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Enrollment as a Lens on Higher Education
Our Opportunity and Our Imperative
Dan Lundquist: founder, Education Consultancy; former college vice president
What Are They Saying On Your Campus?
• “We are doing alright.”• “There are many challenges but we are
holding our own.”OR
• “What can we do to be better?”• “Do we have a sustainable business model?”
Denial and hubris are powerful: they drive illusory tactics designed to “steal market share” so someone else will be the loser.
Situation Analysis 2014
• Price tags continue to increase fueling anxiety• But there are fewer college-ready students from
families who are able or willing to pay • Though they see the value of a college education,
families hedge more (negotiate and borrow) and will “settle” for a second-choice college if it saves them money (up front in tuition or longer-term in loans)
Situation Analysis 2014• 61 percent of colleges didn’t meet goals by May 1
(up from 60 percent a year ago) – 71 percent of private bachelor’s institutions didn’t
meet goals by May 1 (up from 59 percent a year ago).
• 32 percent of all institutions – in violation of NACAC’s principles of good practice – reported recruiting students after May 1 who committed to other institutions (up from 29 percent last year).
• SO expenditure/revenue tensions rise…for colleges and for families
2013-14: Most Colleges Missed Goals
Situation Analysis 2014• Education (and credentialing) is “evergreen” and can't be
killed.– Its importance and value are inherent parts of society; and given
structure in the form of highered institutions BUT… the past two decades of increasing demand and price elasticity have led to some purposefully inefficient practices most can no longer afford
– If allowed to continue with what are viewed as outmoded policies and practices the structure be driven to change by market forces (consumer choice) and regulation (government policy)
• Kodak presumably had more business savvy than highered and look what happened to them.
Moodys Offers Vote of Support
External Environmental Factors
Demographics, economy, price and value (families perception of worth)
“Supply Chain” by Region
Today’s Parents
Today’s Price
10%
27%
Attributes that will effect affluent families to consider a college that’s not the first choice
In a Fall, 2012 survey, 1270 Parents and 1200 Students from affluent families (AGI $100K-$250K+) indicate top two reasons to “downgrade” are cost-related
Source: Cappex July 2012 Survey: N= 1,270 Parents and 1,200 Students; Affluent income: $100k to more than $250k
$9,08
8
$31,6
98
$50,6
27
$78,4
57
$111
,919
$134
,077
$172
,791
$177
,571
$238
,976
$325
,366
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Ability and Willingness to Pay for Private Col-lege, by AGI, 2013
(4727 cases reviewed)
ability to pay per year willingness to pay per year
$0 AGI
“You Say”: NYSFAAA member survey data
NB: 0% elected “increasing” or “dramatically increasing” which were options on the survey
“You Say”: NYSFAAA member survey data
NB: 0% elected “increasing” or “dramatically increasing” which were options on the survey
Revenue from Families Declining
Future Check: from unwilling to unable to priced-out in a generation
Why should we all care and why should we be sounding the alarm on campus?• Across the affluence spectrum, ability and willingness to pay is
decreasing at best.• As ability to pay increases, willingness to pay decreases:
– more and more students are going to their “second choice” colleges because of cost.
• If the more-affluent current parents are balking at paying today’s costs what will the next generation of parents do?– …the first American generation pundits predict less well off than their
parents….• The next cohort of less-affluent parents will have an even more difficult time
paying if college prices freeze today.
2003
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-26 $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
0.00%
8.00%
16.00%
24.00%
32.00%
40.00%
48.00%
56.00%
64.00%
72.00%
Trends in College Pricing
Stated Tuition Net Tuition Discount Rate
Year
Cons
tant
Dol
lars
Disc
ount
Rat
e
PRICE
DETTERENT
REVENUE
Inside Practitioners’ Views
1) NYSACAC member survey, September, 20142) Chief Business & Financial Officers’ views, 20143) College Presidents’ views, 20144) AGB Report, 2014
What Recruiters Say
82 responses, 28% of highered registrants at Annual NYS Admissions Conference, 2014
Do you have confidence in your institution's sustainability?
highly confident guarded optimism unsure/hopeful concerned downright worried0
5
10
15
20
25
30
35
40
Do you feel the senior leadership's vision and action support future success?
0
10
20
30
40
50
The 2014 CFO Surveys conducted by Gallup and Inside Higher Ed
SUSTAINABILITY• Just over one in four business officers (27 percent)
strongly agree they are confident about the sustainability of their institution’s financial model over the next five years; fewer (13 percent) strongly agree their model is sustainable over 10 years.
The 2014 CFO Surveys
BUSINESS MODEL and OPERATIONS • Just 4 percent of business officers responding strongly agree that
the business model of for-profit universities is sustainable; over half (51 percent) say the same about elite private universities.
• Enrollment: Most business officers (92 percent) say retaining current students is a very important strategy to increase revenue in the near future.
• Efficiency: Many business officers (45 percent) say that using business analytics technology to evaluate programs and identify problems/potential improvements is a very important strategy for reducing operating expenses at their institution. But fewer than half say their institution has the program and performance data and information it needs to make informed decisions.
2014 Colleges & University Presidents’ Surveyconducted by Gallup and Inside Higher Ed
• 70% of presidents said their institutions would face budget shortfalls and increased competition for students this year, in a climate of cutbacks of state and federal aid. – But fewer than 30% said they expected to take the sort of strong
actions – cutting administrative positions, freezing salaries, changing faculty roles or teaching loads – that would suggest deep concern, let alone panic, about their institutions' financial futures.
• Nearly two-thirds of presidents are confident about the sustainability of their institution’s financial model over the next five years -- but that proportion falls to half over 10 years.
AGB Report, November 6, 2014
• Inattentive college and university governing boards are putting American higher education at risk
• The commission said the highered environment is rapidly changing, yet boards function as they have for decades and even then disagree with or misunderstand what they ought to be doing.
• “If there’s an underlying theme to the report it was that in some ways the business model of higher education is breaking”
Where Solutions Will Be Found:
• DISTINCTIVENESS: not only having special value but having your value KNOWN and APPRECIATED
• OPERATIONS: 85% see serious sustainability challenges yet fewer than a third are doing anything about this (per KPMG). – EXAMINE, AFFIRM or CHANGE your business models (cost overhead,
mergers, etc.) prioritize what's important, cost it out, match against realistic revenue, draw a line and eliminate below-the-line.
– Sacred Cows (tenure, course loads, health care, TIAA, B&G, academic and extracurricular programs, etc.) will kill us.
• Highered may be “evergreen” but very few individual institutions are! • COLLABORATION: call it getting rid of silos or creating synergy, no
institution is optimized… insist for on-going efforts and culture change.
How Solutions Will Be Driven:
• There are no universal Silver Bullets• Each campus culture and college market position is unique,
requiring custom intel garnered from our experience• Who better than vested “owner-operators” to bring data and insist
that acknowledging reality is not a lowering of ambitions?• There will be winners and losers in the years ahead, and the
“winners” will be those who proactively adapted – not panicked or capitulated – early.
• The AGB report should be heeded: there is always more room to strategically maneuver now than later
Read www.DanLundquist.blogspot.comFollow @DanLundquistWrite [email protected] or [email protected] www.EducationConsultancy.orgCall (518) 986-1842
