It has been five years since the start of the Great Recession, but a recent report from the National Bureau of Economic Research suggests that the employment picture for recent college graduates remains grim. An estimated 284,000 Americans with college degrees worked minimum wage jobs last year, which is 70 percent more than a decade ago and double that of 2007.
Nationally, student debt has surmounted credit card debt, and if Congress does not act within the next few months, the interest rate on subsidized Stafford student loans will automatically double from 3.4 percent to 6.8 percent. As it stands today, student loan debt has ballooned to over one trillion dollars; an entire generation is not saving or investing and is unable to pay off debts because of astronomical interest rates, amounting to what could become the sequel to the 2008 financial crisis.
What does this have to do specifically with Colgate? A recent review of Colgate’s finances by Moody’s, a bond credit rating business, suggests that the greatest challenge to Colgate as an institution is not any curriculum or policy issue but instead Colgate’s reliance on student charges (tuition, student fees, etc.) and investment income from Colgate’s endowment for revenue. These two sources of revenues make up a staggering 85 percent of Colgate’s operating revenues.
Colgate has had recent fundraising successes such as the $400 million campaign spearheaded by former President Rebecca Chopp. But, in order to protect the quality of the Colgate education in the event of a crisis in the student debt markets, Colgate must boost its alumni-giving rate above its current 40 percent, close towards its 2003 high of 55 percent. A greater alumni-giving rate would bolster operating revenues and also help pay for significant capital expenditures, such as the recent campus master plan and financial aid initiatives.
Colgate offers strong job prospects for graduates compared to other four-year universities, but the economic picture produced by the Great Recession could pose several problems to Colgate and other liberal arts institutions in the long term. If prospective students turn to larger universities for a more job-specific education, liberal arts colleges and universities could face greater difficulties in drawing applicants.
In order to protect operating revenues, the administration also ought to consider adjusting controversial social initiatives, as well as expanding popular pre-professional initiatives. A Colgate that engages better with alumni and a Colgate that better trains its students for the professional world will be a stronger Colgate in the face of any fiscal calamity.
Rest assured, Colgate is unlikely to see a shortage of applicants due to its quality of instruction and institutional reputation. It is worth considering that Colgate students are also well paid compared to their liberal arts peers. A 2012 PayScale College Salary Report suggests that a Colgate education is a better investment than ever, as graduates earned a mid-career median income of $111,000. Colgate and other liberal arts institutions owe it to their students to evolve and meet the unique challenges created by the fiscal conditions of the 21st century economy.