What’s Ahead for Higher Ed?

These are uncertain times for organizations in nearly every sector of the economy, and the higher education community is not immune. Tepid economic growth, perpetual political wrangling, shifting demographics and a host of other forces are compelling institutions of higher education, like so many other organizations, to reconsider a number of long-held beliefs about the delivery and business of education in the United States.

Here’s a brief look at what’s ahead for higher education:
  • An emphasis on student outcomes and performance. The New York Times recently reported that “the college degree is becoming the new high school diploma: the new minimum requirement, albeit an expensive one, for getting even the lowest-level job.” That fact has helped to drive college enrollment to record levels—but graduation rates have lagged behind. In response, universities are increasingly focusing on college preparedness in an effort to aid students in completing their degrees. State governments are also getting into the mix: eager for state institutions to develop workers with the skills needed to fill jobs in engineering, math and science, the governor of Vermont recently announced an initiative that would allow high school juniors and seniors to take a handful of college courses—paid for by the state—“to experience higher education and gain the confidence and skills they need to hopefully aspire to continue their post-secondary work after graduation.” Other states have announced similar programs; look for more to follow over the coming year.
  • The continued expansion of MOOCs and online education. The popularity of Massive Open Online Courses, or MOOCs, has exploded over the past year. Just this month, two of the largest course providers added dozens of universities from across the globe to their client lists. While the efficacy of online learning is up for debate, its potential for significant cost savings—to students and universities, alike—is without doubt, an attractive prospect in a time of budgetary belt-tightening. One burning challenge for MOOCs is how to monetize the course offerings. Another question is, what sort of credential should be given to students who use the services? San Jose State University is experimenting with $150 enrollment fees for students looking to earn course credit (the courses will be offered free of charge for individuals that do not want credit). The school’s pilot program is worth watching as MOOCs and online education proliferate.
  • A reinvigorated focus on accountability and government oversight. The cost of higher education has skyrocketed. Tuition and fees are up 26 percent at private four-year colleges over the past decade, 66 percent at four-year public colleges, when controlling for inflation. For myriad reasons—not least of them the growing economic burden borne by middle class families—bringing education costs under control is an increasingly urgent priority for the federal government and state legislatures.  Colleges and universities should take heed of this as the pendulum often swings too far to the other side as regulators and the industry react and respond. President Obama and the Department of Education’s College Affordability and Transparency Center recently released the College Scorecard in an effort to hold universities accountable for growing costs; in his State of the Union address, the president also proposed new standards for providing schools with federal aid, with an eye toward ensuring affordability. With cuts in store for federal and state budgets, regulators are sure to be keeping a closer eye on the ways institutions are allocating and spending their funds. While some universities are nibbling around the edges—consolidating departments, creating “service centers” to harmonize functions and looking for other efficiencies—few institutions are taking the bold steps needed to trim costs.
  • State support has stabilized, but federal funding is uncertain. After years of declining tax revenues and pressure on state finances, funding for colleges and universities has finally stabilized (in some cases it has even increased). Yet, with the threat of sequestration looming and other austerity measures being discussed, institutions are left wondering where their funding will come from in the year—and years—ahead and are struggling with strategic planning. The importance of revenue diversification is bound to grow. Schools would do well to analyze their current funding streams and ask if they might be too dependent on tuition revenues and/or government aid. Many universities may begin pursuing private research grants; others are likely to lay the groundwork for expanding their international student populations—a host of schools have broken ground in China, for instance. The key for university financial officers will be to understand their university’s unique revenue drivers and develop a plan for how to respond should one of their revenue streams be adversely affected.
  • Immigration and shifting demographics are transforming the student population. Colleges and universities are notoriously slow to change course, but shifts in demographics and demand for new types of skills will require institutions to do a healthy bit of soul searching, acting like businesses to determine which services are in need and what their unique role in the market can be. Our policymakers’ focus on our fiscal challenges and immigration reform only serve to reinforce these efforts. What will the next generation of college students expect from their institutions? And how will schools respond? A handful of institutions are leading the way: Just this week, Columbia University launched a new degree program meant to prepare students for careers that touch “big data.” And Thomas Edison State College in New Jersey is providing students—most of whom are over 21 years old—an alternative way to an accredited degree. These are the types of innovations we are likely to see in the months and years ahead; those institutions that hold firm or seek to muddle through are at risk of becoming irrelevant in a rapidly changing world.

Which higher education issues are you focusing on in the year ahead? Share your thoughts in the comments section below.