Future of Private Colleges

April 30, 1976

Report Outline
Money Crunch on Nation's Campuses
American Patterns of College Support
Trends in Financing Higher Education
Special Focus

Money Crunch on Nation's Campuses

Cautious Optimism That the Worst Has Passed

In times of national economic stress, private colleges and universities are particularly vulnerable to financial difficulty. When the stock market declines, so does endowment value. Grants and donations fall off, and private schools must compete with public institutions that offer similar services at lower cost.

When the prosperous 1960s ended and a period of economic decline set in, many observers predicted the end of private colleges and universities. However, a report last fall by the Association of American Colleges indicated that the health of private higher education was not as bad as had been imagined. Later evidence compiled by the association suggests that this premise continues to hold true today. The report, directed by economist Howard R. Bowen and co-authored by W. John Minter, expressed cautious optimism. “The study does not [their emphasis] confirm the frequently asserted opinion that most private colleges and universities are essentially defunct and on their way to oblivion,” the summary chapter stated. “Neither does it confirm the proposition, sometimes but less frequently asserted, that they are enjoying prosperity.”

The association studied 100 private colleges and universities, which it considered a national cross section, and found 27 to be in serious financial trouble. Yet the authors cautioned that “we are by no means predicting that 27 per cent of all private colleges and universities are headed for extinction.” Student enrollment, a leading indicator of the health of private schools, was generally encouraging (see p. 309). On the other hand, the lessprestigious liberal arts colleges had shown a steady decline in recent years. While college and university enrollments were up 8.8 per cent last fall, the biggest one-year increase since 1965, the big surge was in the two-year community colleges. Among private universities the increase was only 2.8 per cent, and among private colleges 5.4 per cent.

ISSUE TRACKER for Related Reports
College Financing and Funding
Undergraduate and Graduate Education