The End of the Public University?

This from Jeffrey Selingo at LinkedIn:

About 8 out of every 10 college students attends a public college or university, from the local community college down the street to the massive flagship university in the middle of the state usually known for its football team. Of those students who go to public universities, most of them—some 70%—go to smaller, regional public colleges that train a majority of our teachers, nurses, and local business leaders.

The vastness and popularity of our public colleges and universities typically surprises audiences when I mention them in talks about my book on the future of higher ed. After all, only two of the top 25 national universities as ranked by U.S. News & World Report are public institutions, and the first one of those (University of California at Berkeley) doesn’t appear until #20. And if you pay attention to the national media, most of the attention is showered on universities such as Harvard, Stanford, Princeton, or small liberal-arts colleges such as Amherst and Williams.

Public universities rarely get much attention unless they reject your son or daughter, raise their tuition, or if their football team wins a national championship.

But given how many Americans are educated at public universities, especially at a time when a college degree is about the only ticket left to the middle class, we all have a stake in their future health. And right now, the signs for the health of many of these public institutions are not good.

Just this past week, Moody’s Investors Service, which rates the debt of mostly stable colleges, reported that 72% of four-year public universities are experiencing essentially flat or declining net-tuition revenue. That’s the money these colleges have left over after giving out financial aid to invest in buildings, academic programs, and faculty. In other words, most of these colleges are either treading water when it comes to new revenue or losing money every year.

“Public universities have not experienced such poor prospects for tuition-revenue growth in more than two decades,” the report said.

Now, if you’re a student or parent paying tuition at one of these colleges, you’re probably wondering why they are crying poor when your bill goes up every year even as it gets more difficult to enroll in the classes needed to complete a degree.

The problem is that these institutions have been raising tuition year after year to make up for declines in dollars from the state. Since 2008, 41 states have cut funds to higher education. At just 1 in 10 public universities do state funds make up the largest proportion of the university's budget; in 2003, states made up the largest provider at half of the public universities.

Not all of these institutions, of course, are innocent victims in this tale. Even after years of budget cuts, many are still inefficient in their operations and in desperate need of adopting more innovative business models. But such changes can only go so far before the core of the academic product suffers.

As the numbers from Moody’s seem to indicate, public colleges and universities don’t have much pricing power left to raise tuition to make up for cuts in state aid. So unless they get infusions of cash from elsewhere, what’s likely to happen is what is already occurring in places like California, where public colleges are turning away qualified applicants and where current students find it more difficult each semester to get into the classes they need to graduate.

What’s happening to public higher education is reaching crisis proportions. So as you cheer for State U. in the big football game this weekend, be thankful for the system we have that has educated generations of Americans because it might not be around much longer, at least in its current form.