On its face, this is simply a move to return the campus to the size it was back in the 1980s and 1990s, when 4,500 students roamed the Cambridge campus.  But with a policy change back then that required all freshmen to live in dormitories, the campus enrollment fell to about 4,200.  So the move seems like an attempt to return the campus to its traditional, historic size.

The Dean of Admission, Stewart Schmill, denies that the move to increase the student body has anything to do with revenue targets.  He pointed out that new dormitories will need to be built (which generally pay for themselves quite nicely, as the rents are guaranteed). He also pointed out that the move to expand enrollment may not happen in one fell swoop.  Plus, M.I.T. practices “need blind” admissions, so more financial aid will have to be allocated to the 300 new students.

I’m skeptical, frankly.  The fact is that many universities, especially large, research-oriented universities, have budgets that depend on a healthy revenue stream from undergraduate admissions.  It’s simply a numbers game–a sort of revenue pyramid.  In order to pay for expensive graduate programs, universities need plenty of undergrads to provide the bedrock financial foundation to support them.  Undergrad course sizes can be bigger so that graduate courses can be smaller.

So when a major institution of any type makes a decision to expand–or contract–and swears that the motivation has nothing to do with economics–well, I’m just a teensy bit cynical.

Here’s my logic.  Colleges are businesses.  Businesses make decisions based not on nostalgia, but on the financial interests of the business.  Ergo….

Whatever the truth, we’ll likely never know much more than what Schmill told Steinberg.  A private university like M.I.T. can keep its finances private.  So we’ll just take Schmill at his word.  Nostalgia for those halcyon days of 4,500!  Oh, how we miss those vital 300 students, who made our campus so much more vibrant and fun.  Ah, me….

Educational Consultant

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Unsurprisingly, students offered admission to Harvard, Yale, Princeton, and Pomona are accepting those offers at more or less the same rates as in years past. All of these schools have increased their financial aid budgets this year over last to ensure that yields stay constant.

But as Steinberg admits, only a small fraction of colleges have reported yield rates, and many colleges (including the likes of Georgetown) still have room in their freshman classes. The effects of the economic meltdown on college enrollments still remain to be seen, and we’re several weeks from having a full understanding of how the economy will affect both college budgets and the experience of the students who do matriculate.

Stay tuned.

Mark Montgomery
Independent College Consultant

May 11 UPDATE:  According to an article in today’s issue of The Dartmouth, Dartmouth College’s yield was 2% lower than last year, forcing the admissions office to pull 50-60 students off the wait list. This is not a huge decline, and probably something that would have made the news, were it not for the kooky economic situation.

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The post Colleges Worry About Declining Enrollments, But You Should Sense Opportunity Amid the Turmoil first appeared on College Admission Counseling.

The evidence is a September 2008 study by the National Association of Independent Colleges and Universities, in which one-third of the 504 member institutions surveyed indicated that the credit crunch had hurt enrollment.  About 20%  of respondents said they had fewer returning students than expected, and roughly the same number said they had a smaller incoming freshman class than expected.

Clearly the credit crunch is hurting individual families, and economic logic would have it that these individual decisions will have an impact on the higher education industry, as demand falls for high-priced tuition at private colleges and universities. I’ll have more thoughts on that story later this week.

As demand falls, some colleges that were not as conservative with their investments and did not leverage their future in favor of immediate gratification may begin to feel the financial pinch.  Moody’s is watching college budgets and investments carefully, and according to an article in the Chronicle of Higher Education, three colleges are on a “watch list” to have their bond ratings downgraded. The colleges in question are Simmons College, Franklin Pierce University, and Suffolk University.

Many other colleges will feel some pain.  But, as I said in an earlier post, most colleges have acted more like the pecunious ant than the spendthrift grasshopper.  The report from Moody’s bears this out, as seen from this quotation from the Chronicle article:

In its report, Moody’s said that the “overwhelming majority” of colleges have dealt with the freeze with “only minor budgetary or liquidity adjustments.” It attributed colleges’ general resilience to their conservative management strategies, their access to lines of credit and quasi-endowment funds, and their holding of fixed-rate debt.

So I’m not betting that many colleges will go belly up or that we’ll see a bunch of college mergers.  Maybe a few exceptional cases will make the headlines, but the vast majority will weather the storm.  It won’t necessarily be a leisurely cruise; but most boats won’t sink–even as the hurricane roars overhead.

College Counselor

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