Private Universities in Financial Trouble: Consider Appropriate Scale to Match Declining Birth Rate

Editorial

14:59 JST, December 7, 2024

The management environment at private universities is deteriorating due to the declining birth rate. Streamlining management through reorganization and consolidation is inevitable. In anticipation of universities going bankrupt, a mechanism to protect students must also be implemented as a matter of urgency.

According to estimates by the Education, Culture, Sports, Science and Technology Ministry, the number of students enrolling at universities, which currently stands at 620,000 annually, is expected to fall to 420,000 in 2050 due to the declining birth rate.

Meanwhile, the number of private universities is on the rise year after year and currently stands at a record high of 624. This is partly due to the fact that a number of junior colleges have been transitioning to become four-year institutions in an attempt to increase their appeal.

This academic year, 60% of private universities took on fewer students than their enrollment capacity. With the decline in the number of students, income from tuition has fallen, and small and midsize schools in rural areas are in a critical financial condition.

The people in management should heighten their sense of crisis and work on implementing bold reforms.

A subcommittee of the Central Council for Education has compiled a draft proposal to promote merging and closing universities and decreasing enrollment capacities to bring them to an “appropriate scale.”

In addition to mergers among private universities, streamlining them by moving departments from one university to another is also an option. It is essential to assess the current situation and take measures as soon as possible.

There have also been cases in which local governments have taken over the operation of private universities and converted them into public universities. Because being a “public-run” brand is an inherent advantage and they can receive financial support from the central government, tuition fees can be kept lower than at private universities.

This move also matches the desire of local governments to keep young people in the area and contain population outflow. However, there is also a risk that the cost of running the university might put pressure on their finances. Those concerned should be aware of the risks involved in simply converting institutions into public universities.

If there becomes no prospect of financial conditions improving, withdrawing from the universities may be unavoidable. In such a situation, bankruptcy must be avoided while there are still students enrolled. The ministry is working on creating rules to ensure that students can continue their studies in the event that a university suddenly closes.

A solid safety net should be created so that students are not left stranded.

Many small and midsize private universities play a role in developing human resources who can play an active role in their local communities. It is important to develop distinctive education while also listening to the opinions of the local business community.

In recent years, there has been a noticeable trend of universities shifting toward new departments with a focus on training human resources in the digital field. Such schools should accurately ascertain the needs of the times and fulfill their mission of contributing to local communities.

University management that focuses solely on young Japanese people is reaching its limits. It is important to enhance the quality of education so that it will appeal to working adults and foreign students.

(From The Yomiuri Shimbun, Dec. 7, 2024)