The business of higher education in the United States is not exactly booming. Like any other segment of the economy, things are fine at the top; one needn’t worry about the Harvards and Swarthmores. But most universities faces a ton of challenges that will knock more than a few out of the game in the next decade. Demographic and economic trends are a big part of the story, but the killing blow may turn out to be a political one: Without even consciously realizing it, Donald Trump may have signed more than a few colleges’ death warrants with his regressive immigration policies.
Since Trump’s xenophobic administration moved into Washington, it has become more difficult (and perhaps less desirable) for foreigners to get student visas. International student enrollment is falling fast, down more than 10 percent from the 2015 to 2016 academic year. This is part of a larger trend of Trump’s State Department clamping down on visas; rejection of visa applications has increased more than 35 percent since 2016. Under Trump the number of student visas granted fell from 474,000 in 2016 to 395,000 in 2017 and 362,000 in 2018, according to the State Department. That’s more than 100,000 fewer would-be students in two years.
Those students (and the hefty tuition they typically pay) are all that is keeping some colleges financially solvent. “Non-elite” schools are already facing plenty of serious challenges, and the loss of international students may be one too many. There are several reasons that the outlook for middling schools — especially private ones — is grim. One is demographic. As Carleton College economist Nathan Grawe argues in his recent book, Demographics and the Demand for Higher Education, there simply aren’t going to be enough graduating high school students in the next decade to maintain college enrollment at current rates.
This problem is exacerbated by income inequality; a shrinking proportion of those students will have parents willing and able to foot an expensive tuition bill. Midwestern and New England schools dependent on in-state enrollment are already feeling the heat from these demographic trends; people have fewer children and younger residents move to other parts of the country for job opportunities.
Another problem is on the supply side. Higher education expanded like crazy beginning in the 1990s. More degree-granting institutions are competing for students than ever before. Online and non-traditional options zealously advertise their services, and many brick-and-mortar campuses have exploded in size. The U.S. currently has more than 5,300 degree-granting institutions, the majority offering four-year degrees; there is competition at every possible price point and mode of delivery.
At the same time, college has become vastly more expensive. This pushes many students toward cost-saving options (online courses or degrees, two-year colleges, and pre-college credits earned in “dual enrollment” or Advanced Placement).
This all means that the average university— the large, indistinct group of good but not elite private and state schools — is fighting over a shrinking, cost-conscious pool of potential students in a crowded marketplace. Most have responded by offering huge discounts in the form of grants and scholarships; this keeps enrollment steady but hurts the bottom line. And then there are the international students, who rarely get discounts. They’re often revealingly referred to as “full-pay” or “full tuition” students. Literally and figuratively, they subsidize the tuition discounts used to entice domestic students.
This parasitic relationship has succeeded because international demand for U.S. higher education is huge. There are many things the U.S. does poorly, but higher education is not one of those things. U.S. college degrees are very much in demand, especially in engineering and the sciences and especially among students from China and India (which combine to send the majority of international students to the U.S.). Furthermore, American colleges can charge international students out the ears without driving too many away. Some come from countries, such as Saudi Arabia, where their government pays to send them to the U.S. to earn a degree; others are from better-off families for whom a few thousand dollars for a prized degree is irrelevant.
As a result, there’s a handful of colleges that have surprisingly massive international enrollment. Florida Tech. Andrews College in Berrien Springs, MI. Universities of Tulsa and Rochester. Principia College in Elsah, IL. SUNY-Buffalo.
Are these schools prepared to offer the kind of support students from Bangladesh or China are likely to need when dropped off in rural Illinois? Nah. But the tuition such students’ pay is a godsend. Many universities are barely clinging to life even with the financial boost of eager Saudis and Chinese paying sticker price. Take away 10 to 15 percent of those students and, as the Chronicle of Higher Ed dramatically put it, the day of reckoning is at hand. Perhaps Harvard Business School professor Clayton Christensen was exaggerating when he said in 2017 that half of all U.S. colleges will close by 2030. But is 10 to 20 percent outside the realm of possibility?
No. With so many options available, colleges that cannot offer students a “value-added” experience — a degree worth more because of the name recognition, prestige, and alumni network of the school — have limited options. They give ever-larger discounts on tuition to keep butts in seats. They expand “non-traditional” offerings like online courses or degrees and adult-focused degree completion programs. But hundreds of schools offer those things now; from where will all the students come?
From overseas. There is no other answer. Now, in the name of appeasing America’s very worst people, the president is using the immigration bureaucracy to make those students harder to reach. Unsurprisingly, universities and higher-education groups have spoken out strongly against these more restrictive policies.
The U.S. insists on seeing education as a product and colleges as businesses. In that light, it is not difficult to figure out where these trends lead. More schools fighting for fewer students means some of them are not going to make it. When they fail it will be sad for many reasons, not the least of which is that a key source of demand for American college degrees was taken away for the basest political reasons.