Lower Enrollment Hits Higher Ed Hard, HBCUs The Hardest

Shifting demographics have long posed challenges for U.S. programs like social security and Medicare – as declining birthrates change the calculus for keeping them afloat. Now, fallout from demographic change is also hitting the higher education industry as a decline in the number of high school graduates – even as actual graduation rates remain steady – leaves smaller colleges and universities vulnerable to the devastating financial impact of lower enrollment.

The problems are most pronounced at historically black colleges and universities (HBCUs), which have been plagued by years of slow growth, and more recently, declines in enrollment.

Attendance at colleges and universities grew 91% between 1976-2010, then declined 6% between 2010 and 2016, according to the National Center for Education Statistics. HBCUs followed the same pattern, but the gains paled in comparison to the overall trend, while the recent losses were more pronounced. In 1976, there were 223,000 students enrolled at HBCUs, a figure that grew 47% by 2010, to 327,000 students. But between 2010 and 2016, enrollment at HBCUs dropped 11% to 292,000 students.

HBCUs were established to provide black students, who were discriminated against at “mainstream” institutions, access to higher education. But since the civil rights movement, black students have had access to higher education anywhere, which diverted the applicant pool away from HBCUs.

What’s more, HBCUs have a reputational problem, largely stemming from the perception they are less prestigious than their mainstream peers. And now, the problem’s reached a boiling point: only 101 HBCUs are operational today in the U.S., compared to 121 in the 1930s.

“HBCUs as a group are in trouble, no doubt about it,” said Richard Vedder, professor emeritus at Ohio University. “Enrollments have fallen substantially and endowments are very low at most of these schools, and therefore have little cushion, though that’s offset by federal support to HBCUs, which have kept them alive.”

Bennett College, a private women’s school in North Carolina, is at risk of losing accreditation due to its financial condition, though a successful fundraising campaign provided the school a lifeline. Cheyney University is also at risk of losing its accreditation and remains on probationary status given its financial pressures. In 2018, Enrollment dropped by 38%, and university-hired consultants have recommended the school merge with another or close altogether.

Losing Cheyney would represent a highly symbolic blow since it was the first HBCU, established in 1837.

“Without a sense of urgency, there’s a sense of complacency,” said Harry L. Williams, president of the Thurgood Marshall College Fund. “Some of these things have crept up on our schools, but there’s nothing new as far as sounding the alarm.”

Struggling schools are now examining their affordability, reviewing academic offerings to ensure they are in line with students’ demands, and some may consider consolidating their programs or merging with another institution.

Schools depend on tuition revenue, but reducing tuition can provide a boost in enrollment. Elizabeth City State University’s student volumes declined 60% between 2010-2016. North Carolina lawmakers approved a program to reduce tuition for in-state students at ECSU and two other state institutions – resulting in a 64% cut to $500 per semester for ECSU students starting in fall 2018. Enrollment at ECSU subsequently grew by 20%.

That kind of support is extraordinary – and not something that all states can afford, especially at a time of anemic growth in state aid to higher education.

Institutions can also benefit from focusing on efficient programming. By emphasizing its core programming, North Carolina A&T – which focuses on science, technology, engineering and mathematics, or STEM programs – has seen tremendous growth in the past several years, and expects to grow by 17% in the next four. On the flip side, schools can also reduce or eliminate unpopular offerings.

Merging with another institution could prove beneficial for distressed schools. Although there may be resistance, due to concerns about losing campus identity, it should be noted that if the university closes, there will be no campus identity to preserve.

With flagship institutions like Cheyney at risk, all institutions—HBCUs and otherwise—must reposition themselves to ensure they thrive in the future.

Maria Amante is a reporter for Debtwire covering stressed credits in Alaska, California, Colorado, Connecticut, higher education and tobacco bonds. She can be reached at Maria.Amante@acuris.com.

The article appeared in Forbes.