The outlook wasn’t brilliant for Loyola U this year,
Freshmen enrollment was down 30 percent, with layoffs now to fear.
And then when Liberto quit in shame, and Kaskel took his place,
A sickly silence fell upon each ‘n every alumni face.
All of Uptown began to rise their voices in despair, as the rest
Clung to that hope which springs futilely in the human breast;
They thought, if only Casey could recruit for the freshman class –
We’d put up endowment money, now, and shove it up Tulane’s smarmy [expletive deleted].
The sad truth for Loyola is that there is no “mighty Casey” waiting in the wings. Freshman enrollment has plummeted by nearly a third with only a short time left until the Fall semester begins. It appears that the main culprit for the massive shortfall was an adjustment to Loyola’s financial aid offers. Apparently, Loyola’s high tuition left little margin for error with respect to financial aid. Prospective students today are savvy; their market responds quickly.
There were other factors involved. Loyola chose to make its tuition packages less attractive at the same time as it has been tearing up its campus with renovation projects. Campus tour guides were left giving the pathetic spiel: “Our tuition might be high, but at least our campus will be pretty after all this massive, noisy construction is over! Wait, where are you going?”
Loyola’s obvious incompetence is only part of the problem here. If colleges held all the cards in the education marketplace, it wouldn’t matter whether they made blunderous miscalculations of this sort. For decades, this has actually been the reality. Following World War II, the federal government began to massively subsidize college tuition and student loans, and it worked out because hey, the country was rich and a college graduate could get a good job, perhaps throw on a few bucks to the ol’ alma mater down the road. The sheer size of the baby boom generation, creating a huge demand for college degrees, was also a huge factor.
Those days are gone, and they probably aren’t coming back. The country managed to limp along well enough before the last major recession, but society is (thankfully) sheepishly starting to acknowledge that perhaps there are a few too many bartenders and waitresses with liberal arts degrees that are saddled with a crippling amount of student loan debt.
Loyola’s problem is that the margin-for-error with recruiting efforts has shrunk precipitously. One day Loyola was thinking about all the ways it could stick it students with higher tuition and fees, the next it realized it should have been cutting prices to stay competitive. Although Loyola has managed to limit the damage, they are still a day late and 9.5 million dollars short.
You can’t really blame Loyola too much. Universities, especially those of the old, established variety, often aren’t used to acting like real businesses. Alas, only a few universities can avoid it these days. Sure, Harvard could probably replace it’s the faculty with denizens of local homeless shelters and still turn a profit, but most schools aren’t similarly situated. They aren’t used to lean times and a national market for students.
The evidence is everywhere. Over the past ten years average tuition and fees at private, four-year colleges have increased 26% past inflation (at public universities, the situation is even worse at 66% past inflation). Meanwhile, the number of administrators at universities has been exploding, vastly outpacing any growth in faculty. Johns Hopkins University Professor Benjamin Ginsberg refers to this trend as “administrative blight.” Although universities have generally avoided gutting their faculties, they have instead chosen to save money by relying heavily on adjunct professors paid pennies on the dollar relative to full-time, tenured professors. It’s a great time to be a bureaucrat in higher education. It is a terrible time to be a student or a new professor.
The final ball actually dropped as of the beginning of this month. On July 1, 2013, student loan rates doubled from 3.4% to 6.8%. The conventional wisdom is that the higher rate is still a “good deal” for students, but it still changes the calculus when deciding whether to go to college and study kinesiology, or just go for that correspondence course in air conditioning repair. Lower-ranked schools with higher tuition remain the most vulnerable.
It remains to be seen how Loyola will deal with this problem. Ultimately, they will be better off if they have both the will and skill to trim the fat and slash tuition. They might even need to prepare for a smaller student body. Alas, even that may not be enough to keep their finances in order. Even mighty Casey may still swing out. And if that happens…
Oh, somewhere in the Big Easy, the finances are not ill,
A Jazz trio is playing blithely, and wallets are full of bills,
And somewhere alumni give, and somewhere students mass ,
But there is no joy in Loyola – mighty Casey’s out on his [expletive deleted].
Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.