Is the Cost of Higher Education Slowing?

According to a report by the College Board shows how college tuition has slowed this year when compared to the past 30 years. This is great news for people concerned about the overall cost of education and how it is increasing faster than inflation every year. In some years tuition increases have reached double digit levels putting additional burden on families. The question of why this is the case has not been fully explored or discussed. Certainly, no solution has been found yet.

The report shows how 2013-2014 tuition and fees increased 10% for private non-profits, 17% for public 4-year and 18% public 2-year. In the past some, of these costs would reach into 20 and 30% increase range begging the question of why. Improvement in the numbers is to the benefit of students, families, and the government itself. The answer to "why" such large increases occur is difficult to answer in a single sitting.

Some have argued that the recession and smaller state budgets are forcing institutions to increase tuition. If this is the case then it is possible that such state monies are not calculated into the cost of education and the entire system has not been evaluated properly. Likewise, this would also assume that a majority of the increases were during the recession which is also not entirely accurate.

Others may argue that it is the availability of state money itself that is forcing colleges to increase tuition. When state money is guaranteed, student loans plentiful, and demand high the traditional educational institutions have no reason to change much like monopolies or government. Why mess with a gravy train?

It is also possible that legacy costs of buildings, mammoth sports programs, be all to everyone approach, and lack of competition are causing these increases. A far majority of society believes that education is the pathway to success thereby creating a captive audience when competition is not fierce enough to force change. In recent years, newer models of education, disruptive technology, and international competition are starting to raise the stakes on antiquated models and opens them to questioning.

The problem of increasing costs will not be resolved anytime soon. Large colleges with endowments and prestige appear to be doing well while a number of smaller colleges are suffering and closing their doors. Institutions based on disruptive technology are starting to make significant headway and traditional institutions are copying parts of their model. Success seems to still be a numbers and economy of scale game.

http://trends.collegeboard.org/

Why are Business Leaders Looking to Online Education?

A recent survey in Higher Edu entitled Ready or Not brings forward an interesting concept that business leaders and senior college leadership have widely varying perspectives on how well they are preparing students to achieve within the marketplace. It also discusses the impeding changes and how brand names of elite schools may be impacted by quality online educational programs. 

The Inside Higher Ed's 2014 survey of chief academic officers found that 96% believed they were doing a good job (1). They were adequately preparing students for life and helping them gain knowledge that will be useful in the market and their personal lives. It is possible to see this as a reflection of perspective of the function and responsibilities of academic leaders within higher education. 

A problem occurs when business leaders are saying something completely different.  A Gallop poll survey indicates that 14% of Americans and 11% of business leaders believe college graduates are fully prepared (2).  Business leader’s rank the knowledge candidates have as important (84%) and where they received the degree least important (9%).

That creates a fundamental problem.  The definitions and criteria used by college administrators, the general population, and business leaders are different. In some ways, this may heighten the higher education crisis the country is experiencing as it works through what the actual focus and purpose of college should be. Should it be broad and help students gain a greater understanding of themselves and the world or should it be focused to help business leaders employ graduates?

Both the broad and specific arguments have merit. Costs and economic considerations are pushing this discussion as practicality must meet functionality. Business leaders want a practical focus on their industry needs and college leaders want to develop the entire person. No right or wrong in each of the formations and when the puzzle is solved higher education will move forward into its next development. 

Online education is new, brazen, and is moving to higher levels development. Business leaders are open to the concept of online education if it meets their knowledge needs. We can see this in their high ranking of knowledge interests and low ranking in school name. Within the hallowed halls of higher education and research the college name means everything and those who have not attended an elite school are seen as less capable. 

 When online schools create market credibility they are likely to draw significant business interest.  If programs are focused on the practical aspects of modern working life, but also provide enough seeds to create a broader context to that life, they may find themselves in significant demand. Business leaders will appreciate the relevance and academic leaders can still fulfill their missions. The definition of a name brand education may change. For traditional schools this type of change may be more difficult.

Article

Is the Higher Education Recession Over Or Just Starting?

A survey by Inside Higher Education shows a fundamental difference in economic assumptions of governors and college presidents with those who run the academic affairs such as provosts. Some are hailing the end of the economic downswing in 2008 while those who run the academics do not feel that this downturn is over. The perspectives are interesting and offer some insight to the debates going on in higher education. 

According to the survey only 5% feel strongly that the economic downturn is over at their institutions. Another 18% feel that for the most part it is over. A total of 21% strongly disagree and another 37% somewhat disagree. Only 26% of private nonprofit institutions agree that the recession for their schools is over. Public institutions were even more likely to believe the downturn will continue. 

The provosts feel that concepts such as MOOCs are unlikely to produce meaningful change. There will also be greater accountability on higher education to match effectiveness with finance. They are unenthusiastic about proposed changes for measuring school effectiveness at a national level but are excited about competency based programs.

Programs like STEM, professional degrees, and online programs are likely to receive more investment. It appears that schools are trying to receive additional funds and allocating those funds to programs that are likely to draw and retain students. Faculty and administrators have a divide in the way they view higher education and the changes that are needed.

The study was based on 842 provosts and has a margin of error around 3%. You may want to read the report yourself as there is a greater amount of information it offers. You can find some dissonance of perspective based upon where one sits within the higher education economic chain. For example, college presidents view the situation much differently than provosts and faculty members.

The report is a mixed bag. Certainly there is an adjustment in the perceived value of some programs versus others. Who can argue with STEM? Online programs are becoming a more common way to augment costs and attract students. Even though MOOCs have limited value they should be seen as higher education experimentation and may lead to either new adaptations or beneficial for continual professional education where a defined degree is not needed. In any event, the cost is rising and this is going to eventually run into the brick wall of public financing. Perhaps this will be when changes occur at a quickening pace.

Read Report

Is Higher Education on a Crash Course with State Budgets?

Credit-rating firm Moody’s Investor Service continued to keep the negative outlook for higher education into the next year (1). They cite slow job growth, an uncertain labor market, and slow revenue growth.  Such schools are fighting over revenue and have already cut greatly over the past few years leaving them little room to do more.  Personal income is not rising making it difficult with high student loan debt and interest rates to send more people to college.  According to Moody’s research spending is also expected to decline.

Some universities like Minnesota State University Moorland and University of District Columbia are pondering cutting core academic programs based upon needed budget cuts (2).  The trend is part of a need to reduce expenses in expense laden campuses. Decisions include the cutting of academic programs that once made up the core of university learning.  Some are concerned about what this trend means in the long run.

Indiana state universities are seeking to deal with a $141 million revenue shortfall and are pushing for a 2% cut in educational budgets (3).  It is hoped that the impact will be minimal and not damage students. There are some attempts to find new and creative ways around the budget crisis but no concrete concepts have come forward. Regardless, it appears that universities will suffer in the future from a lack of resources and constant questioning of their impact.

There appears to be a number of trends that are starting to be addressed and not all of them have to do with education itself. We know through the budget crisis government is under pressure to increase revenue and reduce waste. They are trying to spur economic development through trade and national development. Changes in spending are likely to impact multiple sectors of the economy in both positive and negative ways. Education will be impacted in this process.

The second major problem is the cost structure of universities themselves. They are large, have great sports teams, expensive facilities, and a limited ability to adjust to the new economic realities. Yet as state revenue squeezes, the costs rise, and their effectiveness becomes questioned in a higher technology and science oriented environment, greater pressure will come to bear upon traditional models.

Universities ability to adjust to this pressure while finding new ways of competing and pushing relevance will impact their viability. It must be remembered that changes in the university systems is not something new and has occurred throughout the life of the country.  Early education was informal and based on apprenticeship.  First colleges were religious and private but eventually moved into public universities. These public universities exploded in size and cost during the good years and may need to change again.

Change must come with quality. Recent educational reports have indicated that American students are falling behind in STEM as well as other areas. High Schools are not preparing students to become researchers, scientists, and technology workers at the same level as they did in the past. Efforts are underway to address this problem and push for changes in educational processes.

No matter what happens, we know that the current path is unsustainable. There will be change, and the decisions that are made today will impact whether this change is smooth or bumpy.  Pro-activity encourages decision-makers to think about what can be changed now and slowly adjust the system to ensure that it is keeping up with current environmental needs. Failure to be proactive means a sure bumpy ride in the near future. Perhaps an educational calamity.