
Will Your College Go Out of Business Before You Graduate? - fraXis
http://blogmaverick.com/2013/01/26/will-your-college-go-out-of-business-before-you-graduate/
======
danielford
One reason for new buildings on college campuses is that donors and the
government are much more willing to give funds for that purpose than they are
for salaries and benefits, which make up the bulk of most college budgets. So,
I understand your frustration if you're angry about tuition rising while your
college is erecting a new building every three years, but those are usually
two separate piles of money, and there's not much your college can do to
change that.

That said, I still flinch every time I hear about a new building on our
campus. I'm increasingly uncomfortable with the perception that colleges are
living large while tuition rates climb, and I feel we should be more
conspicuously frugal to combat it.

~~~
akadien
This is quite true. For state schools, new buildings may be a "gift" from the
political class to show the public their support for higher education. The
stupid irony is those buildings typically don't come with operations and
maintenance funds. At the same time, state appropriations are decreasing,
putting the pinch on O&M and department support. The university (or publicly
supported research institute) has a shiny new building in which they can put
neither equipment nor people.

~~~
wisty
The Hollowmen (an Australian political sitcom, somewhere between Yes, Minister
and The Thick of it) had something like this. The Prime Minister wanted a
building, so he could get his name on it. The problem is, Canberra (the
capitol) was already full of buildings with Prime Minister's names on them,
and there wasn't any space to put anything new.

It's a great photo-op. "This $x million building will teach a new generation
of students".

There's also the scope for corruption, when they pick the builders, but that's
another story.

~~~
akadien
> There's also the scope for corruption, when they pick the builders, but
> that's another story.

I live in Louisiana. Tell me about it!

~~~
wisty
Sorry, not being American I know next to nothing about Louisiana; other than
it's got gators, and All the King's Men was shot there.

~~~
akadien
We also have New Orleans, Mardi Gras, and much political corruption and
cronyism.

------
fawce
I love this quote: "Going to a 4 year school is supposed to be the foundation
from which you create a future, not the transaction that crushes everything
you had hoped to do because you have more debt than you could possibly pay off
in 10 years."

I hosted a coursera meetup recently (<http://www.meetup.com/Coursera/Boston-
MA/829362/>) and I met two students who were enrolled as part time off-campus
students, taking the required minimum of classes at the university, and only
"spending" those classes on requirements for their majors. All of their
enrichment beyond the major was through MOOCs like Coursera. They told me it
would take 6 years instead of four, but cost way less, and the preferred the
MOOCs for the advanced material anyway. The last piece of the puzzle for them
was finding internships, so they could lay the groundwork for a job upon
graduating.

Compared to my "find yourself" traipse through college, I was blown away by
the steel-trap optimization these guys were applying to school. This economic
downturn is breeding a whole generation of just-try-to-stop-me kids. It will
be awesome 25 years from now when they are in charge.

~~~
javajosh
Something that I dislike is when people use jargon without defining it. In
this case, you used "MOOC" without definition. I didn't have to, but I looked
it up and it means Massive Open Online Course. But I am annoyed that I had to
look it up, and I'm giving you feedback that, in the future, you should define
your terms.

~~~
fawce
noted, thanks.

~~~
christiangenco
Edit original post please? I fell in the same trap, even though I'd heard the
term before.

~~~
fawce
I would, but unfortunately the edit link is gone. I've never actually done an
edit before, is there a time limit or something?

~~~
andrewflnr
Yes, and it's not very long, two hours tops as far as I can tell.

------
rglover
I graduated a little over a year ago and am now faced with at least $50k in
debt (not accounting for interest). The school I attended was a state
university and sadly, the education I received may have amounted to ~$20k. I
say this because the majority of my instructors were recent hires out of the
university's own graduate programs and (IMHO) lacked the experience to teach
certain topics.

The remaining cost I assume, was for "campus enhancements" like swapping out
printed cafeteria menus with flat screen tv's (you must understand, this was
an eco friendly initiative).

Universities are a trap. The future they're selling kids is non-existent and
they know it. Instead of uni-hopping, students should start picking up
topics/trades of interest early, studying on nights and weekends leading up to
their hs graduation. The obvious suggestion is learn code, but it could
include a lot more. Don't send your kids to school. Be proactive and find out
what they're interested in early and nurture it. It may rob them partially of
a childhood, but at least their adulthood won't be a depressing, seemingly
pointless adventure.

~~~
jmduke
Have you ever considered that your advice to parents should have been applied
to your college experience?

A college education in which you go to class, study, and do assignments is not
worth $50K. College lets you do a lot more than that, and it sounds like you
robbed yourself of a great four years.

~~~
rglover
I do, but unfortunately, coming from Northwest Ohio and two parents who didn't
attend college in its entirety themselves (my mom had an associates), the need
to groom me early (assuming, here) wasn't immediately apparent.

Moreover, sitting in a tiny box, having sex, getting loaded (proof:
<http://www.youtube.com/watch?v=WuJ60dAHyc4> \-- a party house my roommates
and I ran) and joining campus orgs (I ran the campus radio station as the
General Manager my Sophomore year and was an active member throughout my stint
at the school -- I was even awarded a years worth of paid tuition) was still
not worth the skull crushing debt I now have to dig through.

If I skipped college, I still would have gotten laid, smoked pot, and learned
how to program _.

Edit: _ I taught myself how to program in my spare time. My degree is in
broadcast management.

------
timr
I was honestly expecting a different sort of rant from Mark Cuban. It's nice
to see someone taking on the _business_ of college, without dismissing the
need for a _college education_. Bravo to someone who gets it.

That said, while I agree with his premise, I'll admit to being a little sad
about the consequences: people in power rarely talk about it, but the kids who
go to the "name schools" have a huge career advantage over the kids who go to
Podunk University. I should know -- I went to a tiny school, and somehow
managed to end up in silicon valley, where the leaders and power brokers are
(wait for it)...almost exclusively graduates of the Ivy League. And this isn't
the only industry where that's true.

It's disheartening. A hard-working, smart graduate from Oklahoma State with a
degree in computer science degree will be at a _substantial disadvantage_ when
it comes to getting the best jobs -- the big boys (Google, Facebook, etc.)
might send a recruiter to the campus career fair once a year, but they aren't
hosting hackathons, sponsoring scholarships, or setting up permanent shop in
the career center, like they'll do for Stanford or Berkeley or MIT. And when
it comes time to reach for the management fast-track, those Ivy contacts go a
long way.

So, who wins when the ability to pay for college out-of-pocket determines the
economic winners and losers? Not the poor. We're rapidly heading to a country
with a rigid and unyielding class structure, thanks to the brutal realities of
unfettered market capitalism.

~~~
rdouble
Facebook, Apple and Google campus recruitment is about half and half state
schools and half private schools. They don't even bother with some of the
Ivies like Yale and Dartmouth. There are quite a few Harvard MBAs at VCs like
Sequoia but largely most people working in the valley are not Ivy League.
Especially in engineering.

If a kid was already a scion of the upper eschelons of the rigid class
structure you're suggesting, why on earth would they squander their birthright
to go work 15 hours a day with a bunch of tech weirdos? Rich kids don't go
into engineering.

~~~
timr
_"Facebook, Apple and Google campus recruitment is about half and half state
schools and half private schools. They don't even bother with some of the
Ivies like Yale and Dartmouth."_

You're wrong. They may spend more time at MIT and Stanford, but they spend
plenty of time at Brown and Yale and Harvard and the other top schools with CS
programs. I know for a fact that Facebook hires a ton of people from Harvard.

 _"Rich kids don't go into engineering."_

You're thinking Paris Hilton, when you should be thinking Moderately Well-Off
Kid From Berkeley. That's more than sufficiently "rich", for the purposes of
my argument. There are huge numbers of kids living in the suburban midwest for
whom a Berkeley CS degree is a financial pipe dream. Dad might be an insurance
salesman, and mom a teacher, and they barely have enough money to send junior
to State U., let alone a top-tier CS school.

~~~
cafard
Well, yes, but in the midwest State U. could be Purdue, UIUC, Wisconsin, etc.

------
mitchty
It's already starting.

<http://www.cva.edu/> This college in St Paul last year just got some art
accreditation that purportedly takes into account future financial viability.
They just announced they can't remain financially solvent. So much for
accreditation.

At this point I think education will have a rather interesting next few years.

~~~
chaostheory
I find it interesting that the art focused universities tend to be the ones
going under first.

~~~
littlegiantcap
It's interesting, but not particularly surprising. There's only so much that
can be done with a fine arts degree. My girlfriend started off school as a Art
history major because she loved art, but quickly changed once she realized
there was essentially no future in the field unless you wanted to stay in
academia.

------
atdrummond
Typically when this happens another college or set of colleges will step up to
take the students. This occurred in the case of Parsons College (whose campus
is interestingly now the Maharishi University of Management) and Antioch
College.

More aggressively another college might take over the failed institution, as
in the case of Compton College's failure in 1995. El Camino College not only
accepted Compton's students but took over the facilities and faculty as well.

------
guptaneil
I believe every college maintains a backup fund to make sure that the college
can survive at least 5-10 years if all else fails.

In such a scenario, the school would prioritize using the money to make sure
that current students can graduate and that their degree is worth something
for at least a couple years.

EDIT: That was poorly worded. I meant to say that the fund is meant as a
buffer to help the school avoid shutting down, so that they have time to get
their act together. But it also helps guarantee that their degrees will be
worth something for at least a few years, so that students feel safe
continuing at the school and so recent graduates are not screwed over by
something that wasn't their fault. I'm not sure, but this might even be an
accreditation requirement.

~~~
sliverstorm
Aside from the goodness of their hearts, why would they do that?

~~~
guptaneil
I edited the post, it was poorly worded. My intention was to say that colleges
are at least somewhat protected from just "going out of business" since that
would potentially destroy the lives of thousands of recent graduates.

As far as why they would do that, my guess is that is probably a requirement
to get accredited.

~~~
rammark
"The institution’s financial resources are sufficient to sustain the quality
of its educational program and to support institutional improvement now and in
the foreseeable future. The institution demonstrates, through verifiable
internal and external evidence, its financial capacity to graduate its
entering class. The institution administers its financial resources with
integrity." -- New England Association of Schools and Colleges, Standards for
Accreditation [1], Page 22

I'm sure the other regional accreditation agencies have similar requirements.

[1](PDF)
[http://cihe.neasc.org/downloads/Standards/Standards_for_Accr...](http://cihe.neasc.org/downloads/Standards/Standards_for_Accreditation_FINAL_2011.pdf)

------
HarryHirsch
"Why in the world are schools building new buildings? What is required in a
business school classroom that is any different than the classroom for
psychology or sociology or english or any other number of classes?"

This question is easy to answer. In a time of declining public funds
universities are trying to attract students, because tuition is about the only
funding source left. Consequently, universities have to look appealing to
students, and that means cushy dorms, spiffy libraries, the lot.

Again: these are investments made from the general fund, and the university
tries to recover these through increased tuition income. A classic market
failure.

~~~
dantheman
How is it a market failure?

If anything it's a direct result of the ease at which students can get loans
from the federal government.

~~~
HarryHirsch
For starters, the gratuitous building and renovation does nothing to improve
the quality of the degree, and certainly increases cost of tuition. The
university isn't better off, and the students undoubtedly are worse off. If
that isn't a market failure I wouldn't know what is.

~~~
TruthElixirX
Market failure:

Market failure is a concept within economic theory describing when the
allocation of goods and services by a free market is not efficient.

Colleges are not operating in a market system. They get money rationed to them
by the government in various ways. Therefore it is not a market failure.

~~~
yukoncornelius
Yes, its government failure which is a more inefficient allocation of
resources than would occur without the government intervention.

~~~
TruthElixirX
Yes, I agree. That was what I was trying to convey with my comments.

------
ballard
Many top 100 universities are gleaming with dozens of new buildings:

    
    
        - Stanford tore down some donated admin buildings across from Schwab GSB that
          were not even 10 years old.  A good portion of the
          med school is being gradually torn down and rebuilt
          near the hospital.  (Will the roads ever be back to
          normal two-way traffic?)
        - Davis is littered with new buildings.
        - Harvard's 10 year construction schedule and $30,000,000,000.00+ under HMC.
    

Probably a safer bet. Whether funds begged from donors and liquidated from
students are utilized efficiently is another matter.

------
rdl
I would still generally be comfortable with 250k in debt to get a Stanford or
Harvard degree, provided I wanted to work in a field where that credential
would be a huge benefit.

The better deal is probably to ROTC, though. Especially since the military is
downsizing, you could comfortably spend your service commitment doing
interesting stuff and then leave debt free and with great experience. USAF or
USN, obviously. It also seems like an excellent way to do medical school if
that is your goal, too.

------
yukoncornelius
A lot of misinformation in these comments centers around the fact that many
universities constructed new buildings from 2008-2012 as construction costs
were low due to the high levels of under and unemployed in the construction
sector. This factor combined with poor expected returns to their endowments
made it appear wise to make capital investments. Whether this was a good or
bad idea won't be realized for many years.

------
tstactplsignore
As much as online degree may be the future, this is really out of touch. An
online degree is still considered absolutely useless in academia, law, and
medicine. Literally none of the students currently graduating in the top 5% of
their classes will pursue an online degree as opposed to a traditional school.

~~~
cszy
I think you missed the point of the article, which is that a number of schools
simply do not have a sustainable business model and may not exist in 4 years
unless they make major changes. Entry level classes in particular could be
taught online, since the contents of many of the lectures never change.
Likewise, if the credits transferred (unfortunately they frequently do not), a
smart student would take those introductory classes from another institution.

Schools pay professors huge salaries, tuition rises, meanwhile the quality of
the education is the same. Of course, specialized degrees like law and
medicine that require special training and licensing will always be around.
But I'd expect many colleges to start hosting introductory classes entirely
online to save money and probably dropping entire degree programs within the
next several years.

------
eksith
The college I went to, nearly went out of business several times. I think now,
attendance is rising as people who're out of work are going back to school. I
have two jobs for now, but I'm thinking of quitting one and going back to
school myself.

Although it's awkward majoring in something that has nothing to do with your
current line of work.

What's really annyoing is that no one asks for your GPA (well at least, they
didn't ask me) no matter where I applied; just the school and what courses I
took. The more I see people who don't have a college degree getting things
done, the more I feel college, while you do learn, is still a scam as far as
jobs are concerned. And I'd rather learn for the sake of learning than learn
just to get a job.

------
Claudus
List of Colleges and Universities that have Closed, Merged, or Changed their
Names

[http://www2.westminster-
mo.edu/wc_users/homepages/staff/brow...](http://www2.westminster-
mo.edu/wc_users/homepages/staff/brownr/closedcollegeindex.htm)

~~~
cafard
I had a glance at the list, out of curiosity to see whether it included Case
Western or Carnegie Mellon, both whose names reflect mergers. It did not. My
point, though, is that mergers are not necessarily bad.

------
justin_vanw
I'm not saying this is what you _should_ do, but it's probably what I would do
if my college went under:

Put on my resume that I graduated. From a school that was good, not the shitty
one that went out of business.

Actually, as someone who didn't graduate, I find that just not mentioning
whether or not I graduated works fine. I just say 'University of X, 200X -
200X, Mathematics' on my resume. At this point in my career it doesn't matter,
and back when it might have mattered almost nobody has the balls to say to you
"I see that you attended University of X for n years, did you graduate?".

~~~
chaostheory
> Put on my resume that I graduated. From a school that was good, not the
> shitty one that went out of business.

Not counting the ethical part, I don't think this is very smart. All of the
jobs that I have worked for do background checks on both your employment
history and education.

~~~
patmcguire
Ethical issues aside (and I've never done any of this) - who checks your
education? I've never had anyone ask for transcripts, and I've never seen a
database of what they're supposed to look like. You could send in anything
with a watermark-y looking thing and 99% of people would take it.

~~~
yukoncornelius
Many employers, especially those with a dedicated HR department, call the
stated university verify degrees. This is especially true if a security
clearance/background check is an employment requirement. I believe a Yahoo
exec got caught by this last year.

------
jrs235
In order to stay afloat how many larger universities will no longer allow
transfer credits to prevent people going to cheaper schools for gen Eds?

~~~
Bramble
Thankfully, there is regulation in this area for any school that gets state
funding. If state-subsidized 4-years don't accept X number of transfer
students from that state's community colleges every year, they can say goodbye
to a chunk of their state funding.

I can't speak for private universities, however.

------
rooker
I was just thinking about this recently. Our generation is so fucked. Tuition
rising, fewer jobs, recession, social security not going to be there when we
get older, the first true tax increase for every American (payroll tax, we all
felt it to the tune of 2% on our first paycheck of January) since the mid-90s,
and now the retiring generation is saying "Welp! It's up to you to fix it!
Good luck!" Assholes.

------
vincefutr23
does anyone know where to look to find out how much debt a college has or what
their financials are?

~~~
barake
Any non-profit school has to file a form 990 with the IRS. Debt isn't always
included in the filing, but Moody's usually includes a pretty accurate debt
estimate along with credit ratings.

Here is Stanford's 990 from 2011: [http://bondholder-
information.stanford.edu/pdf/Stanford_990_...](http://bondholder-
information.stanford.edu/pdf/Stanford_990_FY11.pdf)

