This is the second in a short series on the economics of higher education. The other three posts are available here:

Higher Education and the Covid-19 Crisis
Should Colleges Merge?
Why Colleges will not be Replaced by Online Education

It is now almost not worth documenting the growing evidence that U.S. higher education is facing an economic crisis. So many institutions expanded dramatically in the two decades between 1990 and 2010, buoyed by growing endowments and favorable demographics. That era is clearly over. The last decade has been hard, particularly for smaller private institutions. Many schools have had to make major cuts to programs and faculty.

For folks out there in normal professional jobs, this might all seem like much ado about nothing. Companies downsize and fail all the time, right? A little cost-cutting once every couple of decades seems pretty minor. There is some truth to this. Many higher education institutions are not as good at phasing out programs as they need to be. Some internal process for making those prioritization decisions is important. 

However, financially-motivated ermergency cuts in colleges and universities are different and rarely result in the institution being better.  Here is why:

  1. Scale and timeframe: colleges and universities tend to make long-term investments and commitments. New faculty take a year or two to get their feet on the ground, the physical infrastructure is built for a particular size student body, and it is usually built to last. When a college faces a 10% enrollment drop, however, it cannot easily rent out 10% of their infrastructure space. Those costs are fixed. Nor can you easily just cut 10% out of the budget of each program. Academic programs and course catalogs operate as soft (or sometimes hard) promises to the students already in the school who have started down those tracks. This leads to two results: first, cuts have to come out of operating budgets, which usually means people. Second, the cuts become magnified. You have to cut more than 10% of the faculty/staff/programs because so many of the college expenses are not movable or avoidable.
  1. When you cut faculty and programs, the student experience actually gets worse. Forget everything you heard about cuts making an operation more efficient. On the contrary, imagine a grocery store hitting bad times, and deciding they needed to cut all the produce from their store. The store is immediately lacking something valuable to every customer that walks in. Programs and courses are built around, and by, people. If you lose one biologist, it might well be the case that there is no one else in the institution that can step into their shoes. As a result, when cuts are made, some classes are dropped and are no longer available, other classes get larger, and the student-faculty experience gets far worse.
  1. Faculty cannot easily come and go. A job as an associate professor of literature might seem pretty generic, but the reality is that these jobs are really hard to find. When faculty are let go, there are very few options for them and their family. A lateral move in the industry is almost guaranteed to require a move across the country. Just about every other comparable high-skill profession is far more flexible and mobile. It is hard to find good people, and hard for people to move to a new job. The job market, moreover, happens on an annual basis. In some fields, you have one shot at a couple of really competitive jobs on the other side of the country each year. If you don’t get the job, you wait a full year.

This does not mean that institutions cannot shrink. Only that it really takes a decade to carefully downsize without sacrificing quality. It is almost never the case that you can downsize and improve quality unless the institution was just building really bad programs.

In my experience, emergency cuts almost never target bad programs that are not doing good work. They tend to focus, instead, on programs where there is low student demand or difficulty finding faculty. This makes financial sense but leads to to a patchwork of programs that might leave gaping intellectual holes in the university catalog and in departments.

So how should colleges shrink when they need to? Ideally it happens gradually over 3-5 years, with full information, so that faculty and students can finish out their academic studies and spend time finding alternative matches in the institution or elsewhere. This is not as unusual as it might sound. Schools phase out programs, courses, and organizations all the time, but when it happens, it is so routine that it doesn’t make the news.

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