Time to Consider Charter Colleges
Strengthening academic institutions while meeting state needs
Robin Capehart
Nov 11
Smaller colleges, both private and public, in the United States are facing significant challenges that threaten their viability, primarily driven by three challenges: financial problems associated with low enrollment, reliance on state and private funding, and the nature of the degrees they offer, particularly in liberal arts.
Financial Problems Due to Low Enrollment
Many smaller colleges are experiencing financial distress largely due to declining enrollment numbers. According to the National Student Clearinghouse Research Center, overall enrollment in U.S. colleges dropped by 3.2% from fall 2020 to fall 2021, with smaller institutions, particularly those with fewer than 5,000 students, seeing the most significant declines (NSC, 2021). This trend is exacerbated by demographic shifts, including declining birth rates and a shrinking pool of traditional college-age students.
Parents and prospective students are increasingly skeptical about the value of a degree from smaller colleges, often viewing larger institutions as more credible and beneficial for future job prospects. A survey conducted by Strada Education Network in 2020 found that 43% of students believed that their college education did not adequately prepare them for the workforce, influencing their enrollment decisions (Strada, 2020). This skepticism leads to lower enrollment numbers, creating a vicious cycle where reduced revenue limits program offerings and further diminishes attractiveness to prospective students.
Reliance on State Appropriations and Private Donations
Smaller colleges often rely heavily on state appropriations and private donations to maintain operations. Public colleges receive funding from state governments, which has seen a decline in recent years. According to the Center on Budget and Policy Priorities (CBPP), state funding for higher education has dropped by an average of 16% per student since the 2008 financial crisis, forcing colleges to increase tuition and fees (CBPP, 2021).
Private institutions similarly depend on donations, but many struggle to secure substantial contributions. A report by the Council for Advancement and Support of Education (CASE) indicates that while overall philanthropic giving to higher education has increased, smaller colleges frequently receive a disproportionately low share of donations, exacerbating financial instability (CASE, 2022). This reliance on external funding sources makes these institutions particularly vulnerable during economic downturns or shifts in donor priorities.
Degrees Offered and Career Pathways
Most smaller colleges tend to focus on liberal arts and humanities programs, which may not provide clear career pathways for graduates. The Georgetown University Center on Education and the Workforce indicates that while liberal arts education fosters critical thinking and communication skills, it often does not translate into direct employment opportunities. Approximately 27% of liberal arts graduates secure jobs directly related to their degree within six months of graduation (Georgetown, 2018).
This lack of direct career alignment contributes to declining enrollment, as students increasingly favor programs that offer clearer job prospects, such as degrees in healthcare, technology, and business. As students opt for more marketable degrees, smaller colleges struggle to attract and retain enrollment, compounding their financial difficulties.
Another Problem – The Skills Gap
Another problem is the gap between the number of graduates produced by colleges and universities and the demand for skilled workers in high-demand fields has become increasingly pronounced across the United States. This disconnect poses significant challenges for states seeking to bolster their economies and workforce.
Insufficient Graduates in High-Demand Fields
High-demand fields, particularly in technology, healthcare, engineering, and skilled trades, are experiencing acute shortages of qualified graduates. According to the U.S. Bureau of Labor Statistics (BLS), jobs in these sectors are projected to grow much faster than the average for all occupations. For instance, employment in healthcare occupations is expected to grow by 15% from 2019 to 2029, adding about 2.4 million new jobs (BLS, 2020). Similarly, the demand for software developers is projected to grow by 22% during the same period, reflecting the increasing reliance on technology across industries.
However, colleges and universities are not keeping pace with this demand. The National Center for Education Statistics (NCES) reported that in 2019, only about 60,000 degrees were awarded in computer and information sciences, while the demand for graduates in this field is significantly higher (NCES, 2020). A report by the Computing Research Association found that while the number of computer science degrees awarded has increased, it is still insufficient to meet workforce needs, especially in a rapidly evolving tech landscape (CRA, 2019).
Regional Disparities in Graduate Production
The mismatch between graduates and job openings is not uniform across the country; it varies significantly by state and region. For example, a 2021 report from the Georgetown University Center on Education and the Workforce indicated that states like Texas and California are better positioned than others in terms of producing graduates in high-demand fields. In contrast, states in the Midwest and Northeast face a pronounced shortage of graduates in areas such as healthcare and engineering (Georgetown, 2021). This regional disparity complicates efforts to address workforce shortages, as states struggle to attract talent to fill critical roles.
Impact on State Economies
The insufficient production of graduates in high-demand fields has direct implications for state economies. A report by the National Skills Coalition (NSC) found that 52% of job openings in the U.S. require some postsecondary education or training, yet only 43% of workers possess the necessary qualifications (NSC, 2020). This skills gap limits economic growth and competitiveness, as businesses face challenges in finding qualified candidates to fill essential roles.
As such, smaller colleges face significant challenges due to financial problems stemming from low enrollment, reliance on state and private funding, and the predominance of liberal arts degrees that do not necessarily lead to clear career paths. Without such changes, the ongoing viability of many smaller colleges remains uncertain.
The insufficient production of graduates in high-demand fields by colleges and universities is a pressing concern that affects both individual states and the national economy. To address this issue, educational institutions need to adapt their programs to align more closely with labor market demands, focusing on areas such as healthcare, technology, and skilled trades. Collaboration between educational institutions, industry stakeholders, and government agencies is essential to develop targeted training programs and initiatives that can effectively bridge the skills gap and prepare graduates for the jobs of the future.
The Solution – Charter Colleges
The establishment of a Charter College system could effectively address the challenges faced by smaller colleges and universities in the United States. This model would involve colleges collaborating with state economic development authorities and higher education boards to produce a specified number of graduates in high-demand fields, thus aligning educational outcomes with the economic needs of the state.
Addressing Economic Needs Through Targeted Programs
Historically, many colleges were founded to meet the economic needs of their states. For example, land-grant institutions were created to produce engineers and agricultural specialists, while teachers’ colleges were focused on training educators (U.S. Department of Education, 2019). This model has proven effective in addressing workforce shortages in critical areas. By implementing a Charter College system, states can incentivize institutions to develop programs that directly respond to labor market demands, ensuring that graduates possess the necessary skills to fill high-demand roles.
According to the U.S. Bureau of Labor Statistics (BLS), sectors such as healthcare, technology, and skilled trades are projected to grow significantly in the coming years. Healthcare occupations, for instance, are expected to grow by 15% from 2019 to 2029, adding approximately 2.4 million new jobs (BLS, 2020). However, many colleges are not producing enough graduates in these fields to meet demand. A Charter College system would allow institutions to focus resources on developing targeted programs that align with these economic needs, thereby increasing the number of qualified graduates.
Financial Support and State Aid
Under this proposed system, the amount of funding that charter colleges receive would be determined through negotiations between the colleges and state economic development authorities, as well as higher education boards. This negotiation process would establish a tailored financial package aimed at offsetting operational costs, particularly for high-demand programs. By aligning funding with specific workforce goals, this model would provide financial stability for institutions, enabling them to invest in necessary resources, faculty, and infrastructure to support these programs (National Conference of State Legislatures, 2021).
Furthermore, state financial aid could be directed specifically toward students enrolled in these high-demand programs, ensuring that financial support is aligned with workforce development goals. This targeted approach would encourage students to pursue degrees in fields with clear career pathways, thereby increasing enrollment in programs that are critical to the state’s economy.
Strengthening Colleges Academically and Financially
Implementing a Charter College system would not only address financial challenges but also enhance the academic standing of participating institutions. By focusing on high-demand fields, colleges can improve their reputation and attract more students, which can lead to increased tuition revenue.
Research indicates that institutions that align their programs with labor market needs tend to experience higher enrollment rates and better job placement outcomes for graduates (Georgetown University Center on Education and the Workforce, 2021). This alignment can create a positive feedback loop: as colleges produce more graduates who are successfully employed in high-demand fields, their reputation improves, attracting more students and funding.
Going Forward . . .
The proposed Charter College system provides a strategic framework for addressing the financial and enrollment challenges faced by smaller colleges and universities. By aligning educational programs with state economic needs, providing targeted financial support, and enhancing the academic reputation of institutions, this model can create a sustainable pathway for producing competent graduates in high-demand fields. Such an approach benefits the colleges themselves while contributing to the overall economic development of the state, ensuring that the workforce is prepared to meet future challenges.