Sunday, August 23, 2009

HBCUs in the Great Recession

Like many of readers of this blog, I have spent a lot of time trying to gauge the impact of the Great Recession on the HBCU community:
  • Although the well-connected bankers at Goldman Sachs and JP Morgan Chase are earning record profits thanks to the generous assistance they received from the Federal government, and although the Chairman of the Federal Reserve Board recently conjectured that the economy would begin to recover by the end of this year, some of the nation's more astute economists have issued strong warnings that the unemployment rate will reach at least 10 percent before it declines. They have also reminded us that unemployment is a lagging indicator of economic recovery because businesses will tend to extend the working hours of their remaining employees before they rehire old employees or hire new employees.
  • The unemployment rate for African Americans has usually been at least twice as high as the national rate. If anything, the Great Recession has pushed African American unemployment even higher. And as the "last hired, last-rehired", African Americans will be harder pressed to keep up with their children's college tuition payments.
  • It should also be noted that the recession has drastically reduced the funds available from all sources of financial aid -- except the Federal government.
When the recession suddenly deepened last Fall, these considerations led me to anticipate that HBCUs would be hit harder than non-HBCUs because they enrolled a higher percentage of Black students:
  • Private HBCUs would suffer enrollment declines as Black students dropped out or transferred to public colleges and universities having substantially lower tuition. This loss of tuition revenue would push some (many? most? all?) of them into a financial crisis. And the longer high unemployment lasted within the African American community, the greater the likelihood that some private HBCUs would have to close their doors permanently.
  • Public HBCUs might enjoy enrollment increases because of their lower tuition, but their increased tuition revenue might be offset by substantial reductions in their budgets imposed by the governors of their hard pressed states. Furthermore, the longer high unemployment lasted, the greater the existential threat from increased political pressures to merge some public HBCUs with public non-HBCUs or to shut them down entirely. This would come as part of their governor's efforts to reduce size of their state's higher education systems to levels that could be sustained by reduced tax revenues.
Unfortunately, by the beginning of this year some of my pessimistic predictions had already come true. In February, I posted a page on the Gateway (http://www.dll.org/hbcus/Announcements/Recession.asp) containing links to the Web sites of some prominent public and private HBCUs whose senior administrators had courageously acknowledged that they were facing severe financial challenges. And in recent months I have also posted links to announcements from public HBCUs that their Fall 2009 enrollments were at record levels.

Note: this discussion is continued in "HBCUs vs. FPCUs in the Great Recession"