How Many Colleges & Schools Will Soon Go Bankrupt?

Coronavirus Pushes Colleges to the Breaking Point, Forcing ‘Hard Choices’ about Education (WSJ.com) Forecast declines in enrollment and revenue trigger spending cuts and salary freezes; ‘the world order has changed’.  Currently, most Universities have turned to online courses during the coronavirus pandemic.

From schools already on the brink to the loftiest institutions, the pandemic is changing higher education in America with stunning speed.

Schools sent students home when the coronavirus began to spread, and no one knows if they will be back on campus come fall. Some colleges say large lecture classes and shared living and dining spaces may not return. Athletics are suspended, and there is no sense of when, or if, packed stadiums, and their lucrative revenue streams, will return.

Every source of funding is in doubt. Schools face tuition shortfalls because of unpredictable enrollment and market-driven endowment losses. Public institutions are digesting steep budget cuts, while families are questioning whether it’s worth paying for a private school if students will have to take classes online, from home.

“The world order has changed,” said Sundar Kumarasamy, vice president for enrollment management at Northeastern University, where 18% of students are international and may not be able or willing to travel to the U.S. come fall. “When we build models, we don’t have a variable called virus.”

Last year, 60% of schools missed their fall enrollment targets, according to a survey by the Council of Independent Colleges, American Association of State Colleges and Universities and Chronicle of Higher Education. This year, about half of colleges that used the Common Application reported a drop in applications.

Back in 2018, Professor Clayton Christensen, from Harvard Business School, forecast that half of american colleges will be bankrupt by 2030. That is around 2000 colleges. Online education will become a more cost-effective way for students to receive an education, effectively undermining the business models of traditional institutions and running them out of business.  Maybe this prediction has accelerated as a result of the virus.

MacMurray College survived the Civil War, the Great Depression and two world wars, but not the coronavirus pandemic. Sadly, the private liberal-arts school in central Illinois announced recently it will shut its doors for good in May, after 174 years.

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