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A college degree is a lousy investment

Liberty University has its own sets of issues but this kind of shit is not unique to them:

‘Someone’s Gotta Tell the Freakin’ Truth’

“We’re not a school; we’re a real estate hedge fund,” said a senior university official with inside knowledge of Liberty’s finances. “We’re not educating; we’re buying real estate every year and taking students’ money to do it.”
 
Not sure if this is behind a paywall or not. From an enrollment admin at Bucknell and enrollment not filling up at private schools.

The Great Enrollment Crash
Students aren’t showing up. And it’s only going to get worse.
https://www.chronicle.com/interacti...W5LMG5tTUNBZF9GbEZtRnBwZ0VSa0tJa19GWVpCUElqdw

Weird choice to start that article with a quote from 1976. His thesis is that there is something fundamentally different going on now that will disrupt the landscape, but he leads with a quote that suggests people have always thought that this problem - that college may not be worth the increasingly high cost - has existed.
 
I think his thesis is we are witnessing the end of a boom period that started in the 80s.
 
From today's FT. Colleges taking out insurance policies against loss of revenue from declining Chinese students

Higher education
US colleges insure against trade war
Universities buy policies as dip in Chinese student numbers sees revenue fall
PRIYANKA VORA — NEW YORK

An increasing number of US universities are looking to buy insurance policies against a drop in revenue from international students, fearing they are overexposed to China at a time of mounting trade tensions between Washington and Beijing.

A 10 per cent decline in new international student enrolments at US universities — which rely heavily on revenue from Chinese and Indian students —over the past two academic years has already cost the US economy $5.5bn, according to a report from Nafsa, previously known as the National Association of Foreign Student Advisers.

Educators fear a further drop in international enrolments this year as US president Donald Trump’s trade war with China grinds on.

Two colleges at the University of Illinois at Urbana-Champaign — the Gies College of Business and the College of Engineering — bought insurance in 2018 worth $60m from USI Insurance Services in Champaign, Illinois. The policy pays off if both the colleges suffer an 18.5 per cent decline in revenue from Chinese students year on year because of government action such as visa restrictions or a “health event”.

“We did so out of recognition that we faced significant exposure to the China market and that a political or a public health event beyond our control could lead to a decline in students and revenue,” said Jeffrey Brown, dean of the Gies College of Business.

Anthony Ackerman of USI said the company was in talks with six other US universities, as well as a number in Australia, looking to protect themselves against a decline in enrolments from international students.

“What happens to universities here if China decides to restrict its students to come to America?” he asked.

In June, the Chinese government warned students and academics about the risk of studying in the US in the light of visa refusals.

Rising trade tensions, combined with the policy of granting shorter visas since June 2018 for many Chinese students, are making US universities less popular in China.

The loss to US universities is a gain for their counterparts in the UK, Canada and Australia. The Universities and Colleges Admissions Service, which handles applications to higher education courses in the UK, reported a 30 per cent rise in applications from Chinese students this year compared with 2018. During the same period, Canadian universities saw a 15 per cent jump in international students’ enrolment.

“Students are increasingly feeling deterred due to tighter visa restrictions and instead opting to study in the UK and other countries,” said Jon Santangelo of the Beijing Overseas Study Service Association.

The UK overtook the US as the preferred study destination this year, according to the 2019 Chinese Student Overseas Study Survey Report.

China is the largest source of international students studying in the US, supplying one-third of the total. Education service exports ranked fifth among service exports in 2018 and were worth $44.7bn, according to official figures.
 
Hard to argue they're running an educational institution if they're basically placing bets to hedge on admissions $$$.

On a similar note, here's a great article from The New York Times Magazine. It's hard to quote all the good parts. The whole thing is worth the read. Here are some key excepts. It's a revealing and emotional read.

[h=2]What College Admissions Offices Really Want[/h]Elite schools say they’re looking for academic excellence and diversity. But their thirst for tuition revenue means that wealth trumps all.

Over the last decade, two distinct conversations about college admissions and class have been taking place in the United States. The first one has been conducted in public, at College Board summits and White House conferences and meetings of philanthropists and nonprofit leaders. The premise of this conversation is that inequity in higher education is mostly a demand-side problem: Poor kids are making regrettable miscalculations as they apply to college. Selective colleges would love to admit more low-income students — if only they could find enough highly qualified ones who could meet their academic standards.The second conversation is the one that has been going on among the professionals who labor behind the scenes in admissions offices — or “enrollment management” offices, as they are now more commonly known. This conversation, held more often in private, starts from the premise that the biggest barriers to opportunity for low-income students in higher education are on the supply side — in the universities themselves, and specifically in the admissions office. Enrollment managers know there is no shortage of deserving low-income students applying to good colleges. They know this because they regularly reject them — not because they don’t want to admit these students, but because they can’t afford to.



In public, university leaders like to advertise the diversity of their freshman classes and their institutions’ generosity with financial aid. In private, they feel immense pressure to maintain tuition revenue and protect their school’s elite status. The public and private are inevitably in conflict, and the place on each campus where that conflict plays out is the admissions office.

When Angel Pérez arrived at Trinity and took a close look at the way the admissions office had been making its decisions, what he found left him deeply concerned. “We were taking some students who probably should not have been admitted, but we were taking them because they could pay,” he told me. “They went to good high schools, but they were maybe at the bottom of their class. The motivation wasn’t there. So the academic quality of our student body was dropping.”At Trinity, Pérez’s predecessors had been able to capitalize on a pattern that admissions officers say they often see: At expensive prep schools, even students close to the bottom of the class usually have above-average SAT scores, mostly because they have access to high-octane test-prep classes and tutors.“O.K., you’re not motivated, you’re doing the minimum at your high school,” Pérez explained, describing the students Trinity used to admit in droves. “You have not worked as hard as your peers. But you did the test prep, and you learned how to play the SAT game.”

If you work in admissions at a place like Trinity was before Pérez arrived, SAT scores can provide a convenient justification for admitting the kind of students you might feel compelled to accept because they can pay full tuition. It’s hard to feel good about choosing an academically undeserving rich kid over a striving and ambitious poor kid with better high school grades. But if the rich student you’re admitting has a higher SAT score than the poor student you’re rejecting, you can tell yourself that your decision was based on “college readiness” rather than ability to pay.The problem is, rich kids who aren’t motivated to work hard and get good grades in high school often aren’t college-ready, however inflated their SAT scores may be. At Trinity, this meant there was a growing number of affluent students on campus who couldn’t keep up in class and weren’t interested in trying. “It had a morale effect on our faculty,” Pérez told me. “They were teaching a very divided campus. The majority of students were really smart and engaged and curious, and then you’ve got these other students” — the affluent group with pumped-up SAT scores and lower G.P.A.s — “who were wondering, How did I get into this school?”
Hidden away among the wealthy masses on the Trinity campus was a small cohort of low-income students. When Pérez arrived, about 10 percent of the student body was eligible for a Pell grant, the federal subsidy for college students from low-income families, and many of those were students of color. Academically, Trinity’s low-income students were significantly outperforming the rich kids on campus; the six-year graduation rate for Pell-eligible students at Trinity was 92 percent, compared with 76 percent for the rest of the student body. But Trinity’s low-income students — at least the ones I spoke to during my visits to campus in 2017 — were often miserable, struggling to find their place on a campus where the dominant student culture was overwhelmingly privileged and white.

“Few enrollment-management people will admit this publicly, but we’re all sort of in the same boat,” Boeckenstedt told me when I visited him in his office at DePaul in 2017. “Admissions for us is not a matter of turning down students we’d like to admit. It’s a matter of admitting students we’d like to turn down.”

There is a popular and persistent image of college admissions in which diversity-obsessed universities are using affirmative action to deny spaces to academically talented affluent students while admitting low-income students with lower ability in their place. Boeckenstedt says the opposite is closer to the truth. If you’re an enrollment manager, he explains, the easiest category of students for you to admit are below-average students from high-income families. Because their parents can afford tutoring, they are very likely to have decent test scores, which means they won’t hurt your U.S. News ranking. They probably won’t distinguish themselves academically at your college, but they can pay full tuition. And they don’t have a lot of other options, so they’re likely to say yes to your admission offer. “These are the kids who will gladly pay more to move up the food chain,” Boeckenstedt says. “I call them the C.F.O. Specials, because they appeal to the college’s chief financial officer. They are challenging for the faculty, but they bring in a lot of revenue.”

Why don’t the most selective colleges do more? The answer, in Boeckenstedt’s opinion, is that staying “elite” depends not just on admitting a lot of high-scoring students. It also depends on admitting a lot of rich ones. And he has a point: The researchers Nicholas A. Bowman and Michael N. Bastedo showed in a 2008 paper that when colleges take steps to become more racially or socioeconomically diverse, applications tend to go down in future years. “Maybe — just maybe — the term ‘elite’ means ‘uncluttered by poor people,’ ” Boeckenstedt wrote. “And maybe that’s the problem?”

Here are the data: Among the roughly two million students who take the SAT each year, about two-thirds, according to the College Board’s categorization, receive scores that are “nondiscrepant,” or in line with their high school grades.For those students, the SAT doesn’t really affect their college prospects at all — their test scores send the same signal to college-admissions offices that their high school grades do. The students for whom test scores make a difference in admissions are the two groups who have “discrepant” scores — meaning either that their SAT score is much higher than their high school grades would predict (let’s call them the inflated-SAT group) or their SAT score is much lower than their high school grades would predict (let’s call them the deflated-SAT group). Those two categories each make up about a sixth of each cohort of high school seniors.In 2010 three College Board researchers analyzed data from more than 150,000 students who took the SAT, and they found that the demographics of the two “discrepant” groups differed substantially. The students with the inflated SAT scores were more likely to be white or Asian than the students in the deflated-SAT group, and they were much more likely to be male. Their families were also much better off. Compared with the students with the deflated SAT scores, the inflated-SAT students were more than twice as likely to have parents who earned more than $100,000 a year and more than twice as likely to have parents with graduate degrees. These were the students — the only students — who were getting an advantage in admissions from the SAT. And they were exactly the kind of students that Trinity was admitting in such large numbers in the years before Pérez arrived.By contrast, according to the College Board’s demographic analysis, students in the deflated-SAT group, the ones whose SAT scores were significantly lower than their high school grades would have predicted, were twice as likely to be black as students in the inflated-SAT group, nearly twice as likely to be female and almost three times as likely to be Hispanic. They were three times as likely as students in the inflated-SAT group to have parents who earned less than $30,000 a year, and they were almost three times as likely to have parents who hadn’t attended college. They were the students — the only students — whose college chances suffered when admissions offices considered the SAT in addition to high school grades.

Good case for Wake's No SAT policy here:

When Boeckenstedt looked at all that data, his conclusion was that the nonsubmitters’ low test scores were essentially a false signal, predicting an academic disaster in college that never arrived. Allowing those students to apply without submitting their scores made it easier for Boeckenstedt and his admissions staff not to be misled by that false signal. It made it easier for them to do the right thing.

There were two numbers that Pérez knew he needed to hit on May 1, the last day that admitted students could accept or reject Trinity’s offer of admission. The first number was the size of the class, which had to be as close as possible to 600 students. The second number, even more pressing, was the combined tuition revenue those 600 students needed to bring in. And back in February, Trinity’s board of trustees decided on the tuition target for the class of 2021: $19 million.

I had no idea universities had a "tuition target" for incoming classes. I guess I never really thought about it.

Pérez knew that if he was going to hit those two numbers, there was one tool that was going to be more important than any other: financial aid. The modern practice of enrollment management was invented in the mid-1970s by a man named Jack Maguire, who was then the dean of admissions at Boston College, and one of his most important innovations was to deploy financial aid strategically, as a way to attract the students he most wanted to admit, whether they genuinely needed financial assistance or not. It was something of a radical idea — giving aid to students who didn’t need it — and it didn’t seem, at first, to make sense. But in the 1980s, other colleges began experimenting with this new strategy, giving these grants the euphemistic name “merit aid,” and they found it worked remarkably well. It turned out that offering grants — even relatively small ones — to students with high family incomes made it significantly more likely that those students would enroll in your college. (If you called the grant a “scholarship,” it worked even better.) And if a well-off student was willing to pay, say, $30,000 of your $40,000 tuition, that was still a pretty good deal for your college.Over the last 30 years, as list-price tuitions have climbed rapidly, this strategy has spread to almost every private college in the nation, and many public ones, as well. And as merit aid has expanded, it has created two big problems. The first, and most obvious, is that if you give more aid to rich kids, you have less to offer to poor kids. American colleges collectively now give more institutional aid to each student with a family income over $100,000, on average, than they do to each student with a family income under $20,000.

Like most enrollment managers, Pérez contracts with an outside financial-aid-optimization company to perform econometric modeling on his applicant pool. The company he worked with, the year I was following his progress, was Hardwick Day, a firm based in Bloomington, Minn., that, after a recent round of consolidation in the industry, is now a division of a giant higher-education consulting company called EAB. Hardwick Day’s predictive models allowed its analysts to identify, based on the behavior of past students, precisely what tuition each individual applicant would probably be willing to pay. A white student from Danbury with, say, a 3.1 G.P.A. and a 1,200 SAT? Hardwick Day’s models might predict that if Trinity offered him a $15,000 discount, he would accept, but if it offered him a $5,000 discount, he would go to the University of Connecticut instead.

The rise of predictive analytics in admissions and financial aid has had the effect of automating and turbocharging the pressures that enrollment managers have always felt. Colleges’ predictive models and the specific nature of their inputs may differ somewhat from one institution to another, but the output is always the same: Admit more rich kids. That’s the message that almost every enrollment manager hears each spring, either obliquely or explicitly, and it was certainly the pressure that Pérez felt each time he opened up the latest PDF from Hardwick Day.The math in the reports might have been cold and hard, but in Trinity’s admissions building, the process was growing more emotional. By this point, Pérez’s admissions counselors felt personally attached to many of the tentative admits. Each morning, they would gather in a conference room down the hall from Pérez’s office. One by one, Pérez would display the application profile for each student whose fate was still uncertain on a large monitor on the wall, and together he and his staff would discuss and debate and horse-trade over each one. Counselors often made passionate defenses for certain students — only to learn, a few hours later, that the latest report from Hardwick Day had ruled them out.
 
I had no idea universities had a "tuition target" for incoming classes. I guess I never really thought about it.

You work at a university and never realized that someone might care about how much money they brought in every year? How do you think budgets or businesses work?
 
You’re an accountant. You get paid to think about that stuff.

I’m a professor. I get paid to teach whoever they admit and I bring in big $$$ grants.

I don’t go down to the admissions office and put in requests. I know they make sausage but I don’t get paid to think about how they slaughter the pigs.
 
You’re an accountant. You get paid to think about that stuff.

I’m a professor. I get paid to teach whoever they admit and I bring in big $$$ grants.

I don’t go down to the admissions office and put in requests. I know they make sausage but I don’t get paid to think about how they slaughter the pigs.

You know how much you bring in every year, right?
 
At the end of the year, not the beginning.
 
You’re an accountant. You get paid to think about that stuff.

I’m a professor. I get paid to teach whoever they admit and I bring in big $$$ grants.

I don’t go down to the admissions office and put in requests. I know they make sausage but I don’t get paid to think about how they slaughter the pigs.

Micromanages every sport on the planet, watches every TV show, doesn't consider how his employer operates its business.
 
From Ph’s long post...

Pérez knew that if he was going to hit those two numbers, there was one tool that was going to be more important than any other: financial aid. The modern practice of enrollment management was invented in the mid-1970s by a man named Jack Maguire, who was then the dean of admissions at Boston College, and one of his most important innovations was to deploy financial aid strategically, as a way to attract the students he most wanted to admit, whether they genuinely needed financial assistance or not. It was something of a radical idea — giving aid to students who didn’t need it — and it didn’t seem, at first, to make sense. But in the 1980s, other colleges began experimenting with this new strategy, giving these grants the euphemistic name “merit aid,” and they found it worked remarkably well. It turned out that offering grants — even relatively small ones — to students with high family incomes made it significantly more likely that those students would enroll in your college. (If you called the grant a “scholarship,” it worked even better.) And if a well-off student was willing to pay, say, $30,000 of your $40,000 tuition, that was still a pretty good deal for your college.Over the last 30 years, as list-price tuitions have climbed rapidly, this strategy has spread to almost every private college in the nation, and many public ones, as well. And as merit aid has expanded, it has created two big problems. The first, and most obvious, is that if you give more aid to rich kids, you have less to offer to poor kids. American colleges collectively now give more institutional aid to each student with a family income over $100,000, on average, than they do to each student with a family income under $20,000.

Yep (the bolded part)

It works.
 
Small private colleges are getting hit hard. We are seeing the beginning of it.
 
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