Abstract
The approaching decline in the U.S. college-age population, sometimes referred to as a “demographic storm,” has been identified as an existential threat to the future of American colleges and universities. This article conducts a model-driven analysis of three plausible college-level responses to declining applications. It draws on systems theory to conceptualize a tuition-dependent college as a complex service system and to develop a system dynamics model that captures key causal interrelationships and multiple feedback effects between faculty, facilities, tuition revenue, financials, reputation, and outcomes. Simulations with the college model suggest that common solutions such as reducing faculty or adding campus facilities may improve the college’s short-term financial position, but they are insufficient to ensure the long-term viability without the continuous tuition hikes. This model contributes to the research literature on the economics of higher education, and model-driven academic management and strategy. It also provides useful implications and insights that can inform policy-makers and college leaders.
Highlights
There are nearly four thousand degree-granting institutions in the United States [1]
The prospects are especially dire for tuition-dependent private colleges [3, 4], and some observers have predicted that half of American colleges and universities will soon perish [5]
Model-driven academic planning is an improvement over traditional methods because it allows academic stakeholders to consider alternatives and review the dynamics of plausible scenarios before making a decision [19]
Summary
There are nearly four thousand degree-granting institutions in the United States [1] They range from highly selective global research universities with tens of thousands of students to small community colleges with open admission. These institutions of higher education face many challenges. The prospects are especially dire for tuition-dependent private colleges [3, 4], and some observers have predicted that half of American colleges and universities will soon perish [5] In this context, college leaders seek to understand how to adapt to declining student applications [4, 6,7,8,9]. State governments and policy-makers would benefit from insight into this problem to prevent escalating college closures [10] and the associated negative impact on the U.S economy
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