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Colleges and universities, caught in a crossfire of rising costs and increasing impatience from families and funders, face an ongoing onslaught of tough choices in the next few years.
The system is fatigued. States, donors, administrators, families and faculty—nearly everybody in the system feels the pressure. Subsidies are shifting: State leaders are questioning their investments in higher education, and there’s confusion over how much employers, who have gotten something of a free ride historically, should pay.
The result is a disinvestment just at the time when the nation needs post-high school learning and training more than ever. Ramping up education attainment is the best way to lift more individuals into the middle class, to provide the talent needed to compete globally, and to supply people to staff millions of unfilled jobs here at home.
But those talent pipelines are left searching for solutions.
At campuses across the country, administrative teams and business consultants are working to cut costs and increase productivity. At the same time, demand-focused administrative teams are launching expensive marketing campaigns, introducing new programs and doubling down on new construction projects to compete for a shrinking pool of potential students—luring new students with whatever it takes to increase throughput metrics and lower costs per student.
While the strategies reflect admirable efforts at the institutional level, both are leaving constituents, including learners, with a bitter taste and are at best masking a massive underlying problem—a manipulated supply-demand curve that can’t seem to find equilibrium.
It’s not as if we couldn’t see this coming.
Higher education and post-high school training programs exploded after World War II, when 7.8 million returning veterans took advantage of the GI Bill. At one point just after the war, veterans accounted for 49 percent of college admissions.
We built colleges and universities to accommodate them, and the number of institutions grew from around 2,000 in the 1950s, to more than 4,000 today.
But the nation’s birth rate has declined since then, and by one prediction we could see the number of high school graduates fall by 15 percent in the next 10 years. Already, regional publics and smaller private liberal arts institutions are feeling extreme pressure, especially those with fewer than 1,000 students. Just last year the number of colleges and universities that can award federal financial aid fell 5.6 percent, to 6,138.
Simply stated, we have a capacity problem.
Nine years of declining enrollment means there are fewer students to absorb the total cost structure of a university, pushing the cost per student ever higher at many institutions. Add to this the cost of duplication and the cost of differentiation—the scramble to compete in this misaligned macro supply/demand environment—and we see a cycle that has even the most hopeful exhausted.
Higher ed might have made the needed tough choices years ago if the system followed the economic laws of supply and demand. But subsidies for education—well-intentioned and necessary—masked the oversupply issues. What’s needed now are leaders willing to embrace true partnerships at every level and better understand the opportunity that comes with serving today’s learners—moves that have the potential to improve the financial outlook for both intuitions and learners.
As policymakers and education leaders consider the underlying realities of overcapacity and the changing nature of today’s learner, here are some points to consider.
It’s important to acknowledge the progress that’s already been made. Pennsylvania’s four-year public universities are working to build a system in which students have access to courses and programs at any university. Georgia officials recently announced a consolidation plan intended partly to link academic programs to regional workforce needs. And Wisconsin announced a plan to merge its 13 two-year campuses with seven of its four-year colleges.
It’s time to bring these micro-lessons to the overall higher education system and address our capacity problem. While many insiders find the idea of consolidation to be punitive and too daunting to discuss, other solutions are elusive. The consequences of kicking this can down the road are severe—we’re living it.
Change doesn’t happen quickly in complex systems, but as more leaders catch a glimpse of the true underlying challenges in our post-high school education model and find the courage to address those challenges at the root, we’ll establish a path for a system that today’s learners and taxpayers deserve.Back to News