Economy Effects Colleges
Recently, the United States has suffered a huge economic crisis involving a bailout worth $700 billion given to various banking companies and large drops in the stock market. As a result of this economic climate, Americans have had to cut back spending and are finding themselves with less money than normal. Because of this, the institution of higher education has suffered many consequences. Not only have the universities had to cut back and change normal proceedings, but many students and prospective students have had to take caution as well.
Colleges around the nation are changing their policies due to severe decreases in funding since the economic crisis began. Many colleges are being forced to make cutbacks that can affect the staff and the students. Although the immediate cause of these cutbacks is the college's choice to spend less money, the underlying remote cause is the economic crisis. For instance, "Shrinking endowments, state funding reductions and families struggling to pay tuition are forcing many colleges and universities to cut staff and spending or to delay construction and development plans"1. Because the American people are suffering from major repercussions of the current economy, colleges are not receiving their normal income and must make changes because of it. Although having to cut back on staffing and the student body seems like enough of a problem, some colleges have even been forced to close down. For example, "Late last month, a small Christian college with just 280 students and $4 million in debt announced it would have to shut down at the end of the current academic year"2. Smaller universities already do not have sufficient funding as it is, but the current state of the economy was the final blow leading to their demise. Although this is a very extreme effect that has only occurred to mostly small, private universities, the economy has hurt public and private schools alike. As stated in a New York Times online article, "Tough economic times have come to public and private universities alike, and rich or poor, they are figuring out how to respond. Many are announcing hiring freezes, postponing construction projects or putting off planned capital campaigns"3. Regardless of the wealth and size, every university in the United States is being affected by the faulty economic climate.
Students are also suffering from the failing economy. College tuition has traditionally come with a large price tag and many parents set up college funds early in a child's life in preparation. However, many of these funds were investments that failed in the current economy or the money was simply spent out of need for the family. Therefore the remote cause of the poor economy created the immediate cause of unaffordable tuition. This financial trouble has affected the school choices of most students and their families, in which, "57% of students [are] considering a less prestigious school for money reasons… [and ] 50% of families reported limiting their children's college choices to less expensive options"4. This alarming trend, in effect, limits a student's educational freedom on money instead of merit. Potential students are not the only one suffering. Students that recently graduated are also beginning 'real' life with a large sum of debt. "The most recent figures, from 2006-2007, show about 60 percent of bachelor's degree recipients graduated with debt. The average debt at graduation for those borrowers rose about $400 from the year before to $22,7005. With the economy at a downward spiral, current and potential students can only expect a larger debt upon graduation for themselves.
Bailouts of major corporations seem to be necessary. However, a bailout of the American people may also become necessary as colleges and students become financially weak. If the cost of attending college continues to rise as bank accounts shrink, many students may opt for a vocational trade or an associate's degree at a community college to avoid college debt. This trend through time would lead to the downfall of many colleges and a decreased value of education. Hopefully, the economy will revive in a few years as it did after the Great Depression, leaving tuition only as a problem for the younger generation.
crisis squeezing colleges, universities," Mcclatchy Washington
Bureau, http://www.mcclatchydc.com/152/story/56167.html, Accessed 3 December
CBS News, "In Ailing Economy, College Costs Jump," http://www.cbsnews.com/stories/2008/10/29/national/main4557394.shtml, Accessed 3 December 2008.
Jones, Brent, "Economy, Costs for Students to Rethink College Choices," USA Today, http://www.usatoday.com/news/education/2008-10-14-college-costs_N.htm, Accessed 3 December 2008.
Mcclatchy, "Economic crisis squeezing colleges, universities," Mcclatchy Washington Bureau, http://www.mcclatchydc.com/152/story/56167.html, Accessed 3 December 2008.
Pope, Justin, "College Closings Rare, but Could Rise in Downturn," Associated Press, http://www.google.com/hostednews/ap/article/ALeqM5gaTfslefN46DEpyAVRb571ZZvZ7wD94G5JNO3, Accessed 3 December 2008.