- Many families are predictably shifting the focus of their college searches to less expensive state-supported institutions.
- State-supported institutions will be limited with regard to the number of students they can absorb. Some state universities/systems are already heavily stressed, especially those with entitlement scholarship programs, and may be forced to cap enrollments rather than accept all who qualify.
- Private colleges and universities are continuing to award financial aid, both need-based and merit-based, to the students whom they value most.
- The number of student loan providers is shrinking such that more families will need to rely on private lenders (banks, financial institutions) for unsubsidized student and parent (PLUS) loans.
The availability of cash for college is tied to liquidity at both the personal and institutional levels. Parents whose investment portfolios are devalued in the current market have less equity on hand for the purpose of securing loans. And institutions that rely on the interest from their endowments to subsidize their financial aid (discount) programs are finding that their capacity to “backfill” against their discount rates can be significantly compromised when that return is less than expected.
The latter is something to watch as devalued endowments have serious implications for institutions regardless of wealth. With less cash coming in (lower interest payouts) from their endowments and the likelihood of reduced annual giving from alumni and friends, schools find that supporting their student enrollments takes precedence over other priorities. In order to fund their financial aid programs, private colleges and universities in particular are scaling back other elements of their programs and facilities maintenance—a phenomenon that revealed itself during the recession of the late 1980’s.
So, what does this mean for you—the consumer? In the short term, you might expect to see business as usual across the board in terms of how colleges recruit and enroll their classes. They will work hard to at least maintain the appearance of being unaffected
by the current economic conditions. Some may decide to reduce (private) or cap (public) their enrollments in order to maximize create greater efficiencies within their operating budgets. But for the most part, they will continue to press for improved academic profiles, increased diversity, greater selectivity and higher yields. And they will continue to use their financial aid budgets to leverage the enrollments of the students they value most!
Therefore, it is imperative for students to focus on finding the best college fit. If affordability is a concern for you, colleges that value you for what you do well will admit you and give you what you need in order to find success.
In a more robust economy you might be more comfortable taking chances—applying to and, perhaps, enrolling at schools that are “reaches” for you even though you might be expected to finance a greater portion of your education.
Now, however, it is more prudent to focus on places that will give you comparable educational values AND that will make it less painful for you to attend financially. Graduating with enormous debt (more than $30,000) after four years is a choice you make—it’s not something you need to do!
So, be student-centered. Focus on you—what is important to you? What do you want to get out of your college experience? Where can you get what you need—don’t assume that it’s an all or nothing proposition (Ivy or bust). The best school for you will provide an environment that embraces you because of the strength of your potential and is prepared to invest in your success?
To learn more about a student-centered approach to finding and getting into colleges that are good “fits” for you, read Winning the College Admission Game; Strategies for Students and Parents.
Autographed copies of the book are available at www.TheAdmissionGame.com
. You can also find the book at Amazon.com and in bookstores around the country.Peter Van Buskirk is an author, consultant, speaker and creator of the Best College Fit™ Resources. Visit www.TheAdmissionGame.com to learn more about Peter and his student-centered approach to college planning.