Will Covid Collapse the College Cartel?

S ince the latest surge of Covid cases, college students across the country have been prevented from leaving their dormitories, told they may not dine at local restaurants, barred from leaving the county in which they go to school, and forced back into remote classes. Complaints have started to trickle out from students and the families footing the tuition bills, but mostly they have gone along with these draconian restrictions.

There are new signs that students are losing their patience with these restrictions and are starting to wonder whether a college education is really worth going through so much trouble. Up until now, college administrators have had the upper hand in negotiating with students desperate to win admission to their institutions. They are beginning to lose that advantage.

Though it may not seem like it, even higher education is subject to the laws of supply and demand. And the demand for college has been shrinking rapidly. Last week, the National Student Clearinghouse Research Center reported a drop of almost half a million students compared with enrollment the previous year. Long-term demographic trends account for part of the decline. After decades of robust population growth, the number of students in each college-going cohort has continued to shrink by an average of 1.67 percent per year since 2010. The decline shows no signs of stopping. The baby bust following the 2008 financial crisis will hit college admissions offices in just a few years, so institutions will be forced to compete for a declining number of students.

The current economic crisis has exacerbated matters. Students see a tight labor market and are beginning to see that they might not need a college degree to get the job or salary they are looking for. Doug Shapiro, the executive director of the Clearinghouse Research Center, recently told the Washington Post that he was worried about this trend because it could disproportionately affect the earning potential of lower-income students down the road. Those are the students most likely to take advantage of the tight job market.

That’s possible, but it fails to take account of how many students were getting degrees and then taking jobs that never required a college education in the first place. Bartenders, taxi drivers, and truckers never needed those degrees, and pushing them into four-year schools burdened them with massive amounts of debt with no return on that investment. This does not take into account the opportunity costs of years spent pursuing worthless degrees — many of which were never completed.

For years, colleges have pressed their unfair advantage. They have provided a credential and a ticket into middle-class occupations, even for those who did not learn much in college that would help them in the careers they chose. Colleges had allies in high-school counselors who pushed students toward higher education — sometimes as a way to make up for all of the deficiencies of the K–12 system.

The elite colleges in particular have engaged in gamesmanship to ensure they can squeeze as much money as possible from families. A recent federal lawsuit accuses 16 schools, including Brown, the University of Chicago, Columbia, and Cornell, of conspiring, through cartel-like agreements, to reduce the amount of financial aid to admitted students. Under federal law, the schools were permitted to use a common financial-aid formula if they were “need blind” in their admissions process. Alas, according to the lawsuit, they were not. One executive at the American Council on Education told the New York Times that he doubted the suit would be successful because “the schools are very antitrust aware and particularly sophisticated. They have good advice provided to them.” In other words, they have well-compensated lawyers to alert them to snares and loopholes in the law. But he may be wrong about the prospects for the lawsuit.

A few years ago, the National Association for College Admission Counseling settled a lawsuit with the Justice Department, which had accused the organization of using its ethics code to prevent students from considering offers from other schools after a prearranged deadline had passed.

Now it appears that, at last, students and parents are getting wise to the financial games that colleges have been playing. In a Gallup survey in 2019, only 51 percent of Americans said that getting a college education was “very important,” down substantially from 70 percent in 2013. The federal government will continue to subsidize higher education, despite all evidence that doing so has only made college more expensive and unaffordable for most students. (It’s heartening that even with Democrats in control of Washington, student loan forgiveness seems to be going nowhere.) But even with the free-flowing federal coffers, colleges are closing or even lowering their prices. Drew University, Sweet Briar College, and Benedict College all lowered their tuition this fall. Others will be forced to take similar steps — and soon.

While Ivy League schools may be able to find enough students willing and able to pay full tuition, many of those students may now choose to attend other colleges that are more affordable, even if they are of somewhat lesser reputation in academic circles. Who knows — they may be more interested in living on campuses where they do not have to wear masks all the time or isolate in their dormitory rooms for weeks on end. As Shapiro noted in the Post: “There’s a great deal at stake. We have to get students back on track, re-engage them.” Perhaps so — but that may not be easy to do.

James Piereson is a senior fellow at the Manhattan Institute. Naomi Schaefer Riley is a senior fellow at the American Enterprise Institute and the Independent Women’s Forum.