What does the state of on-campus housing tell us about the state of American higher-ed? A lot, as it turns out.
Last week NBC News described the growth of a market in palatial student dormitories. Critics have long known that in promoting themselves, colleges tend to highlight their luxurious facilities—not their academic programs. Students, in turn, increasingly feel entitled to these spa-like accommodations. As one Boston University student put it in reference to her luxury dorm, “I’ve worked really hard and I figured I deserve to live in a place like this.’’ She paid for her housing with her student loans.
These dorms epitomize higher-education’s bloat and the current generation’s sense of entitlement. Moreover, their recent growth bespeaks the federal government’s overinvestment in higher education. Indeed, as noted before here, real-estate developers relish their investments in student dorms because they know that, thanks to the generous student-loan program, students and their families will pay for lavish on-campus housing regardless of their economic woes–or the country’s.
Recent developments in the student-housing market continue to reflect the state of American higher education as a whole. Given higher-education’s current financing challenges, colleges are heavily outsourcing the development of these properties to private investors. According to the NBC story, universities administrators argue that they prefer to “spend their limited cash on academic programs and leave the living spaces to the experts.”
Moreover, the story notes a curious consequence of falling enrollments at some private non-profit colleges. Investors are now looking to invest primarily in large public universities since “enrollment tends to be more stable.” Thanks to the recent questioning of higher education’s value, private universities—especially middle-tier ones–are no longer a wise investment.
In a recent piece for Minding the Campus, Richard Vedder argued that colleges now face a unique set of challenges due to declining enrollment and reduced revenues. He pointed to a number of private colleges that were in dire financial straits or were closing, and cited an analyst from Moody’s who suggested that “tuition-dependent colleges and universities will be challenged to…remain competitive over the longer term.”
One hopes that colleges will seek to “remain competitive” by reinvesting in academic programs or by ensuring their graduates’ success in the labor market. The fact that at least some schools are now paying less attention to facilities is reason for optimism. However, one thing is pretty clear: the story of student dormitories validates Vedder’s claim. When even the federal government’s guarantees are not enough to assure dormitory investors, you know higher education is in trouble.
Doesn’t sound like “higher education is in trouble” — sounds like a healthy development.
If the student loans are cut back, it’s at least as likely that the developers will suffer, as that academic expenditures will be cut back.