Economic Tsunami and the Impact on Higher Education
The world’s economy has entered a major downturn with unemployment and financial strains affecting many countries in Europe, China and the United States. This is not a single year situation, but one that will affect high education for years to come challenging the business model that has dominated higher education for decades.
Increased unemployment rates in France, Spain, Ireland, Greece, Italy and other European countries may translate into societal unrest. In Europe, student unrest is a potent lobby for demonstrations as it is in the U.S. The take back Wall Street demonstrations of last fall, while dormant during the winter of 2012, will re-emerge in the months ahead. Student debt in the U.S. exceeds $1 trillion dollars. One in 10 U.S. college students does NOT borrow for their college education and the average U.S. college graduate owes approximately $27,000. Currently, 17 million “millennials” are unemployed. These “mortgaged futures” may translate into a future where young people move in with their parents after graduation, marry later and have fewer children. These trends will have a significant impact on U.S. society in the future.
An uncertain financial future is forcing many U.K. students to forego the traditional gap year. Both Cambridge and Oxford universities have reported substantial increases in applications.
A weakened economy and the inability of Indian students to secure student loans to study abroad will affect Indian student “migration” to study abroad in the U.S., Europe and Australia.
There has been an increase in the number of Americans applying to Canadian schools because of lower tuition costs. U.S. applications to St. Andrews and Edinburgh University in Scotland have also increased.
The University of California at Berkeley has substantially increased the number of international students it has admitted since 2008, often at the expense of in-state applicants. Several colleges and universities in California and other U.S. states have done the same.
Enrollment in two-year and community colleges in the U.S. is double or triple depending on the state as families seek to limit student and family borrowing by enrolling in a lower price school for two years. There are waiting lists at some community colleges in Florida, Nevada, New York and Texas.
There has been a worldwide decrease in government funding of higher education as austerity measures cut across all parts of a country’s economy. Private investing in high education will increase in the future in several countries.
On line course enrollment will increase worldwide as will the impact of for-profit educational providers.
All of the above trends will continue to play out in the future and will continue to impact student mobility around the world. Families will seek the best educational investment for their children. The importance of student borrowing and career placement after graduation will move to the forefront of admission marketing. Social media, rather than slick brochures, will influence where students enroll and why. The mobility of the worldwide student base, the creation of international campuses, the signing of articulation agreements and the number of study abroad students, will all is affected by a country’s economy. Colleges and universities can no longer count on increased government subsidies. Collaboration, reducing expenses and adding a robust on-line component will all be part of higher education’s future business model.
AUTHOR: MJ Dennis Consulting
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.