20% of colleges and universities will disappear by 2030. Thread.
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2/ Last year's freshman class was the biggest, and demographically speaking, it's all downhill from here for the next 20 years. All else equal, enrollment at colleges and universities will drop 15%. Most schools won't be able to handle it.
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3/ Colleges and universities have been in spend mode while times were good, on academic buildings, athletic facilities, and lots and lots of administration. Mostly fixed costs. The cuts will be very painful. This year, the first year of the downturn, has already been a disaster.
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4/ Athletic programs get a lot of attention but should probably get more. The myth is that football programs generate copious revenue through schools, directly and indirectly, through alumni support. It's absolutely false in 99% of cases. Football is a huge drain on resources.
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5/ Tenured faculty are fixed costs (can't be fired) but if you push hard enough, they are variable. In most cases, the academics aren't the problem--they are cheap and add a lot of value. But they will probably be the first to go, if you make things hard enough for them.
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6/ Schools will resort to lowering standards to keep enrollment up, but that's a race to the bottom, as everyone will be doing that simultaneously. Most schools cannot withstand even a 3% drop in enrollment without having a crisis.
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7/ Small liberal arts colleges will feel the most pain, and will probably account for the majority of the closures. State universities will need explicit taxpayer support. The easy solution here is to lay off administrative staff, but schools will resist as long as possible.
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8/ I've put years into thinking of ways to play this--textbook companies, student housing REITs, but there aren't many big, liquid, obvious trades. Honestly, the best trade here is schadenfreude--everyone gets to feel a bear market at some point. /end
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Yeah unis are so fucked Similarly PhD students
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hmm naw I don't Just not tooled for it culturally
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