Money and Finance
- The Barbarians Are At The Gate! Of Universities, Moats And Disruption! - By Aswath Damodaran
Link to: The barbarians are at the gate! Of universities, moats and disruption!In my last post, I attempted to break down the bundled product that comprises a college education into its component parts, and closed by arguing that the future of universities...
- Clayton Christensen: Still Disruptive
Thanks to Will for passing this along. Christensen’s answer the question excerpted below is especially interesting, and echoes what John Templeton wrote in 2005: “Most of the methods of universities and other schools, which require residence, have...
- For-profit Colleges, Vulnerable G.i.’s - By Hollister Petraeus
MILITARY personnel and their families are finding themselves under siege from for-profit colleges. A number of these schools focus on members of the armed forces with aggressive and often misleading marketing, and then provide little academic, administrative...
- Declining By Degree
Will America’s universities go the way of its car companies? FIFTY years ago, in the glorious age of three-martini lunches and all-smoking offices, America’s car companies were universally admired. Everybody wanted to know the secrets of their success....
- Academic Bankruptcy - By Mark C. Taylor
WITH the academic year about to begin, colleges and universities, as well as students and their parents, are facing an unprecedented financial crisis. What we’ve seen with California’s distinguished state university system — huge cutbacks in spending...
Money and Finance
The college-cost calamity
WITH its leafy avenues and Gothic buildings, the University of Chicago seems a sober, solid sort of place. John D. Rockefeller, whose money built it, said it was the “best investment I ever made”. Yet Chicago and other not-for-profit American universities have been piling on the debt as if they were high-tech start-ups.
Long-term debt at not-for-profit universities in America has been growing at 12% a year, estimate Bain & Company, a consultancy, and Sterling Partners, a private-equity firm (see chart 1). A new report looked at the balance-sheets and cashflow statements of 1,692 universities and colleges between 2006 and 2010, and found that one-third were significantly weaker than they had been several years previously.
A crisis in higher education has been brewing for years. Universities have been spending like students in a bar who think a Rockefeller will pick up the tab. In the past two years the University of Chicago has built a spiffy new library (where the books are cleverly retrieved by robots), a new arts centre and a ten-storey hospital building. It has also opened a new campus in Beijing.
And it is not alone. Universities hope that vast investments will help them attract the best staff and students, draw in research grants and donations, and ultimately boost their ranking in league tables, drawing in yet more talent and money. They have also increased the proportion of outlays gobbled up by administrators (see chart 2).
To pay for all this, universities have been enrolling more students and jacking up their fees. The average cost of college per student has risen by three times the rate of inflation since 1983. The cost of tuition alone has soared from 23% of median annual earnings in 2001 to 38% in 2010. Such increases plainly cannot continue.
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Related book: The Higher Education Bubble
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Related book: The Higher Education Bubble
- The Barbarians Are At The Gate! Of Universities, Moats And Disruption! - By Aswath Damodaran
Link to: The barbarians are at the gate! Of universities, moats and disruption!In my last post, I attempted to break down the bundled product that comprises a college education into its component parts, and closed by arguing that the future of universities...
- Clayton Christensen: Still Disruptive
Thanks to Will for passing this along. Christensen’s answer the question excerpted below is especially interesting, and echoes what John Templeton wrote in 2005: “Most of the methods of universities and other schools, which require residence, have...
- For-profit Colleges, Vulnerable G.i.’s - By Hollister Petraeus
MILITARY personnel and their families are finding themselves under siege from for-profit colleges. A number of these schools focus on members of the armed forces with aggressive and often misleading marketing, and then provide little academic, administrative...
- Declining By Degree
Will America’s universities go the way of its car companies? FIFTY years ago, in the glorious age of three-martini lunches and all-smoking offices, America’s car companies were universally admired. Everybody wanted to know the secrets of their success....
- Academic Bankruptcy - By Mark C. Taylor
WITH the academic year about to begin, colleges and universities, as well as students and their parents, are facing an unprecedented financial crisis. What we’ve seen with California’s distinguished state university system — huge cutbacks in spending...