Higher Ed Shakeout Hits HBCUs First

NSU: Gleaming on the outside, troubled on the inside.

NSU: Gleaming on the outside, troubled on the inside.

by James A. Bacon

All colleges and universities find themselves under unremitting pressure these days as consumers balk at relentless increases in tuition & fees and new business models coalesce around online education. But few are as stressed as the Historically Black Colleges and Universities (HBCUs), which have special problems all their own.

Sidney A. Ribeau, the president of the prestigious Howard University in Washington, D.C., announced his retirement Monday following a 6.3% decline in enrollment this year and a decline in its Moody’s credit rating from A3 to Baa1, according to the Wall Street Journal. That incident follows the recent firing of Norfolk State University (NSU) President Tony Atwater and the closing of St. Paul’s College in Southside Virginia this summer.

“There are so many teetering on the edge right now … without some kind of intervention, 20% to 30% [of HBCUs] cannot survive another decade,” said Johnny C. Taylor Jr., president of the Thurgood Marshall College Fund.

Some problems are particular to the historically black institutions, which tend to have small endowments and rely heavily upon tuition and fees to meet expenses. The savings of black families were devastated by the 2007-2008 recession, and the 2010 tightening of eligibility requirements for Plus Loans (federal loans taken by parents on behalf of their children) impacted low-income families disproportionately. A WSJ survey found that enrollment had declined at a third of the 85 HBCUs surveyed by 10% or more between 2010 and 2012.

A longer-term trend has been the increased competition other higher ed institutions for black students; 90% of black students today now enroll outside HBCUs. Like the black-owned hospitals, banks, insurance companies that arose to serve blacks during the Jim Crow era, HBCUs have struggled to redefine their role in a desegregated society.

Online learning may provide the coup de grace. Massively Open Online Courses (MOOCs), hybrid MOOCs and other permutations of online learning have the potential to slash the cost of delivering educational instruction. While students craving the residential experience at elite institutions such as Harvard, MIT or the University of Virginia may continue to pay a premium tuition, others, less willing to run up tens of thousands of dollars in debt, will gravitate toward online learning. The “existential threat,” to borrow a phrase from former UVa Rector Helen Dragas, will hit the HBCUs first.

Here in Virginia, Norfolk State has the most visible problems, but Virginia Union University (private) and Virginia State University (state-supported) may have slender margins for error. My impression is that Hampton University (private), one of the strongest HBCUs in the country, has the best chance to find its way in the new era.

Other universities will be tempted to dismiss the travails of the HBCUs as unique to that set of institutions. But they would be foolish to do so. HBCUs are simply located the closest to shore when the tsunami hits.

4 Responses to Higher Ed Shakeout Hits HBCUs First

  1. “Other universities will be tempted to dismiss the travails of the HBCUs as unique to that set of institutions. But they would be foolish to do so. HBCUs are simply located the closest to shore when the tsunami hits.”

    I completely agree with these statements.

    A large percentage of our institutions of higher education are now highly dependent on these federal student loans (and other fed gov. monies.) being funded in their recent massive amounts. And the remarkable expansion of these loans over the past decade have without doubt fired up a false balloon market. Like all red hot false markets, people getting the money assume it will last forever and start spending it accordingly, accumulating exorbitant debt as they spend it like there is no tomorrow.

    But bubbles always burst. This particular bubble likely has or will soon.

    Like Jim suggests, the HBCUs are likely the canaries in the coal mine. Their hard times now will most likely spread to many others very fast.

    I regret to say that this problem bears resemblance to the housing market bubble and collapse fueled in substantial part by the Federal government’s flooding of the housing mortgage market that began in the late 90s. It took 10 years for financial disaster to metastasize. I suspect the student loan problem may well be metastasizing on the same ten year schedule.

    I also agree with Jim’s statement that” The savings of black families were devastated by the 2007-2008 recession, and the 2010 tightening of eligibility requirements for Plus Loans (federal loans taken by parents on behalf of their children) impacted low-income families disproportionately.

    I would add that it hit all income groups (save for the mega-rich) far harder than we now realize, or are willing to admit.

    For example, the draining of wealth out of home values and the strength of its current impact on usually strong and vibrant real estate markets hit me like a hammer recently as I looked into home values (and their flux) since 2007 in home markets ranging from $400,000 to $2,000,000.

    The lost of value and lack of recovery of these higher end markets is astounding. Its impact short to mid-term is already profound and in my view it is likely to stay that way for some time, absent dramatic change that I have yet to see. Such market dysfunctions do huge collateral damage. Inability to pay for your kids college is only one of the many bad results that ripple through economies and the health of nations and societies. The longer it lasts the more damage it does.

    • For some background see else on this website:
      Playing With Other People’s Money
      University bereft of New Thinking
      Has College Enrollment Peaked
      Athletics And Debt Service Driving Up Virginia College Costs

  2. I wonder how this plays out with Universities like Liberty?

    and interesting how most that are in trouble don’t really have significant sports programs so that’s not hurting them financially ….

    Black folks have a much higher unemployment rate and I suspect that has something to do with “traditional” black colleges having trouble – more so than the overall “high tuition” trend with most all higher ED.

    I agree with Reed on the loan stuff.. we’re coming a cropper on it.

  3. Pingback: Online Articles That May Be of Interest to JBHE Readers : The Journal of Blacks in Higher Education

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