How to Survive the Higher-Ed Meltdown

Higher education is reeling. A recent study demonstrates that a third of colleges and universities are now financially unstable through overbuilding, over-borrowing, and over-diversifying. But the good news is there are schools not only surviving but prospering in these harsh times.

This good news comes from ARAMARK Higher Education's Presidential Perspectives Series, a national forum authored by college and university presidents. Its Responding to the Commoditization of Higher Education includes an article by Michael MacDowell, president of Pennsylvania's Misericordia University. MacDowell traces the historical roots of the higher-education crisis. Key to how we got to this point was society's decision that nearly all should attend college, which raised costs for taxpayers. Moreover, with more-universal admissions, greater numbers of entering-college students find themselves "not ready for the experience," leading them to drop out (often with student-loan debt) or to "take many years to graduate, thereby increasing the cost to taxpayers, themselves, and their families." Simply put, with rising access, costs increased while student success fell.

As a result, government and the public began pressuring schools to become more efficient, resulting in increased class sizes, mass, online learning, and "homogeneous program offerings," producing "inevitably, less attention to individual students." With programs growing ever-more homogeneous, "a college degree is rapidly becoming a commodity," a trend exacerbated by funding cuts by cash-strapped states. Ironically, government initiatives to increase quality and efficiency have "the unintended consequence of not only limiting differentiation" among institutions, "but also stifling innovation," which increases homogenization." A final dash of salt in the wound: Accountability-aiming requests for additional data compel universities to add "personnel, thereby increasing the very costs these agencies seek to mitigate."

But MacDowell is no doomsayer. Universities can balance "equity and efficiency" with "autonomy and quality" through "differentiating their institutions." Before detailing how, he reminds us that universities "must accept some blame" for allowing their missions-which are "what differentiate institutions"-to "become increasingly homogeneous." Mission statements have fallen to the desire to be all things to all people.

Universities also are culpable for turning strategic planning into "a method of obfuscation," at least in the eyes of change-demanding trustees. Add to MacDowell's account of the intransigence of "nay-saying stakeholders" the move to "shared governance" models, in which faculty plays a greater decision-making role vis-à-vis administration and boards. History shows that, as schools move further toward shared governance, they are less able to make the systemic changes survival sometimes demands. This has produced board-administration clashes at several flagships-the Universities of Virginia, Iowa, Texas, Oregon, and Wisconsin, among others. Boards demand change commensurate with conditions, while presidents-fearing no-confidence votes from life-tenured faculty-are forced to defend a planning process that "doesn't change much and usually only tries to emulate the accomplishments of ‘aspire to' colleges and universities," which leads to increasingly similar offerings and furthers the march toward commoditization.

Unlike large, state-supported institutions, smaller schools can react more quickly. Misericordia has capitalized on its smallness to pivot effectively. But size alone was not sufficient. It first had to recognize that no small private school can "compete with the homogeneous offerings" of state schools. Instead, Misericordia reinforced the service component of its mission through intensifying its focus on the service professions, especially health sciences. Refusing to be all things to all people simultaneously strengthened its identity, sharpened strategic planning, and hiked its competitiveness.

This strategy's fruits are impressive. Almost half the school's students today enroll in health-related professions. It now has a sparkling retention rate of 92 percent overall. High demand for professionals in these professions draws high-quality applicants with families willing to pay much of their tuition. Thereby, Misericordia has accomplished three goals: (1) increase enrollment from 1,050 to approximately 1,900 over 13 years; (2) increase the caliber of entering classes; and (3) maintain a tuition-discount rate five-six points below rival schools.

The strategy's deepest accomplishment has been to safeguard Misericordia from commoditization. Its growing prominence in health sciences has boosted its image, rendering it more attractive to applicants seeking majors in history and other more traditional studies.

Misericordia's success notwithstanding, MacDowell gleans that the bigger picture portends further commoditization. Near-universal admissions foster and, in turn, are fettered by declining funding and rising accountability demands. These dynamics point to ever-greater commoditization-larger classes, both online and traditional, and less personal contact with students. But commoditization can be resisted if schools highlight their "comparative advantage." Differentiation both satisfies impatient boards and, more importantly, can increase enrollment and quality.

Although size and politics limit state institutions' ability to imitate Misericordia, big lessons can be learned from small schools. In order to implement these lessons, state legislatures must incentivize schools to enact such strategies. Legislators must compel state schools to close or consolidate low-attendance programs, which are now unaffordable luxuries for taxpayers. Legislators must also reduce regulations, which hike administrative budgets at the expense of instruction.

Learning big lessons from small schools, higher education stands a better chance of enhancing both student access and student success.

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