A Threat to Private Colleges?

Wells College sits on a picturesque tree-filled campus on the shores of New York's Cayuga Lake, with brick buildings dating back to its founding in 1868, a year when a different president, Andrew Johnson, was impeached.

It has a modest $24 million endowment and enrolls a little more than 400 full-time students. It's quite different from the image of blue-blooded and cash-rich institutions like Harvard University, with $42 billion in endowments and 36,000 students.

Its margins are so slim, in fact, that last May, when Wells faced the prospect of the pandemic closing its campus in the fall, the college’s president, Jonathan Gibralter, wrote that closure could push Wells over the edge. "Wells simply will not receive enough revenue to continue operations," he wrote in a letter.

As it turned out, the college was able to hold in-person classes in the fall, and donations have put it on more stable footing, Gibralter said last week. But a new threat is on the horizon, menacing private colleges and universities, particularly smaller ones without much wiggle room that are already facing a decline in the number of traditional college-aged students in the coming years.

In the White House now is a president who is promising to make college -- or at least public ones as well as those predominantly serving students of color -- free.

Removing the barrier of tuition could be transformative. Studies estimate millions more will be able to get a higher education at public and minority-serving institutions.

But it would also mean private colleges and universities, which would still be charging thousands a year in tuition, would find themselves competing for students, who could go elsewhere and not have to pay tuition.

Private colleges and universities could see their enrollment decrease by 7 to 14 percent over the next decade if President Biden's plan is adopted, a study by Georgetown University’s Center on Education and the Workforce predicted in October.

To be sure, presidents of private institutions like Gibralter, Daemen College’s Gary A. Olson and Pomona College's G. Gabrielle Starr said in interviews their own colleges would survive. Enough students will want what they offer, smaller class sizes or, in the case of private faith-based colleges, a religious community, to pay for it.

“If public higher education were to be tuition-free, we’d weather the storm by offering an educational product in a way that public universities do not provide,” Gibralter said. “I really think private liberal arts colleges offer a unique, special kind of education.”

But there will be many that could fail, said Barbara Mistick, president of the National Association of Independent Colleges and Universities.

“And that would threaten a wonderful system of higher education in the country that is top in the world because of its great diversity,” she said.

“There are going to be unintended consequences,” Mistick said. Many communities that rely on their local colleges will suffer, she said, comparing the impact of college closures to the decimation of Main Streets in small towns with the proliferation of big box stores. “Look at what the malling of American did to wonderful small towns,” she said.

But to Morley Winograd, president of the Campaign for Free College, it might be the price of achieving a greater good.

His group on Tuesday released a study it commissioned, estimating that enrollment at four-year, nonprofit private colleges and universities will decline by 12 percent, or 270,000 students, in the first several years after the adoption of Biden’s free college.

But on the other hand, Winograd, a senior fellow at the University of Southern California’s Annenberg School’s Center on Communication Leadership and Policy and former senior policy adviser to Vice President Al Gore, said enrollment at public community colleges would rise by 1.23 million, or 18 percent, and at four-year public colleges and universities by an estimated one million, or 17.7 percent. All told, 1.96 million more people would have the opportunity to go to college, a gain of 13.4 percent.

Similarly, the Georgetown study predicted that enrollment at public institutions would increase by 6 to 14 percent over the next decade. Even with the loss of students at private colleges and universities, college enrollment over all would increase by 4 to 8 percent, it found. And the additional taxes paid by people earning higher salaries because they have a college degree would pay for what it estimated to be the $683 billion cost of the program over a decade.

Elite private colleges and universities would still attract students willing to pay for “reputational value,” said Anthony Carnevale, director of the Georgetown center. Others will face conflicting demographic changes. The number of households with two incomes is expected to increase, increasing the pool of families that could afford tuition, he said.

But the number of traditional college-aged people is projected to decline.

Biden’s transition team has been discussing if there is a way to incorporate private colleges into a free college plan, Carnevale said.

Under the free college plan Biden laid out in the campaign, the federal government would send to the states two-thirds of the cost of making public colleges, as well as historically Black colleges and universities and other minority-serving institutions, tuition-free, though it would not include the cost of room and board. The states would chip in the remaining third of the cost.

One idea that’s been discussed, Carnevale said, is to allow those dollars to go to private institutions as well to lower their tuition by the amount public colleges and universities had charged. In return, the private institutions would have to agree to enroll certain a percentage of students, perhaps 15 or 20 percent, who are eligible for Pell Grants. The administration could offer an additional incentive to take on more of the lower-income students by lowering or waiving the federal tax on endowments, he said.

A spokesman for the Biden transition, though, did not return press inquiries.

Whether Biden will be able to get a free college plan through Congress, even with the slim majority held by Democrats in the House and Senate, is hardly certain.

Senate rules would require the support of 10 Republicans to bring any measure up for a vote. Republican lawmakers, and potentially some Democrats, are skeptical of the price tag. Former education secretary Betsy DeVos also reflected the view of some conservative education experts that creating a system relying on government funding will eventually lead to an underfunding of higher education and the rationing of how many students would be able to take a course or pursue a field of study.

Should free college pass, however, it would come on the heels of experiments by some states to eliminate tuition for more students at public colleges and universities.

However, they do not give a clear picture on the impact on private colleges and universities.

Most notably, New York State created the Excelsior program, which has provided tens of thousands of scholarships for state students whose families make less than $125,000 to cover tuition at State University of New York or City University of New York institutions.

Presidents of private universities like Gibralter and Daemen's Olson, and Kimberley Wiedefeld, vice president for enrollment management at Roberts Wesleyan College, said their enrollment dropped in the first two years of New York’s program.

But Gibralter said enrollment would have rebounded if not for the pandemic. Olson and Wiedefeld, though, said enrollment has recovered. Roberts Wesleyan, a Christian college, emphasized the religious community it provides, and also guaranteed prospective students they’d get the support needed to earn their bachelor's degree in four years. The college noted that would save students $46,355 in lost income and $82,074 in lost retirement savings over taking five years to graduate.

But also, Olson said, the Excelsior program hasn't yet made public college tuition-free for all the state's students, because of a lack of funding and restrictions that have scared away some students from taking its scholarships, including having to stay in the state for four years after graduation.

The 25,000 scholarships provided in 2018 make up only 4 percent of the state’s undergraduates. Private universities could have felt a bigger impact if more of the state's undergraduates received free tuition at public universities.

“It might have been a serious problem. If it wasn’t so restrictive, it might have been a disaster,” Olson said.

Another notable program is the free community college program Tennessee created. However, the impact on private universities has been blunted by the fact that private universities are eligible to receive money to make tuition free for students pursuing two-year associate degrees at the institutions, said Claude Pressnell, president of the Tennessee Independent Colleges and Universities Association. One benefit is that students getting two-year degrees at private universities also offering four-year degrees graduated at higher rates than at other community colleges.

In interviews, the presidents of private universities argued there would be a loss should they enrollment decline or if some institutions close. Starr, of Pomona College, for instance, said the support and tutoring Pomona offers has meant little difference in the graduation rates of students regardless of race.

They also argue there is a better way -- to increase the size of Pell Grants enough to cover tuition, but to allow students to use it wherever they want, regardless of whether they are public or private.

“It sets up an unnecessary competition between the private-sector colleges and the public sector,” Olson said.

Instead, the presidents and Mistick said a better course would be to increase the maximum amount of Pell Grants so that students could use them to cover or reduce tuition at whatever institution they want to attend, public or private.

Mistick noted that a change in the Pell Grant application process as part of the budget Congress approved in December is expected to increase the number of students eligible to receive the maximum amount by 1.7 million a year.

Students will still be able to qualify for the maximum if their families are determined to not be able to contribute anything to the cost of attending college under a complex formula. But those who do not qualify that way will now be eligible for the maximum if their families' adjusted gross income is less than 175 percent of the federal poverty level, or, for single parents, 225 percent of the poverty level.

Still, Winograd said there's a trade-off in what private colleges want. Helping only those eligible for Pell Grants would leave out middle-class students and decrease the impact increasing the number of college graduates would have on the economy.