Education: Private Colleges Cry Help!

Fewer kids, higher costs spur a scramble for funds

It might have been a scene from the activist 1960s. State police were called out to prevent violence as angry students jeered after being ordered to leave the premises. But unlike the protesters of the Viet Nam days, the demonstrators who struck last month at tiny Windham College in Putney, Vt., were battling to keep their school open, not close it down. They failed. After a long period of financial scrambling, the once prospering 27-year-old school was some $6 million in debt and unable to pay salaries or even its heating bills. Enrollment at the modern campus, designed for 1,000 students and built at a cost of $10 million at the height of the educational splurge of a decade ago, was down to 260. Lamented the financial vice president, Herbert Flaig: "We have lost a battle, and the fall has not been easy."

Windham's fall is scarcely an isolated case. For America's 1,500 private colleges, the 1970s have proved as much a time of retrenchment in higher education as the 1960s were a period of headlong expansion. Ten colleges shut their doors in 1978, bringing the total of closings for the decade to 129, more than double the number of new colleges that have opened. The campus kill ratio seems sure to soar in the years ahead. A Carnegie study predicts that as many as 300 institutions will vanish through the 1980s. Some educators expect an even greater number to lose their present identity through mergers and drastic cutbacks in the range of courses they offer, as well as outright bankruptcies. "One way or another," says Dartmouth President John G. Kemeny, "if present trends continue, about half of them are going to go out of business."

Why is the outlook especially glum for private colleges? A chief reason is that they must compete with public colleges, which get regular subsidies from state governments to keep tuition low. The average yearly private-college tuition is now $2,970 (not including room and board), compared with public-college tuition of $600. And there is pressure on the private schools to continue raising fees, since tuition now pays for less than half of a private-college education; gifts, endowments and Government grants must make up the difference. At Harvard, tuition, room and board charges have risen this year to $7,500. Others in the nation's most expensive five: Bennington, $7,540; Yale, $7,500; Massachusetts Institute of Technology, $7,440; and Sarah Lawrence, $7,440.

It's very hard to sell at a fair price what's being sold down the street for 25% of cost," says Peter Armacost, president of Florida's Eckerd College, a 911-student private school. Adds Stanford President Richard Lyman: "At some point, and I don't know where that point is, it will no longer be a rational decision to attend a private institution, regardless of the value of its education."

Economists argue that private colleges are as affordable as ever, since aftertax income has risen as fast as tuition, or faster. Yet by that reckoning, public colleges are a bigger bargain than ever, since the gap between public and private student tuition has grown from $416 yearly in 1956 to more than $2,000 today. The four-year premium for a private B.A., a sum approaching $8,000, is large indeed.