Facing a Broken Business Model, What's Next for Higher Ed?

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The academic year ended on many campuses this month—the first normal one since 2018-19.

While most college students, as well as those who work on and lead campuses, are elated that in-person classes and residential life has returned, there is one thing they’d like back from the pandemic: federal dollars.

What’s clear now is that the $70 billion in government pandemic funds to higher ed papered over issues with institutional business models?that had pre-dated Covid-19.?While the years before the pandemic weren’t as bad as had been predicted following the Great Recession—thanks to better-than-expected returns from the markets and enrollment that didn’t crater—the financial resiliency of higher ed didn’t really improve either.

Indeed,?an analysis?from 贝恩公司 released earlier this week, found that the number of institutions in precarious financial positions rose by 70% over the last decade.?(This accompanying interactive tool?allows higher ed leaders to model the impact of macroeconomic, enrollment, and cost scenarios on an institution’s financial position.)

The headwinds facing colleges and universities seem quite different now than they have at any other point in the 25 years I’ve been covering the industry. A new trends report from 德勤 —that I co-authored with Cole Clark and Megan Cluver and based in part on a meeting of college and university presidents last December at Deloitte University in Texas—lays out some of the challenges ahead:

???Enrollment rates that have been declining in the U.S. over the last decade as other countries catch up.

???The perceived value of higher education that has fallen as the skills needed to keep up in a job constantly change and learners have better consumer information on outcomes.

???A business model that is broken as institutions can no longer rely on rising tuition among traditional students as the primary driver of revenue.

???The need to focus on "talent management" as much as enrollment management to continue to fuel growth in the sector.

???Becoming more agile and deliberate about connecting and integrating the various offices around campus in planning for, averting, and managing the aftermath of a crisis.

While the confluence of factors bearing down on higher ed right now is certainly worrisome, I remain optimistic about the future.

Yes, enrollment is still declining according to the?latest numbers published this week by the National Student Clearinghouse Research Center. But the drop—small at?0.5%—is more like pre-pandemic levels compared to the big falloff we witnessed the last few years. Hispanic and Asian enrollment is up, and there’s even a small uptick in male enrollment.

One concern is that the number of adult students—a siren song of survival for so many institutions—is down. So, too, is the number of master’s students (another cash cow for colleges and universities).?Not surprisingly, computer science majors are on the rise. One interesting, and perhaps pandemic-fueled issue, is that majors in health professions continue to fall—a critical set of academic programs offered by many institutions. (For a smart analysis of the latest enrollment numbers head over to Bryan Alexander 's blog.?

So why do I remain optimistic??Maybe it’s because I have recency bias from my travels over the last few days.

My first stop earlier this week was in Las Vegas, where I was with a group of 70+ faculty members at the larger users conference for Alteryx . Alteryx is an analytics platform that is used in a variety of industries from sports to travel to make sense of the massive flood of data every business is grappling with right now. Faculty members, mostly in business—but also increasingly across the curriculum—teach using a variety of data platforms, including Alteryx, which also offers its own set of free courses for learners.

Not only were faculty there, but a few brought their students along.?The energy in the room around helping learners gain data skills (no matter their major) and then helping them get jobs was, I must say, inspiring.?It certainly wasn’t the caricature of out-of-touch faculty that you often hear about these days. Granted, data analytics is a hot field right now, but the discussion centered on how to “democratize” these skills so they aren’t just in a few majors.

Then on Wednesday night, I was in Minneapolis for a salon dinner with campus leaders in the region.

This is the 30th dinner I’ve hosted with college leaders around the country with the help of corporate and philanthropic?partners since 2018. That year the first dinner was in Philadelphia and two of the guests from that evening just happened to be in attendance again last night: Alison Byerly, now president at Carleton College , and Matt Sigelman from the The Burning Glass Institute .

I promise guests at these dinners that we won’t attribute anything to specific individuals to allow for a free-flowing conversation. But I can report that at one point last night the discussion turned to skills in the world of AI. As Matt Sigelman pointed out from research we just published—and that was a subject of a?Wall Street Journal?essay?over the weekend—there are different kinds of skills. Quoting Laurie Leshin, the director of NASA’s Jet Propulsion Lab, Matt talked about “timely” skills (which are often specialized to a field) and “timeless” skills (foundational skills, such as leadership and negotiation).

A lot of the jobs that are going to be most disrupted by AI, Matt told us, are also going to be some of the fields that grow the most.?“It’s counterintuitive,” he admitted, “but people become more valuable if they’ve got judgment and core problem solving abilities to leverage AI.”

These are the skills colleges are uniquely qualified to help students learn and give them space and time to practice. It will require institutional leaders and faculty to work together to rethink the curriculum to provide that space rather than stuff more requirements into majors, to teach students from various disciplines collectively rather than in silos, and build in even more opportunities to practice through experiential learning.

It’s the type of thinking that I saw for a few hours in Vegas this week among a small group of faculty, but one we know exists on every campus.?Now it’s about faculty and administrators getting out of the way of the institutional culture?that is deeply rooted on campuses to build a business and educational model for what’s ahead.

?? Events

??? The "Next Office Hour" this month and next?will focus on?the student experience.

????Wednesday, May 31?at?2 p.m. ET/11 a.m. PT.,?we’ll explore?how colleges and universities can take their student success efforts to the next level.

Joining me will be:

• Katy Redd,?Longhorn Wellness Center?at the University of Texas at Austin
• Tom Andriola,?Chief Digital Officer,?University of California at Irvine?
• Tim Renick,?National Institute for Student Success
• Sarah Toms,?chief learning innovation officer, IMD?

?Register for free here?(Support from Amazon Web Services)

????Tuesday, June 20?at?2 p.m. ET/11 a.m. PT.?we'll explore the?results of a comprehensive survey of 2,400 college students?about what they want out of the?campus experience—from admissions to mental health to job readiness.?

More details to come soon, but reserve your spot now to join in an interactive discussion and get an on-demand recording.?

?Register for free?here (Support from Qualtrics)

???Finally, join me this Tuesday, May 30, at Noon ET/9 a.m. PT on LinkedIn Live?where I'll discuss Deloitte's higher ed?trends report mentioned above with two of the other authors.?

???To join us, click ATTEND?here?or click +FOLLOW on?my?LinkedIn?profile?to be notified when we’re live (the conversation will also be archived).

Credits Earned Are Credits Lost?

Earning college credits in high school is all the rage,?especially with dual-enrollment programs, as states and school districts look to encourage more students to go to college and reduce the cost.

• But as Michael Horn noted in his?newsletter?this week, “for students who take concurrent college courses under the belief that those credits will help them graduate faster, they may have a rude awakening.”

Reality check:?First time students who transfer lose 43% of their credits, on average.?

• The “average credits lost during transfer is equivalent to about four courses, which is almost one semester of full-time enrollment,”?according to the Government Accountability Office.

The big picture:?One of the most common transfer pipelines is also very leaky: community colleges.

• Of every 100 community college students who want to transfer to a four-year college, only 31 will and only 14 of those will complete a bachelor's degree.
• Programs like?ADVANCE?at George Mason University in Virginia are trying to fix that leaky pipeline. The president of George Mason, Gregory Washington, joined me and Michael on the?latest episode of?Future U.?to explain.
• ADVANCE basically turns a cohort of students at nearby Northern Virginia Community College, who are pursuing their associate’s degree, into non-degree seeking students at George Mason from day one.
• The community college students get a Mason ID. They can go to athletic events, use the library, and feel like they “belong” at Mason where they’ll eventually be degree-seeking students.

By the numbers:?There are 3,600 active students in the program. Students who come to Mason through that door graduate two semesters faster than non-ADVANCE transfer students.

• 92% of ADVANCE transfer graduate from Mason in less than two years.
• ADVANCE students are 60% first generation, 68% students of color, and 39% Pell eligible.

The bottom line:?Programs like ADVANCE are few and far between. Valencia College and the University of Central Florida have something similar called?DirectConnect?where Valencia students don’t always need to even leave their campus to take UCF courses.

• As we discussed on?Future U., the biggest barriers to more programs like these seem to be finances and culture.
• Four-year colleges have baked into their business models that they’ll have students for four years living and learning on campuses. It’s not easy to reduce revenue by two years when you have sunk costs of tenured faculty and buildings.
• Then there’s the culture piece, which too often says if it isn’t taught on our campus then it’s not good enough to get credit from our institution.
• Enrollment pressures on colleges and universities might force them to reconsider such transfer pipelines. If not, then institutions such as George Mason will do it in their place (Mason is already working on expanding its program to other community colleges in the state).

?? Listen to the?Future U.?episode?on credit mobility.

Until next time, Cheers — Jeff?

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