> Small colleges with reasonable endowments are up and running, but nervous, because they can see that they do have a runway to worry about.
But how did they get to a cost structure where they have to be so nervous? If they could keep costs to where they were in real terms 25 years ago they could charge less tuition (thereby making it easier to fill classes) and break even without dipping into the endowment.
Harvard can hire hundreds of overpaid administrators, build ugly buildings, and invest foolishly and it’s “only” a colossal waste of money. When Union College copies Harvard’s poor decision making there’s a lot less margin for error.
Just like in health care, insane cost growth is the whole ballgame.
> But how did they get to a cost structure where they have to be so nervous?
It's not necessarily the university's fault in every case and instead is due to the changing face of higher education in America. Many colleges and universities were able to rest on their laurels for decades as the American economy transitioned from a labor force to a variety of specialized jobs across many new and exciting fields (as well as specialized training in old fields too).
The jobs market is again shifting and has been for many years. College has become increasingly unaffordable due to institutional hubris and from the fact that many colleges have been focusing on the wrong priorities to attract new students (luxury dorms! exotic food! useless majors!). Alternatives to expensive college degrees have sprung up everywhere, and while many universities scoffed at the thought that these new types of education would be embraced by the public, the alarm bells are beginning to ring louder and louder as traditional institutions begin to see declines, not only in general enrollments but also in specific programs that have been popular for decades.
Some places can weather the storm as they have prestigious names or large endowments or illustrious alumni networks or great sports teams. Others have to pivot to embrace the idea that college has become too unaffordable and orient their institutions towards new ideas and programming that will bring in students. The problems higher ed faces does not 100% come down to institutional cost structure, but instead a reimagining of how one can achieve a college-level education without resorting to massive amounts of debt.
But how did they get to a cost structure where they have to be so nervous? If they could keep costs to where they were in real terms 25 years ago they could charge less tuition (thereby making it easier to fill classes) and break even without dipping into the endowment.
Harvard can hire hundreds of overpaid administrators, build ugly buildings, and invest foolishly and it’s “only” a colossal waste of money. When Union College copies Harvard’s poor decision making there’s a lot less margin for error.
Just like in health care, insane cost growth is the whole ballgame.