This week has been very hard on students and faculty. The community has seen three of Elizabethtown College’s programs cut, along with 13 professors being let go. Financial hardships have been noticed throughout the years here at Etown, but recently, it has become even more personal. However, colleges across the country have been suffering similar financial hardships due to the high inflation we have experienced in recent years.
According to the National Center for Education Statistics report, nearly 100 colleges have closed in the 2023-2024 school year. According to four other colleges, they cited that rising costs and inflation were due to the fact on why they decided to close their doors. Higher education inflation rates have slowed over the past few years, and institutions have yet to experience the same prices that they had pre-pandemic. With high financial pressure and lowering enrollment rates, colleges without deep pockets find it hard to weather the storms.
College’s revenues have been wavering over the recent years. Experiencing a drop in tuition in 2023, net tuition dropped by 3.3% per student. For their previous academic year, institutions have suffered a decline of net tuition growth by 2-4%. Furthermore, colleges have been experiencing an enrollment decline for over a decade. Enrollment has dropped by 15% since 2011, with COVID-19 accelerating the rapid reduction.
According to Higher Ed Dive, “In a report last year, Fitch Ratings analysts pointed out that public institutions have held tuition flat and predicted that growth in private college tuition would soon abate. For the 2023-24 academic year, the ratings agency concluded that “muted” net tuition growth combined with “a challenging inflation environment” would weigh on margins.”
Facility spending across the U.S. colleges in 2023 grew by more than 26%, with their spending spike a shift in the sector. Operating budgets increased more than 9.5% between 2019 and 2023, while the cost of building supplies and construction services rose to 19%. Therefore, colleges’ buying power has been extremely impacted by inflation.
Liberal arts colleges are facing this more than larger universities. With the declining enrollment rates, liberal arts colleges are losing what makes most of the income. Liberal arts colleges rely more on tuition, endowments, gifts and grant incomes to balance their accounts. These sources of income cannot always keep up with the rising inflation costs, so they must make cutbacks where needed.
Colleges being able to handle the impacts of inflation are varying based on several factors. Many professionals like the Industrial Federal Credit Union say that colleges should implement forensic budgeting where they investigate closely what they are spending on and determine what these items should cost or could cost, determining where to possibly save. Hiring a third-party consultant can help identify areas where the school is spending and where to avoid costs. Finally, the administration should review expenses, contracts and operations of the college as part of their budgeting strategy.
Hopefully, Etown will be able to brave the storm.
