The new economics of higher education

That is my new Bloomberg column, written for a special feature and thus 2x the normal length.  Here is one excerpt:

The decisions of American families also will choke off out-of-state tuition revenue. Note that about three-quarters of America’s higher education sector, by enrollment, is state schools. The out-of-state tuition rate is the real cash cow of American higher education, and sometimes it can approach three times the in-state rate. Schools’ reliance on out-of-state revenue is going to take a big hit, as it was premised on a degree of individual geographic mobility that simply does not exist right now and may not be restored anytime soon.

I suspect many parents will, whether it is rational or not, prefer to keep their children closer to home.

The most vulnerable state schools will be those in underpopulated states and far from population centers. The University of Vermont, with about three-quarters out-of-state students, ought to worry…

Another problem will be the plummeting enrollment of foreign students, who typically are paying out-of-state tuition rates…

The University of Rochester, with about 27% foreign students, will find this adjustment especially difficult.

There is much more at the link, recommended.  One theme is that upper tier schools will stay in business, but by relaxing admissions standards and by cannibalizing students from lower-tier schools (I am curious to see how those students do in their newly found “promotions”).

p.s. Average is Over

p.p.s. “free college” is a really bad idea, worse than before.  State schools cannot at the moment survive the complete loss of tuition revenue.