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College Consulting and Higher Education Management

One hidden, but very important part of my job is to keep up with trends in how colleges are managed. This arcane stuff may seem irrelevant for a college counselor, but it helps me understand the larger context in which college admissions offices make their decisions.

An article today from Inside Higher Ed reports on a meeting of college presidents whose institutions are members of the Council of Independent Colleges.

Here are some tidbits of information gleaned from that article, along with a quick explanation of why those tidbits are important.

1. College “discount rates” are going up. This means that admissions offices are discounting the price of tuition for more students in order to lure them in to purchase the educational services offered by the colleges. Thus more students are getting better scholarships at independent colleges than they did before. In the short term, college applicants this year may find that the price of tuition has actually dropped–as colleges raise the discount rate.

2. Endowments have taken a big hit. This means that smaller colleges have even less income from their endowments, and are even more dependent on tuition revenues than in the past.

3. High discount rates are worrisome to the institutions. Just like any business, colleges that squeeze their margins have less money to weather unpredictable economic swings.

4. Applications to most institutions are up, but enrollments are flat and will likely soon decline. This means that colleges are aware that we are now on the downside of demographic bubble that has filled their classrooms in the past few years. Increasing discounts to lure a dwindling pool of potential customers is not a strategy for long term financial health.

5. More colleges are heavily recruiting students at community colleges. The economic crisis has led some students to choose cheaper community colleges to at least begin their bachelor’s degrees. Independent colleges see community colleges as a rich source of potential transfer students.

6. Colleges have been having trouble getting loans from the big national banks. The credit crunch has affected the education business, just like every other business. Some construction projects, like the new science center at Wheaton College in Norton, Massachusetts, have been interrupted for lack of capital. The spending spree on college campuses that characterized the past decade has ground to a halt.

A good college counselor has to be well informed about colleges–in all their aspects. I admit to a wonkish interest in institutional management, which is probably a result of my days as an associate dean (budgets can be fun!). But as it turns out, these issues of institutional management relate directly to a student’s choice of colleges and to the admissions process as a whole.

Knowing how all these pieces fit together gives people like me an edge in advising students how best to play their cards. Whether the stock market is up or down, it’s important to know what college managers are thinking as they select their customers who will make up their freshman classes.

Mark Montgomery

College Advisor

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