In the United States, the upper level education system saw a massive increase in prices over the past few decades. Students ended up saddled with tens of thousands worth of debt due to student loans. The rate of increases far outpaced inflation.
It got so bad, some are calling it a bubble.
Like all bubbles, they tend to pop and deflate. This could be the near future of college institutions, especially the private ones.
As with many things we discuss these days, the trend was started before COVID-19. However, this accelerated things and colleges are no exception.
With so much uncertainty regarding shutdowns and online courses, schools have no idea what they will have in the Fall. President Trump even stated that immigrants will have to leave if their colleges do offer only online courses. This was rolled back to the second semester but the point is the same: online courses mean a lot less money for the institutions.
There is also the fear factor. Will students, or their parents, want to be in a campus setting considering there is so much uncertainty. At the same time, will the parents be willing to write out a check knowing there is the possibility the kids might be sent home after a few weeks if the virus numbers increase radically?
The situation in Vermont is indication of what is going to be coming.
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Green Mountain College in Poultney, Vt closed its doors in 2019. It is now on the block, with the starting bid at $3 million. The liberal arts college closed after 185 years. So far, the only announced bid was for $4.9 million which fell through earlier in the year.
Now the property is on the auctioning block and all faculty is gone.
This is something that we can see taking place across the country. Some are estimating that we could see 20% of the private institutions shutter their doors.
The problem is further complicated by the fact that many high school guidance counselors are suggesting to students to take a year off and let things settle down.
It is quickly evolving into a supply and demand equation. There simply are not enough people looking to head to university at the costs they were charging. Over the last decade, many realized the money spent was a rather poor investment as many Millennials found it tough to find a job.
Education is in for a major overhaul. We could see most of the educational process, at least upper level, taking place online within 5 years. It is the digital age and having students sitting in a class listening to a lecture simply no longer makes sense.
The university system will likely be a lot smaller in a few years. Auctions such as this one could become commonplace.
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