Another canary in the coal mine has fallen off its perch: Wilberforce University, the USA’s oldest historically black institution of higher education. Almost $10 million in debt, it has borrowed from its endowment. Last fall the school had fewer than four hundred students, and enrollment will likely shrink further by the beginning of the upcoming fall semester. Wilberforce will probably lose its accreditation in spring 2015.
Many universities are now in the same financial predicament — decreasing numbers of high school graduates, increased price sensitivity among potential students and their parents, record high tuition discount rates, operational costs that continue to climb, and stagnant levels of net tuition revenue.
It’s not just the traditional non-profits that are having financial problems. The federal government recently turned off the spigot of student financial aid to Corinthian Colleges, one of the largest for-profit education companies in the country. The feds are forcing it to sell off a number of its campuses in exchange for an infusion of $16 million, intended to push existing students through to graduation. Corinthian Colleges is also under investigation by sixteen states. Another for-profit company, Education Management Corporation, has been negotiating a debt-equity swap with creditors in an attempt to stave off default.
Some readers may remember that a few months ago I mentioned the radio program This American Life as one example of the changing consumer narratives created by technological innovation. As of yesterday, the program officially became financially independent of its former distributor, Public Radio International. This is yet another example of how disintermediation is affecting the media industry. The same process is underway in higher education. I’ll write about an example of that in my next post.