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Three Pieces Of Actual Good News About American Colleges and Universities

By Derek Newton
Reposted from Forbes, with permission.

If it seems as though American colleges and universities are drowning in bad news, you’re right. It does seem that way. Doom and gloom assessments are popular and repeated endlessly.

But if you look just a bit, there’s actually some pretty good news out there regarding our institutions of higher learning. And it, unlike most of the clucking from the Chicken Little chorus, is worth knowing and sharing. Things are not nearly as bad as you’d infer from reading the higher-ed headlines.

Here’s one – college applications are actually up. Probably.   

The decline in enrollments since the pandemic started has been well documented. And the forthcoming drop in domestic college-age freshmen is real. But among the biggest questions in higher education has been whether any of the students who postponed or skipped or left college in 2020 and 2021 would return – would there be a Covid bounce?

If there is, it could seriously bolster colleges in the near term, allowing them to make smart investments in preparation for the demographic declines that are predicted to hit in two years or so. A little uptick in enrollments would be a big deal right now.

And according to data from The Common App – the one stop application portal and process used by nearly 900 colleges and more than one million applicants – applications are up. Significantly.

Their January report says applications from unique applicants on their system are up 13.2% over pre-pandemic 2019-20 levels. Total application volume, which is all applications from all applicants, is up a robust 19.8% since 19-20.

More good news is that The Common App says public colleges saw the biggest application gains – up 24% compared to a 17% bump for private institutions. And, even better, applications from foreign students are way up – nearly triple the number of 19-20.

This is not all applicants. Because The Common App represents only about 900 schools, the bounce they see may be that more people are using their system and the overall trend may, in fact, be down. But if The Common App data is a bellwether in any sense, the news is unquestionably good. A Covid-bounce may materialize.

Here’s more good news – a major ratings agency upgraded their outlook on American non-profit colleges. Yes, upgraded.

Last month, Standard and Poor’s Global upgraded their sector rating for colleges and universities from negative to stable. The ratings folks at S&P are clear that colleges are not in store for smooth sailing. But, they say, the storm may be over.

From their report, “After four years of it being negative, we have revised our sector view for U.S. higher education to stable. Most colleges and universities have successfully responded to the pandemic, with significant help from federal emergency funding and record investment gains in fiscal 2021.” Adding, “Notably, despite their worst crisis in decades, no rated colleges or universities defaulted on their debt.”

They also say, “Colleges and universities enter 2022 in a better financial position. Colleges adapted budgets to the pandemic and most schools ended fiscal 2021 with improved, and for many, positive operating results.”

Again, the report isn’t entirely roses and wine. The authors highlight some very real and serious potential pitfalls. Even so, that market and credit analysts upgraded their views on the financial well-being of America’s non-profit schools is something you likely missed in this negativity zeitgeist.

And here’s further good news – college endowments shattered records last year.

This news is part of the reason for the S&P upgrade but the numbers themselves are pretty staggering.

According to a new survey of institutions, the average growth in college endowments in 2021 was 35%. That’s investment returns and new donations. But it’s still a big, big boost overall and simply eye-popping when compared to the 1.8% growth that foundations and endowments saw in 2020.

The average college endowment of those in the survey is now more than $1.1 billion and the median is now $200 million. Nearly 20% of the college portfolios in the survey have assets in excess of a billion dollars. Only 13% have endowments valued at $50 million or less.

A billion dollars in the bank and 30% annual returns will turn plenty of college frowns upside down – giving those schools plenty of options to withstand whatever enrollment or economic pressures they may face. Of course, the schools with the most gilded endowments are also those with the most applicants – more or less. The wealthy schools are the most prestigious and best known, meaning they were unlikely to be squeezed even without their outsized investment returns.

Even so, growing endowments and returns are very good for colleges. Other than a surge in enrollment or boosts in per-student state and federal funding – which may also be forthcoming – a growing endowment is probably the best thing for college stability. In other words, if you want colleges to prosper, it’s good news.

Regardless of what you read or hear, America’s colleges aren’t doomed. Or dying. Not in any systemic way, anyway. In some places, there’s reason for outright optimism. More people should know it.

Originally posted on Forbes on February 18, 2022.