Shifting Sands Around Colleges

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Investors have learned that buying houses and renting them to college students is a good way to make money.  They have also learned that building businesses that cater to students brings a good return on their investment. This includes pizza parlors, bars, and coffee shops. These businesses have done well in many situations because of the students who patronize them.

However, over the past eight years there has been a significant decline in student enrollment in colleges as the chart below demonstrates. Across the country today, news reports a significant reduction in in-class teaching, with some schools going to online instruction only.


CNBC reports that 93% of students believe online education should be priced significantly below in-class experiences. However, many schools have not made any price reductions.  Since many are trying to figure out appropriate COVID-19 adjustments, they are holding the line on student pricing. Are students going to be okay paying a high price for private and public-school tuition when they are not attending in person?

Many students will alter their education plans because of this. Without the on-campus experience or the freedom to participate in social events and other activities, will they continue to pay the high price for a college degree?

The reduction in student enrollment indicates a trend that is already in place with decreased student enrollment. COVID-19 will provide a significant incentive for students to refuse to pay large amounts of money for online education when they can access lower cost options.  You can read my article on college cost savings.

Investors and businesspeople who are dependent on campus students for income would do well to rethink the current business model. Student enrollment has already been in a steady decline, and COVID-19 is accelerating this trend. While most major changes occur over a significant period as the student enrollment chart indicates, COVID-19 has accelerated this trend. King Solomon wrote, “There is a time for everything, and a season for every activity under the heavens.” (Ecclesiastes 3:1, NIV)

The entrepreneur and business owner must own the responsibility to anticipate future trends and changes and make the necessary adjustments to succeed in the future. A question I would ask anyone who holds rental property focused on colleges or a business that caters to students is this: where will the business be in 3 to 5 years? If the business owner believes everything will come back bigger and stronger, then you may be wise to hold on to your assets until there is an uptrend. However, if you believe this trend is long-term accelerated by COVID-19, perhaps you should take a different course of action.