This week the biggest story in the world of higher education was that Sweet Briar College, a small liberal arts women’s college about 12 miles north of Lynchburg, Virginia founded in 1901 announced that it was closing due to financial challenges. According to the story in the Washington Post:
Officials cited “insurmountable financial challenges,” saying the 700-student college, founded in 1901, would shut down permanently in August. An $84 million endowment, officials said, was not enough to offset ebbing demand for their school in a tumultuous market.
In response, Mark Cuban said that this was just the first domino to fall. The federal government will have to cap student loan guarantees, he said – and that will cause some schools to close.
The move by Sweet Briar comes just a few months after AIB College of Business in Iowa decided to shut down and donate the campus to the University of Iowa. AIB’s decision, made back in January, was made when the college’s trustees looked around at other private colleges and AIB’s own condition. They decided they would rather shut down than be forced out of business.
I agree with Cuban that things are going to change in the world of higher education, but not necessarily in the way he thinks.
The information about the majors and colleges that provide the best return on investment is widely available. Students are looking at $30,000 a year or more to go to school, and they’re too smart to throw that much cash (or student loan debt) at an institution that won’t pay off with a good career and a fat paycheck. In response, schools are hiking tuition rather than focusing on doing a better job at cutting their own expenses and improving their offerings.
At the same time, inline learning resources such as Lynda and Academy provide more options than ever before to learn marketable skills at reasonable prices from the top thinkers.
If you were a halfway intelligent person looking at what to do after high school, which path would you choose? Less expensive and more valuable, or overpriced and shoddy?
The choice is clear – the shakeout is just beginning, and more schools will close. Not only for-profit institutions, but also the small liberal arts colleges that pride themselves on giving students a well rounded education in courses of study that provide no meaningful economic payoff.
So what does the future of higher education look like? I can’t say for sure because I don’t have a crystal ball, but I wouldn’t be shocked if we see more people turning to online alternatives unless they’re looking to medical school or scientific endeavors. Learn what you want, get the best education possible, and do it on your own terms. Sounds like a good plan to me.
From The World Of Student Loan And Higher Education
Nevada Student Loan Borrowers May Be Getting New Options. Nevada State lawmakers led by Democrat Aaron Ford have introduced a bill that would allow Nevadans refinance their student loans and get a better interest rate. SB215 would create a refinancing program under the Nevada Department of Business and Industry, and would issue revenue bonds to pay for the program. No word on a hearing, but it’s a promising step in the right direction.
Private Lender SoFi Planning IPO to Help Fund More Student Loan Refinances. SoFi is one of a handful of private companies looking to change the face of private student lending by offering the ability to refinance private student loans on more attractive terms to graduates of certain schools. Now Bloomberg is reporting that the company plans to raise $500 million in an initial public offering later this year. SoFi has originated over $1.75 billion in loans since being founded in 2011, and recently expanded to offer mortgages and personal loans. It currently operates in just a handful of states, including CA, NJ, TX, PA, and NC, but with so much IPO money I’m expecting to see further expansion.
Navient Pulls A Rabbit Out Of A Hat. Remember last week when I told you how Pioneer Recovery, the debt collection firm owned by Navient (formerly part of Sallie Mae) had lost the contract to collect federal student loans? Well, this week Navient bought a collection agency that provides receivables management services and account processing solutions for state governments, court systems and municipalities. Just goes to show that companies like Navient can get kicked to the curb by one government entity only to pick up a lucrative contract that continues to line their pockets.
Free Student Loan Disability Report Issued. Mid-Minnesota Legal Aid and Legal Services State Support have published an excellent report titled, “Discharging Your Student Loan Because of Your Disability.” It’s very good, understandable and useful. Lots of pointers if you’re disabled and looking to wipe out your federal student loans. Download the report here.
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