undergraduates received some form of grant aid, which “covered an estimated 62.1 percent of tuition and fees for first-time undergraduates and 57.6 percent for all undergraduates.”16
Given net tuition and fee revenue fell by 5.4 percent for first-time undergraduates and by 5.9 percent among all undergraduates, it has become clear that endowments alone cannot cover the discounts of what have become 40, 50, and 60 or more percent. As a result, “most financial aid funded directly by institutions comes from undedicated revenue sources, such as available general funds, institutional reserves, endowment earnings and fundraising.”17
But even these efforts have not been enough. With advent of the COVID-19 pandemic, when teaching and learning went online and not in person, students and parents began questioning the value of an education even more. One-quarter of high school graduates in 2020 delayed their college plans “because their parents and guardians were less able to provide financial support.”18 Of greater long-term concern to institutions of higher learning, a Fidelity Investments report found that “six in 10 college-bound high school students said the pandemic has changed their view of higher education.”19
This is a serious matter, both for individual
students and the country. With so many
students now borrowing to cover at least some of the costs of education, total student loan debt in the U.S. has hit $1.7 trillion.20 Public officials can talk about loan forgiveness and/or free education, but neither is directly on the horizon. And while student debt is a major issue facing institutions, it is by no means the only issue.
Heavy Reliance on Tuition
The increased discounting of tuition and the consequences of such only point to what has been (and in many cases continues to be) the heavy reliance colleges place on tuition. About 95 percent of colleges rely primarily on tuition to support operations. But this means many
colleges and universities are unable to raise enough revenue to cover costs.
One consequence of this phenomenon is colleges and universities run on deficit spending. According to a study by Moody’s in 2018, which primarily focused on the 500 or so of the strongest players in higher education capable of issuing debt through public markets
at least 25 percent of private colleges now rundeficits. And as has been noted by some critics, public college debt – even in a good economy – “outpaced revenue the past three years. At public colleges, even in a good economy, expenses have outpaced revenue the
,
Right:
Professor Scott Galloway
Source: The Rant: The College Implosion, No Mercy, No Malice, YouTube. See: https://www.youtube.com/watch?v=d8kwzSTITP0&t=201s
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