Response

Response
by Raoul (2024-04-26 17:23:20)
Edited on 2024-04-27 11:16:39

In reply to: What is your focus on things closing all about? posted by Kali4niaND

I spent most of my career in financial and operations turnarounds. It didn't start out intentionally that way, but after beginning in consulting the industries in which I have been involved (retail stores, multi-unit auto service, education and training, and most recently cannabis) have faced significant adversity in the last 30 years and one gains some knowledge.

These industries collectively over-expanded with easy money and excessive optimism, and then reacted slowly to macro changes - especially from the evolution of technology whose impact was either not fully appreciated and/or denied by insiders. I continue to follow these industries as I have my whole life, and with the internet that's pretty easy (along with the time afforded by testing retirement).

I have posted on education a fair amount over the years because it is generally an important topic - but more in the politics of education (PBR). In the past 18 months or so I have posted much in the Back Room on what I consider a crisis where postsecondary education institutions close and everyone is shocked: students, parents, faculty, alumni and local communities as well as some administrators. We have a very big problem with both excess capacity and the lack of academic program focus that was perhaps inevitable (from the good times), but whose addressing was delayed by the Obama era takeover of direct student lending and then the tossing of money at schools during COVID to help them. [Not everyone appreciates that the Great Recession + Changes in student lending was great for the postsecondary education industry].

For years bond rating agencies warned of a coming bloodbath, but it didn't happen because of the massive liquidity - at least with private schools (for profits experienced a full-blown melt down from 2013-2020 - example, U of Phoenix went from 440K enrollment peak to under 100K). The crisis in privates was delayed. Sadly, the extra time was wasted by most administrations and now they are scrambling - and we haven't even hit the enrollment cliff. On top of that, the nature of what people want to learn and how/where they want to learn is evolving quickly. Add in cost inflation, especially for building operations and maintenance, insurance and of course wages (huge cost for all educational institutions) and you have the makings of a very big mess.

I discuss this here because (a) many back here are big consumers of educational services at the postsecondary level (b) many are not fully aware of the broader challenges facing postsecondary educational institutions. Maybe by helping them understand it they can be better consumers. Most won't get caught up in a closure. But they might have a child studying somewhere where their program is affected by budget cuts. And as alums, they can encourage administrations to be proactive. (c) Finally, helps folks, most of whom went to ND or similar elite public or private universities at one time, that the places they know of are in a dramatically different position than most everyone else. The administrators, faculty and students have the money/ability to worry about protests and plagiarism and donations and new buildings. Most other schools are fighting for their lives and/or for a new business model while pissing off students and faculty.

Finally, I would say education institutions and retailers are something everyone knows well - the businesses and institutions are generally known regionally if not nationally. So they are of some interest when in trouble. They affect our lives in some way.

JuCo enrollment is the canary in the coalmine

Comm colleges have been struggling mightily since they peaked in the Great Recession. They're hanging on because they're highly subsidized (usually).

Since then, it's been a difficult crash for them. No one needs an AA. And while there are plenty of great jobs if you get a CTE cert or training, most students still prefer to get paid doing that OJT. So it remains niche and underutilized. Many Comm Colleges are joining up with major employers to provide their training, so if nothing else they can explain their access to the property taxes.

Many comm colleges are getting into the undergrad business to stay alive. Here in AZ, they received the ability to offer over the STRONG objection from our public Univ.

I do wonder if there would be a market for some comm colleges to spin off into low-cost, non-reasearch, liberal arts focused undergrad colleges. There's still a ton of kids who want on campus liberal arts degrees but don't want to spend 50k a year doing it. Many comm colleges have underutilized branches or sections of their schools. I know that a liberal arts college doesn't seem like an investment right now, but that's because they're doing it at a price no one wants to pay. Comm colleges are subsidized and may be able to reinvent the 4 year experience: real professors in small classrooms who are able to meet with students instead of focusing on research.

I wonder what other opportunities this higher ed pullback will create. Kids still need a place to grow up.

Good observation on the encroachment from community colleges

They are aspiring that here in IL as well. It is a good deal if they can make it happen. I have a good friend from ND whose son did 2 years at community college and finishing off his English degree (as you suggested) at ASU's online school. Very much a bargain so get an English degree without the debt from many of the places that would sell them for $40-80K a year for 4 years.

Many Community Colleges have the issue that their state funding is getting strained. NY and CT facing huge issues that way. As an offset NY just agreed to not fund schools with endowments over $750M and more fully fund those with less. Fordham and St Johns are pissed as they just got over that threshold apparently. Cornell and Columbia - no big deal. They won't even miss it.

Thanks. Have a great weekend. *