinely take 5 or 6 years to graduate because of lack of all the right classes.</p>

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<p>brassring, great post! Nothing wrong with LACs doing as you suggest.</p>

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<p>Humm, Trinity College admitted over 2100 students for the Class of 2012. Perhaps, you meant to write about the number of student the school in CT does ENROLL. If you were looking for a school that does admit about 700 students, you ought to look at the “other” coast. It also so happens that such school has been able to offer the very best LAC engineering program and easily one of the very undergraduate engineering in the country. That school is Harvey Mudd. And yes, it is a part of a consortium, the model you do correctly describe as having positive contributions and probably a bigger future in the US. </p>

<p>Now, about “Public schools too will face choices” I believe that this must be the understatement of the year. Just a few scant months ago, proposals started to emerge about the need to confiscate (no other word would do justice to the Marxist proposals) a part of the rich schools endowments such as Harvard’s to shore up the bleak fortunes of public schools in Taxassachussets. A similar idea was thrown around by some academics to help the endowment of the California education systems. Of course, seeing that small LACs started to have endowments as large as the entire UC system started to become tempting all the while Stanford looked like a pig to be slaughtered! </p>

<p>For all the talks about the bottom falling out of the endowment at LACs, I do not see it worse than not having one to start with! The biggest difference remains the endowment per capita!</p>

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<p>One of the cost factors frequently ignored is the fact that at many state flagships (including ours), graduating within four years is difficult, if not impossible. For example, at the information session for the flagship honors program, all six of the student representatives confessed that they would not graduate within four years. The message was essentially that unless you know your major when you start freshman year, you won’t be able to get the courses you need for your major within four years. Four years of private tuition may cost more than five years of public tuition (plus living expenses), but the gap narrows considerably.</p>

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<p>Not graduating in four years also costs one year of working in your career.</p>

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<p>Uhh, Swarthmore College enrolls about 375 freshmen each year and has had a successful engineering major since shortly after the college was founded. On average, about 1 out of every 20 Swarthmore students graduate with a B.S. in Engineering, although many of them double major and also graduate with a B.A. in another department.</p>

<p>BTW, virtually nobody takes advantage of the 3/2 engineering programs like those at Wellesley you mention. There are many reasons, not the least of which is that it takes five years to earn a four year degree and financial aid maybe tricky for the fourth and five year after the transfer.</p>

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<p>It’s got to be true that it’s better to have an endowment than not to have one. On the other hand, there are some private colleges that have gotten accustomed to their fat endowments providing something on the order of 30% of their operating budgets. When suddenly those endowments are worth 25%, 30%, possibly 50% (by some estimates) less than they were a year or two ago, those schools are facing wrenching adjustments over the next 2-3 years—on a proportional scale, much bigger than a public institution that gets, say, 40% of its operating budget from the state and is now looking at a 5% to 10% cut in state aid (=2% to 4% reduction in overall operating revenue). For some state schools, the reduction in state aid has an even smaller impact. The University of Michigan, for example, says it gets only 7% of its operating budget from the state, and the Governor is proposing a 3% cut which amounts to a trivial 0.21% of the university’s budget. </p>

<p>I think the bigger adjustments may be in store at the privates which have long touted their superior capacity to spend as the reason to choose them. And this, of course, is compounded by the fact that their financial aid budgets will have to expand substantially in the current economy; that, or they’ll need to renege on their pledges to remain need-blind in admissions and to meet 100% of demonstrated need. They’ve got a huge management challenge ahead of them. I look for their s/f ratios to grow, class sizes to grow, and all those plush amenities to dwindle. At some point they risk losing the distinctive characteristics that allow them to market to an elite niche.</p>

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<p>Uhhh, the University of Michigan is $44,000 a year for out of state students. How’s their financial aid budget holding up after a $2 billion loss to their endowment? Figure the Michigan economy, fueled by the auto industry, is going to pick up the slack?</p>

<p>I don’t know what their average aid for out-of-state students is, but that $44k number is $12,000 higher than the average student pays at Swarthmore and double the $22,000 the average student pays at Grinnell. I see that Michigan does not even attempt to cover full-need for OOS students, so it is likely more expensive than Grinnell or Swarthmore for any OOS need-aid student.</p>

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<p>^ I’m not an expert on the University of Michigan’s finances, but I imagine the hit to their endowment will hurt, just as at most other schools with large endowments (and theirs is one of the largest in absolute dollar terms). It won’t hit quite as immediately, though, because their endowment payout is conservatively based on a 7-year rolling average of endowment assets rather than 3 years as at many other schools, which smooths out the economic cycles. Ironically, they might actually have more endowment income in the near term, given the huge growth in their endowment in the 5 or 6 years leading up to 2008. And despite the size of their endowment they’re far less dependent on it than many privates—endowment payout currently accounts for only 7.5% of the operating budget. </p>

<p>They’re also far less dependent on legislative appropriations than the vast majority of publics, state aid currently comprising a modest 7% of their operating budget (in contrast to 40% or more at some publics)-- basically because the state of Michigan has been chronically broke for the last 30 years, and the University has had to wean itself away from state aid except at this very modest level. Yes, Michigan’s economy is in the tank and state general fund revenues will be down, but so far anyway the state of Michigan, with more conservative budgeting than many other states, is not looking at anything close to the multi-billion dollar deficits that plague states like California, Arizona, Nevada, and Florida, where public higher education is going to take a huge hit. So far Michigan Gov. Jennifer Granholm is projecting a 3% cut to higher education, which if you do the math amounts to a 0.21% impact on the University’s overall operating budget. </p>

<p>Yes, Michigan is expensive for OOS students. Yet they continue to fill over a third of their class with OOS students, who represent a very strong revenue stream. Michigan does provide FA to OOS students—not enough to meet 100% of need, as you correctly point out, but according to U.S. News 39% of OOS students at Michigan receive need-based aid at an average of $20,971 per OOS award, hardly peanuts. In addition, US News reports 42% of OOS students at Michigan receive “non-need-based gift aid”—presumably merit scholarships—at an average of $11,461 per award. That represents some pretty heavy discounting off the OOS sticker price and from the University’s perspective cuts into the OOS tuition revenue stream. But my sense is it also prices them very competitively for a whole lot of OOS students. </p>

<p>No doubt some high-need students would do better with the FA packages offered by the handful of privates that can afford to meet 100% of demonstrated need with gift aid. But certainly for full-pays, Michigan is substantially cheaper even at the full sticker price, and may be much cheaper with a merit award. For those in between, it’s going to be a closer call, and the net cost will probably vary from student to student depending on their individual financial circumstances and the individual FA award. But I don’t think Michigan is particularly worried about losing market share among OOS students; overall it appears to be highly competitive in price in comparison to privates (except at the low end of the income scale), and at the same time it offers superior quality to many other publics that can offer a lower price to their own state residents. It (along with Virginia and to some extent North Carolina) occupies a distinct market niche that doesn’t appear to be in any danger of disappearing anytime soon.</p>

<p>I also think research universities may have an advantage in weathering the current recession. The research enterprise pays a lot of bills, including a big chunk of faculty salaries, the largest single expense item in a college or university budget. Of course, the research dollars could dry up but at least for the next year or two they’ll be operating on money already committed and in the pipeline. And going forward, the Obama administration appears to be committed to investing more in scientific research, not less, especially in areas like NIH-funded medical research and DoE-funded energy research, both areas where a school like Michigan is positioned to compete at the highest level. As for the rest, they’ve got a very broadly diversified financial base—research, endowment, tuition, and state aid, coupled with enterprise funds like health care and hospitals that keep the medical school running, annual surpluses from a very profitable athletic program, licensing fees on apparel and other paraphernalia marketed under one of the most recognizable and sought-after brands in the country, as well as patent licensing fees and other intellectual property developed out of the research mission. Many parts of this far-flung empire could be hurt in what now appears to be a very sharp and severe recession, but if I were in charge of figuring out how to pay the bills I think I’d much rather have that diversified financial base than to be entirely reliant on endowment spending and tuition, both of which are going to take a whack at the high-priced privates.</p>

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Yes, most people don’t realize how profitable NSF funding is for research universities. Individual NSF grants include “overhead” which goes directly to the university and amounts to almost 50% of the funds allotted. In other words, only about half the money in those large research grants is used to fund the actual science; researchers include the extra overhead funds in their grant proposals and that overhead money is pure profit for the university. At a R1 like Michigan with a large engineering school you are talking about a lot of money. I am not even considering NIH funding, which I assume is handled in a similar manner.</p>

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<p>And here it is, August of 2011 and top LACs continue to see applications rise. Some even saw record numbers for the past year’s applications. People will always want an education from the top schools.</p>

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<p>The worst that’ll happen is that Top 50 LACs may need to admit some students from the middle-bottom of their respective graduating high school classes…with some preference given to students attending public magnet/private schools well-known for their academic rigor. </p>

<p>Won’t be the end of the world as some high school grads with less impressive high school records will rise to the occasion and excel. I speak from experience. :)</p>

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<p>WSJ had an article on students coming to the US from China, Saudi Arabia and Brazil where they have the money to send their kids over here for education. The article focused mainly on Chinese students in US graduate schools but I think that the financial leverage in other countries is having an effect at the undergraduate level too.</p>