Transcript Posted: Interview with Doug Lederman

Host Daniel Barwick interviews Inside Higher Ed’s founder and editor Doug Lederman, who explains new data that shows the acceleration in college closings and why that’s not always a bad thing.

Dan: We’ve certainly become familiar with for-profit colleges being forced to close. However, the US Education Department’s Integrated Post-Secondary Education Data System has recently released data showing that the for-profit sector is not the only sector shrinking. Doug Lederman of Inside Higher Ed recently released an article entitled “The Number of Colleges Continues to Shrink,” and we’re fortunate to have him with us on the program today. Doug is the editor and co-founder of Inside Higher Ed. He speaks widely about higher education, including on C-SPAN and National Public Radio, and at meetings and on campuses around the country. His work has appeared in the New York Times and USA Today. He was previously the Managing Editor of the Chronicle of Higher Education from 1999 to 2003. He has won three national awards for education reporting from the Education Writers Association and began his career as a news clerk at the New York Times. Doug, welcome to the podcast.

Doug: Thanks for having me, and good to be here.

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Dan: New data has come out from the US Department of Education. What can you tell us?

Doug: These are annual reports that the National Center for Education Statistics, which is the arm of the Education Department that produces data on post-secondary education and other parts of the ecosystem releases. These reports used to be much more closely-watched because they were for a long time the primary indicator and tabulator of enrollment data and all sorts of other things. We now have the National Student Clearinghouse in the US, which has become a faster producer of key enrollment figures, and so those are much more closely-watched and they’ve been particularly watched closely-watched the last year-plus, as people have been wondering about the effects of the pandemic, but NCS still produces a slew of statistics about all sorts of different parts of the ecosystem. We pay attention to some of them more than others, but one that they have continued to produce is a look at the number of institutions that exist by sector and all sorts of different cuts. I think it’s less significant in certain ways – the enrollment figures are probably the most significant indicator we have about the health of post-secondary education – but I think there’s some interesting things that can be said, based on data about the number of institutions there are, there are also other reports they produce about the number of employees, et cetera, et cetera. And what this particular report, which is from the 2021 academic year, shows that the number of institutions in post-secondary education has continued to shrink. I dove into that in that story that you pointed out.

Dan: Let’s zero in on a couple of the numbers: Private for-profit four-year colleges and private for-profit two-year colleges have dropped in number by 31% and 29% respectively in the last three years. So we’re looking at a drop of almost a third. What’s going on there?

Doug: For-Profit higher education has been a contested terrain for a long time. It has been around a lot longer than probably people would have noticed – really decades, but it really exploded in the nineties when a bunch of publicly traded companies got into for-profit higher education. Places like the University of Phoenix are probably the best-known ones, but it has had this sort of cycle over the years, and it’s a very diverse sector. It’s everything from beauty schools up through these massive national chains. And so talking about it as “one thing” is dicey, but for-profit higher education collectively has been a driver of innovation sort of from the “outside” in terms of forcing traditional institutions to respond through competitive forces. A lot of them are pretty focused on career-oriented fields, and so they’ve been particularly competitive with community colleges in certain ways, but they’ve also been controversial because they have been perceived by many and shown in certain ways to not serve their students all that well, and to have students collect a lot of debt sometimes for less-than-strong outcomes in the job market, et cetera.

Dan: That’s putting it kindly.

Doug: Yes, it is. I don’t want to turn this into a treatise on the state of for-profit higher education, but we saw them explode in enrollments during the Great Recession, and we saw a lot of them soak up a lot of federal financial aid. There was a point in 2008 or 2009 when about a quarter of all Pell grant money was going to students at for-profit colleges, while I think they enrolled about 12% of the students. They started to suffer as the economy slowly recovered during the early part of the last decade. And most notably, the Obama administration really went hard after the sector on the regulatory front and really cracked down on them. And that combination of factors has led to, through the last half of the 2010s and through to now, seeing an erosion of the number of institutions. Now, it had exploded, it had gone up, I haven’t done a comparison to how it compares to 15 or 20 years ago, I suspect there’s even more for-profit institutions than there were back then, but we’ve seen a real “coming back to earth” and arguably below that for for-profit institutions. So most of the decline in the for-profit sector that you cited has been a combination of economic factors and regulatory factors that have really damaged the sector and caused a lot of institutions to disappear.

Dan: Let’s look at private non-profits. Another startling number in the study was that 22% of private non-profits offering less than a two-year degree closed up shop in the last three years. So in your experience, how much of that is the pandemic and how much of that is other forces? Because I know that the regulatory environment does change, but I know that has changed more for for-profits and affected for-profits more.

Doug: Definitely. The non-profit two-year-and-less degrees have been eroding over a long period of time. There were hundreds of them, and these were mostly kind of, I don’t know exactly how to describe it – they weren’t quite finishing schools, but they were places where a lot of students went in the forties and fifties when they couldn’t get into a four-year institution. I think the community college, the emergence of community colleges, public two-year institutions in the fifties and especially the sixties drove a lot of the private two-year and less-than-two-years, sort of out of business. There have been only maybe scores of them, like under a hundred I think for a decade or more, maybe probably going back 20 years, and they’ve just continued to erode. Now some of them have disappeared because they’ve grown from less-than-two-year or two-year associate degree institutions into four-year institutions. But a lot of them have just gone out of business. To me, this is evidence of the system kind of working and adapting and lack of demand, because of other institutions doing it better or, or more cheaply, and those institutions just really not having a reason to exist. I think if I’m remembering right, the numbers you cited at 22% drop, that’s a pretty small base. I think it was just a few, like maybe 75 or something like that. So it’s a small number. And I would say that I’ll be shocked if there are 20 left in five years.

Dan: Well, when you talk about the market working, that anticipates a question that I knew I was going to ask you. I’d like you to think about whether or not we should see college closures as a bad thing. To what extent do closures represent systemic problems? We’ve certainly seen colleges that close because of systemic problems or poor management or something like that. But I’m interested in that versus ordinary market forces, which your previous answers suggested that you see ordinary market forces as perhaps, if it forces a college to close, that may be a healthy thing. I don’t want to put words in your mouth. Can you explain how you think we should see college closures in different kinds of situations as a good thing or a bad thing?

Doug: It’s a great question. Obviously, in some ways, the most interesting questions are the ones that sort of pull back the frame and widen the lens. I would say, interestingly, while I do talk about market forces sometimes in higher education, I would say it is not a pure market by any means. It’s incredibly highly subsidized. There are people who believe that we ought to have a free market, but that’s just not the way it’s really ever been in this country and in the US, and probably not going to be.

Dan: If anything, it feels like it’s actually trending in the opposite direction – that the market may become even more subsidized.

Doug: Yes. The one way in which I think we’re seeing more movement toward a market is that we’re seeing a lot more availability of technology that has lowered the barriers to entry for providers of education and training. Not necessarily degreed education and training, but we are seeing much more competition. And I think we’re only going see more of that over time for traditional institutions, from all sorts of other providers who believe they have ways of helping people to advance in their careers or develop as human beings, which are the things that we look have historically looked to colleges and universities to do. So I guess to answer your question, I think there are modest ways or meaningful ways in which higher education operates as a market, but not nearly as much as other industries do. So I guess I do believe that we are seeing some forces that are pressuring institutions. We have demographic changes that are decreasing the number of traditional-age college students. The number of high school graduates is flattening or declining in a lot of parts of the country. There is a significant questioning by the public about the value of degrees lots of concern about debt, et cetera, et cetera. And so all of those things are putting pressure on institutions even before the pandemic. And I think in general, and I hate to say this because I know how painful closure can be to a community and to the people who work at an institution and to students and alumni, et cetera, but I think closures are inevitable. Again, I think disappearing institutions, whether that’s closure or merger, I think we’re going to see more. And I think they represent questions of capacity; it’s regional, it’s in different places, I think there is excess capacity at traditional institutions collectively, at least to the extent that the institutions don’t change. And we know there are lots of underserved or not served at all people in higher education, particularly adults, but we’re at a time where the number of traditional-age students are declining. It’s almost inevitable that there is going to be some mismatch between demand and supply.

Dan: Let me just ask a follow-up question here: When we talk about college closures, lots of times when I look at them, I think okay, yes, everybody can look at that and agree. Yes, that college was horribly managed; sometimes it’s obvious that the niche they served is disappearing; that there are just sheer demographic changes that are more prone to affecting that type of institution than other types. But sometimes it still seems tragic to me. You can find these all over America – you have a relatively small town in a Midwestern state, you know, with 7,000 people, and it happens that the jewel of that town is this not-for-profit private college, which has a rich history, but the entire region of the country is losing population. You can just watch the college gradually slipping into insolvency. But its closure would devastate that community in a way that the community will probably, in our lifetimes, never recover from, because it is the cultural and in many cases the economic hub of that small town. Do you think that there are circumstances – and now that I’ve painted that very pathetic picture, I will ask you – do you think there are circumstances in which a college that is facing closure as a result of what you described as demographic changes or the value of the degrees, that somehow even though it is inefficient because it no longer serves us or serves its area in a way that’s needed, do you think that it should still be saved? Do you think that there’s – I don’t even know how to ask the question, because I’m really asking about, are there circumstances in which it’s unacceptable for a college to close?

Doug: Well, that’s a great question. And I’d never know you were from Kansas since you probably just described 20 towns in Kansas, maybe?

Dan: The funny thing is I encountered those a lot – you know, I went to graduate school in Iowa and I found in Iowa, there were many towns with these small, independent, not-for-profit colleges.

Doug: There actually are way more private colleges in Iowa than in Kansas, but they’re all over the Midwest. They’re all over New England. Those are two regions and those are of course the two regions where we’re seeing the biggest demographic pressures and pain. So is it sad, terribly sad, when it happens? Yes. Are there a lot of forces that can be aligned and arrayed to protect a college from closing? Yes, actually it’s even truer on the public side. As difficult it is to, I’m going to use a terrible phrase here, but to “kill off a college,” it’s probably 20 times more difficult to do so to a public institution because you’ve got legislators who come out of the woodwork in addition to all the other advocates. And again, I don’t at all mean to sound callous here; it is tragic and it is tragic for the communities. I think what’s tricky is that we have this incredibly diffuse non-system of higher education, and if we had a system, somebody might – and I’m not advocating for it because there would be lots of downsides to a system – but if we had a system, somebody might decide, “we have too many private colleges in Iowa,” and I’m just watching people recoil as I make this analogy, but just like Starbucks might decide, “oh, we’ve got way too many franchises in this area. We need to kill some off.” Every college believes it’s different and many are different from each other, but when the demand for a residential education is softening, I don’t know if I want to say it’s declining, it’s probably declining too, but I don’t have data to back that up per se. But I think there are going to be increasing questions unless, and until – and this is really where all the questions about sort of change and, and system change come in – we could figure out a way to deliver a really good residential bachelor degree education for $15,000 a year, that in a way that would make it affordable to people who right now are going to choose either to go to a big public or to go to a community college, or to get educated in some other way, that is more affordable. Maybe some of those places would be saved, or more of them would be saved. I don’t know if that all makes sense, but it is a complex web of factors here. I don’t know who exactly, in your scenario, who would be charged with “saving the college”; we see it happen sometimes. I mean, Sweetbriar College announced numerous years ago now, probably five, or maybe even more, that it was going to close, and a bunch of alumni and supporters rallied. Sweetbriar was not, if you were picking a list, if you had access to basic financials and you were picking from a list of institutions that were likely as to close, Sweetbriar probably wouldn’t have been among them, because it had, I think, a $70 or $80 million endowment at that time, which is a lot more than a lot of the colleges you and I were just talking about in Kansas and Iowa. People rallied, and so far Sweetbriar hasn’t closed again. It is still functioning and the people behind it continue to say they have a plan to keep it functioning and viable. I don’t know enough to challenge that, but it’s hard, and I think we will see more. There are people who’ve been predicting for decades – and again, you don’t see me, so you don’t see how white my beard is right now, but I’ve been doing this a long time – there’ve been predictions of hundreds of colleges that would close in the past and it hasn’t happened. We’ve seen an uptick in the last few years, but it’s still small, the proportion. Sorry for the long rambling answer, but it’s an important and interesting question.

Dan: I agree. You reminded me of another point that I would love for you to comment on. When you talked about that there will probably be more, and then of course you tempered that a little by saying that it might not be a large total number, it feels like when you say there’s no “system,” you mean of course literally a coordinated system. I feel like there are other systems that are acting as sort of – I don’t know what the right phrase without sounding sinister – like shadow systems that are essentially shaping or effecting the college landscape. The simplest example I could give that comes to my mind is the College Affordability and Transparency Center, which basically is intended to provide data to students about whether it’s wise to attend a particular institution. And it gives data, in one place, sponsored by the government. It basically is providing data to all citizens in one place that wasn’t as easy to obtain before, if at all. I’m curious as to whether you think, as we hopefully come out of the pandemic – as we speak this is August, 2021, and so of course, we’re all wondering whether or not we’re actually coming out of this – but I’m curious as to whether you think what will really affect these future closures is this sort of tip over the cliff that maybe that the pandemic might have produced for a series of vulnerable institutions? Or do you think a greater factor is this kind of inevitable march of increased accessibility to objective information that colleges that have relied on, more qualitative measures like tradition and pride and so forth, may be vulnerable when people become more educated consumers of this very expensive endeavor, the college degree? Does that question make sense to you?

Doug: The question makes a lot of sense. The answer, like so many of my answers, is probably going to be less clear. I think there was increased questioning pre-pandemic of all sorts of things about the sort of perceived value, the perceived outcomes of spending some amount of time often out of the workforce, to gain a credential and get a collection of knowledge and skills and ways of thinking, et cetera – all the things that one hopes a time spent in an institution of learning would produce for you. I’m talking in purposefully broad terms, because I don’t want to focus just on a credential or just on this or that. There’s a lot that people develop when they spend time at “college” and I think the change we’re seeing is a lot broader defining and a lot more differentiation among what people are looking for and what different types of institutions and different types of providers, beyond what traditional institutions can offer. And I think that what has come to higher education later than it’s come to a lot of other industries is our data and our accountability. I’m not just talking about government accountability and regulation. I’m talking about we have a lot better information now than we used to – and it’s still way imperfect – but about what happens to you, if you spend this money on this particular program, the federal government now produces data that shows what the average person spends on a particular academic program at a particular institution, and what the graduates of that program earn. Right now, I think it can show what the person earns two years out, but it will be building over time. Again, it’s an imperfect way of judging what you get – and I’m somebody who believes very deeply in the value of a degree and of a liberal arts education, et cetera. I don’t want it reduced just to earnings, but I do think the days when just having gone and feeling good about your experience at an institution is going to be insufficient for a lot of people to judge whether it was “worth it.” And I think that questioning, there’s no turning that back. We’re not going to return to the old way. And how good we get at really judging what somebody has learned and how much it has benefited them – we’re a long way from really being able to calculate that. But I think it’s inevitable. And I think the pandemic has both – and this is true of just about everything – accelerated pre-existing trends and exacerbated-existing conditions. So we’re going to have more attention to what college, and going to college or getting some kind of credential, can do for you, but also increasing pressure on institutions to “prove it.” And I think there are lots of different ways they can prove it, but I think the demand for evidence is not going to stop.

Dan: For my final subject that I want to cover with you – it’s a little bit of context. We tend to think of a college closure as representing some kind of loss to the overall education market, but your article points out that some of these are merely the effect of mergers. I’m curious as to how you think we should think about mergers. When colleges merge, what’s the true consequence in your experience for educational opportunity in that space? A merger, for it to work, is rarely just the two schools combining to be the same sum as they were before. So I assume there is something that is happening at that point. What in your view is the consequence and should we see it negatively?

Doug: I’ll talk about mergers and then I’ll talk about something that’s a little different that’s a little broader. Mergers are still rare, and I think they will probably remain rare in part because there are times where in the corporate sector, say, two companies that are pretty strong will come together. The company will be called, you know, something with three syllables – anyway, that merged company will be really a merger of equals. And the old phrase, you know, one plus one will equal three. It will be able to do more things; it will be able to reach more people, et cetera, et cetera, but they usually don’t talk about how there are also jobs lost usually because they merged the two and they don’t both need both marketing departments, et cetera. So there’s internal pain, but usually there’s something additive and in higher education in general, most of the mergers are actually just absorptions by a strong institution of a weaker institution. So in general, I would say mergers and higher education don’t really add capacity. And in fact, they are usually reflective of declining demand in some way – it’s an institution that has struggled and lost students, et cetera, kind of being bailed out. And often the institution that is the “buyer” in this process, or the absorber, is getting a really nice piece of land somewhere in a place that it wants to be, it wants to expand into, et cetera. There are good mergers where the institution that is largely disappearing becomes a part of the larger. Probably the best recent example was Boston University absorbing Wheelock College in Boston, and Wheelock was known for its education programs, and now the school of education at BU is named for Wheelock. I think two-thirds of its faculty wound up getting jobs, and a lot of its students wound up continuing. That was a really well thought-out merger. A bunch of others are like fire sales where the institution waits too long because it can’t get around the idea of disappearing, basically closing with very little else. But there’s a different kind of merger, and I think we have, historically, just like I talked about how killing off or closing a public institution was hard, merging public institutions is also hard. Where we’ve been seeing a little more of that of late, because we’ve been seeing – we obviously have some public university systems and we’ve seen some of them do what I was talking about before – not saying, oh, we should close these institutions because they don’t want to close them for some of the reasons you cited about the town and the communities, as you were talking before, when you were talking about the Iowa and Kansas private colleges, but they basically have been taking pairs of institutions like in Pennsylvania, and this happened in Georgia before it: taking pairs of institutions and figuring out how they basically combined a lot of what they do to be more efficient and effective. These are contested usually, and neither institution is exactly disappearing. But when I talked before about wanting to go beyond just talking about merger, I think we’re increasingly in an era where very few institutions are going to be able to be islands unto themselves. They are, through some kind of collaboration, cooperation, joint operation in some way, I think is going to really be beneficial to a lot of institutions. Many institutions are going to face a future where they are going to have to either do less, because I don’t think we may see some short-term major investment in higher education, as you were talking about before, because the Biden administration is spending a lot of money right now and is trying to infuse the economy post COVID, et cetera. But I think in general, most many institutions are going to have to figure out how to make do with the money they have now or modestly more. And that is usually going to either mean doing less or finding better ways of doing things often, I think, in combination with others. There are lots of ways that can happen, but I do think it’s going to be harder and harder for institutions to be fully sustainable by themselves.

Dan: My guest has been Doug Lederman, editor and co-founder of Inside Higher Ed. Doug, thanks for joining us today.

Doug: Pleasure.

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