Costly Colleges

Sweet Briar College Is Closing. Who's Next?

The venerable all-women’s college announced it’s shuttering after this year’s graduation. Why it won’t be the last liberal arts college to close shop.

The decision by the Board of Sweet Briar College—the venerable 114-year-old, all-women’s college in Virginia—to shutter the school after this year’s graduation should be a wake-up call to colleges across the country. But it probably won’t be: Far too many think the warning signs only portend danger for other campuses.

I recently attended the College Board’s annual Higher Education Colloquium, along with some 300 college presidents, admissions deans, and financial aid directors. I was invited to speak about “College Costs and the Middle Class: Irreconcilable Differences?” My message was about as welcome as another blizzard in Boston. That’s because I warned that there is a perfect storm that is bearing down on higher education—one consisting of rising tuition, parental dissatisfaction, and technological disruption.

The soaring cost of college has been the stuff of headlines for years: an increase of 1225 percent since 1978, more than four times greater than that of the Consumer Price Index. Next year, for example, the cost to attend private Syracuse University will be $59,320, while in-state students at Penn State will face a bill of $30,250—and that’s just for one year. With the average time to graduate now close to six years, it is little wonder that 55 percent of middle-class families surveyed by the education site Noodle said they were seriously considering sending their child to community college (and that survey was conducted before President Obama proposed making community college free). This is not good news for traditional four-year colleges: Middle-class families account for about two-thirds of their applicant pool.

The Colloquium’s response to these startling realities was to schedule a session entitled “Paying for College: Communicating with an Uneasy Public.” And the refrain heard the most often over the two-day conference was the lament about why Congress and the state legislatures couldn’t better appreciate the societal value of higher education, and therefore appropriate more funding. There wasn’t a single session—or word heard—about cost-cutting by the colleges themselves.

I suggested—preceded by a half-ironic “trigger warning” lest I offend sensitive ears—that one way colleges could reduce the price to families was a tuition deferment program paid for out of the college’s own endowment or borrowing. The resulting interest rate to students could be substantially lower than government or private loan programs. Plus having “skin in the game” would require colleges to more closely assess whom it was accepting and the quality of its programs in preparing graduates for careers.

The president of Vassar later responded by saying that only the government can collect loans and that it is the taxpayers' responsibility to see and subsidize the value of college.

Parent dissatisfaction wasn’t limited to financial issues, according to the Noodle poll. Parents want colleges to do a better job preparing their charges with real-world marketable skills. And they don’t care about issues that colleges deem a priority, such as politically correct speech codes or a boycott of Israel. The latter was ranked No. 3 on the Chronicle of Higher Education’s 2014 “Influence List,” but only 7 percent of parents agreed.

When I pointed out this apparent disconnect, the president of a “top 10” college spoke up and candidly admitted that she saw her school’s role as leading public attitudes, not reflecting them.

Perhaps the most surprising aspect of the gathering was that there wasn’t a single discussion about technology or an exploration of other education delivery models that could improve outcomes and decrease costs. And when I pointed out that there were a lot of smart entrepreneurs trying to figure out how to disrupt an industry estimated at $1.3 trillion annually—just as their predecessors had reinvented retailing, publishing, and music among others—the collective response was silence. Except for the same college president who declared, “We shouldn’t be beholden to technology.”

Sweet Briar’s problems, apparently, were a confluence of distressing enrollment trends and high fixed costs. Sweet Briar knew what made it attractive: small classes, a bucolic setting, a commitment to single-sex, undergraduate education, and a world-class equestrian program. It could get women to apply—applications had nearly doubled over the past few years—but the school’s yield, the percentage of accepted students who choose to attend, had dropped to 21 percent from 38 percent. As a result, the undergraduate student body had shrunk to 561 women from 611 five years earlier. To get those women to enroll, Sweet Briar had to discount heavily, giving entering students an average 62 percent discount on its $46,595 cost of attendance.

Surprisingly, its endowment—$84 million, or about $150,000 per student—was more robust than many liberal arts colleges’. Although Sweet Briar had a smaller cushion than some of its all-women competitors—Wellesley’s endowment is $703,000 per student and Smith’s is $576,000—it was in far better shape than many others.

That couldn’t sustain the school’s eight-to-one student faculty ratio and its overall employment of nearly 300. And apparently, Sweet Briar simply couldn’t or wouldn’t change.

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Sweet Briar will be missed. The real question is: Who will be next?