Washington Monthly - September/October 2020 - 30

HOW TO SAVE
HIGHER EDUCATION
A New Deal for America's sinking colleges.

T

here has never been a crisis in American higher education like the one we are facing today. While fall enrollment numbers are still in flux as colleges scramble to deal
with an out-of-control pandemic, there is no question that all
but the wealthiest institutions are facing deep financial pain
and potential catastrophe. Even relatively conservative estimates like those published by the college financial planning
firm Edmit suggest that, thanks to declining revenue and investment returns, one-third of all private colleges are now on
track to run out of money within six years-a nearly 50 percent
increase in estimates from 2019-and many are vulnerable to
bankruptcy much sooner. Public universities, meanwhile, are
about to be hammered by steep cuts in government funding,
forcing them to raise prices, cut services, and turn away students, including millions of newly unemployed workers.
The higher education system was weak before the coronavirus hit. Thanks to long-term enrollment declines, recent years
have already seen a spate of small-college bankruptcies, each a
minor tragedy of shocked students, heartsick alumni, and another town or city suddenly without a vital institution whose
generational roots were somehow not deep enough. Many re30  September/October 2020

gional public universities had been steadily drained of vitality
as state budget cuts accumulated, year after year.
But COVID-19 has turbocharged all of these trends, with
serious consequences for America's most vulnerable. Lowincome and first-generation students, immigrants, and people
of color will be more likely to delay going to college or to drop
out. Because colleges will charge more and families will have
less, many more students will take out loans and, with diplomas or without, end up in default, widening economic inequality and the racial wealth gap. For many poorer communities, colleges have been like stubborn plants, protecting them from the
erosion of globalization and economic disruption. When their
schools close, it will further social decay.
The need for college won't go away, however, particularly with widespread unemployment. For-profit colleges
backed by private equity will surge into the gap, using aggressive and deceptive marketing tactics to sign up naive
students who will pay outsized tuition with no-questionsasked loans from the U.S. Department of Education. Much
of that debt will never be repaid, ruining credit, wasting
lives, and costing taxpayers billions.

Nick Sirotich

By Kevin Carey



Washington Monthly - September/October 2020

Table of Contents for the Digital Edition of Washington Monthly - September/October 2020

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