In USA alone, at least 70 Colleges have closed or merged with another in the last 4 or 5 years, of which 40 have shut shop or announced closure. The primary reason, of course, is financial. With about 20 of them, closing in 2023-2024, Covid is not the only reason for the poor financial health.
In UK, according to The Guardian, “An increasing number of universities in England face a material risk of closure”
In Canada, Gabriel Miller, president of Universities, Canada told CBC, "We're seeing budget deficits in universities right across the country: Quebec, Ontario, the Maritimes"
These three countries have been right at the top for attracting the most International students. So what may be the issues which are putting financial constraints?
Shrinking populations – There is a reduction in the number of domestic students applying for the college education. The declining birth rates have finally started showing its effects. The fertility rates, USA – 1.786, UK – 1.755 (England & Wales is at 1.44) , Canada – 1.3, have been in a decline in these countries and the current fertility rates will continue to impact the numbers available for higher education for many years to come.
Loss of Faith in college Degree - The Pew Research Center and Gallup published new surveys that reveal that Americans are losing faith in the value of a college degree. According to the surveys, 29% of Americans say that college is not worth the cost and 49% say having a four-year college degree is less important for landing a high-paying job today than it was 20 years ago. The question people are asking is, Does the college degree ensure a high paying job? Sadly, it is no longer true and students are opting for trade/vocational courses instead, to be job ready instead of a “not so reputed” college degree. Further the younger generation has realized the futility of undertaking studies in non-conventional subjects like dance, drama, tourism etc. They may get you a job but won’t take you far.
Burgeoning College Fees – College fees has been going up for ever and have reached a stage where a good college is unaffordable to most. One may get loans, but that is a burden one needs to carry for a long time and again suitable only if you get admission into a good course in a good college. College costs have gone up by more than 150% in the last 40 years, but the salary of new entrants into the job market has gone up by less than 20% (U.S. Census, Bureau of Labor Statistics and National Center for Education Statistics data).
Wider Spread of International Students – International students in most countries pay up to 2 to 3 times of what domestic students pay for the college degree. Needless to say, that the higher fees actually bolsters the institute’s finances as well as subsidize the education for domestic students. Over a period of time, due to the high costs of higher education, as well as more colleges/universities across the world becoming better at delivering education the international students are getting spread over a larger number of countries (colleges), therefore there is a financial hit to the institutes which were earlier attracting students despite being “not so reputable.” Consider this, in the year 2000, 70% of all international students were studying in the top 5 countries. In 2022, the top five countries account for only 48% of students.
Political/Economical Concerns – Australia and Canada are at the forefront of fighting the ask from locals to cap the number of students. Their reasons include pressure on local housing market, domestic students being forced out of top universities as also the impact on domestic students in the job market and other unintended impacts of the immigration policies, for example the post study work visa allowing international students to stay in the country to work / look for work for certain number of years. Political compulsions are forcing the Governments to reduce the intake of international students. Similarly the higher household debt to income ratios because of general economic factors is contributing to declining demand for higher education.
Many colleges are and will continue to face hardships to stay afloat. While the demand for reputed colleges, universities is intact and ins some cases also seeing higher number of applications, the not so reputed, smaller and less selective institutions will continue to see a decline in number of applications and inevitably move towards closure.
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