Fall 2016 issue of Horizons

COLLEGES & UNIVERSITIES

Economic Trends in Higher Education by Brent Stevens, CPA, CGMA

T he current economic environment at public and private colleges and universities continues to be challenging. While much of the public rhetoric on higher education has recently focused on the rising costs to the consumer (the national average of increases is 6.6% according to the College Affordability and Transparency Center ) and increases in student loan levels, some of the underlying economic data from the institutions’ perspectives paint a slightly different picture. A significant portion of institutions in the United States are dependent upon revenues from tuition and fees to sustain the campus (both for current operating costs and infrastructure related expenditures). Unfortunately, the number of potential students entering the higher education environment has not experienced the

opportunity for substantial increases that may be present in other industries.

Fewer Students Based on data collected by the Western Interstate Commission on Higher Education (WICHE), the number of students graduating from high school in the last years of data available declined to approximately 3.2 million in 2016, from a high of 3.4 million in 2011. The study also projects relatively flat high school graduation rates through 2028. A similar study by the Department of Education (through the National Center for Education Statistics) indicated that the rate of high school graduates enrolling in higher education over the last 10 years (of data available for the survey) declined slightly from 68.6% in 2005 to 68.4% in 2014.

page 46 | horizons Fall 2016