Published on 2017/02/23

Evolving with the Incentive Structure: Facilitating the Shift from Access to Completion

The EvoLLLution | Evolving with the Incentive Structure: Facilitating the Shift from Access to Completion
Higher education’s incentive structures have evolved to shift the focus from accessibility alone to retention and completion, so now institutions need to determine how to structure pathways that support the success of diverse demographics of students.

The students, structures, demands and incentives that shape the higher education industry have changed significantly over the past 20 years. From prioritizing access, retention and completion are now top-of-mind goals. From focusing on delivering a four-year residential experience, today’s students now bring with them incredibly diverse demands, levels of preparation and aspirations. Colleges and universities of all stripes need to shift gears to adapt to this changing environment, but that’s easier said than done. In this interview, Daniel Greenstein reflects on how the higher education industry has shifted—paying special attention to how the incentive structure has evolved—and shares his thoughts on what it’s going to take for modern institutions to succeed.

The EvoLLLution (Evo): What do you mean when you talk about the student-readiness of colleges and universities?

Daniel Greenstein (DG): When you take a long view of higher education, the colleges and universities we have built and that have been so high-performing for so long and the practices they developed and that evolved over time were really developed for a small portion of society. After World War II, the group of folks who enrolled in higher education began to expand quite rapidly because that period marked the development of early federal funding through financial aid and the GI Bill, alongside a bulge in the size of the high school-leaving population.

In a period of forty or fifty years—in what is probably one of the greatest acts of American public policy—we’ve democratized higher education. This has fundamentally changed the shape and the complexion of the student body.

The second thing that began to happen over the last forty years is a decline in opportunities that allow people to access the American middle class. You’re seeing a decline in the value of a high school education. In the 1970s, you could get a secure job straight out of high school at Kodak or Xerox or any number of other outlets that really delivered a reasonable pathway into a sustaining career for oneself and one’s family. So, at the same time that we’ve democratized access to higher education, we’ve also seen a diminution in other pathways into the middle class. As such, there’s more pressure on higher education institutions to not just accept students, but to actually graduate them.

Finally, there is a great diversity of students enrolling in higher education today. What’s interesting to me is that even though the demands on higher education have changed pretty dramatically over this period of time both in terms of the kinds of students that are coming in and the differing needs and expectations they bring, universities and colleges have largely not expanded or evolved. So what we’re seeing is practices that worked really well for people 30, 40 and even 50 years ago still in place today, and they don’t necessarily work for the new student body given the kinds of pressures students are feeling as they go through higher education.

So, when I talk about what it means to design a college around its students, it’s not about the student being ready for college. The question is, “Is the college ready to not just accept students, but to actually progress to completion the diversity of students that it is accepting?” That requires a pretty fundamental transformation at institutional level.

Evo: What does it take for institutions to deliver a strong experience to today’s non-traditional student demographic?

DG: We—and I mean policymakers and higher education administrators as well—tend to hold in mind’s eye the popular perception that four-year residential programs largely grounded in the liberal arts are the norm. This perception honestly casts a pretty large shadow across the industry.

However, what we’re seeing is that colleges and universities who serve the increasingly diverse student populations very well are very conscious that they’re dealing with multiple different student groups with a wide range of interests and expectations. They recognize that not all their students are the same as one another, and that they don’t share the needs of traditional students engaged in a residential experience.

This segmented view is critical to delivering a strong student experience today. Leaders need to ask themselves what kinds of students they’re serving and how to design their offerings to meet the needs of those students. Today’s students exist in a number of different groups with slightly different needs, so for institutional leaders, actually varying the offerings to meet the expectations of their different students—while still maintaining a level of consistent quality across the board—is a challenge.

Evo: What are a few of the characteristics that define a great non-traditional student experience?

DG: Before diving into this, it’s important to first define the edges of the topic. As a starting point, co-curricular experiences are super important to a student’s satisfaction, and they have enormous impacts. This includes things like the customer experience an institution delivers as well as the non-academic offerings it makes available. However, we don’t work very closely in that arena so I’m going to narrow my remarks to what I’m going to call “curricular” aspects and there we can see a number of trends.

Students who are the first in their family to go to college—first-generation students—are often academically at risk when their readiness is measured by traditional standards. This means they’re often placed into a developmental or supplemental education track, and they require support to persist through to credit-bearing offerings. Students who are coming back to school after a period away also often require highly structured pathways.

For both of these student groups, it is extremely important to engage in a good conversation with someone at the college about their educational goals—which are often, but not always, career-related—and then identify the pathways and credentials that make the most sense given their goals. That conversation needs to delve into the associated cost, the anticipated time to completion, the background and level of academic preparedness required, and the career options at the other end. Then they need to begin a process to come up with an education plan that is highly focused and geared toward maximizing their opportunity to succeed.

Then the institution needs to make sure they have folks spending time over the course of each student’s credentialing program who are continuing to check in and refresh along that pathway to make sure students are staying on their pathway, or making sure that where and when the pathway is deviated from, it’s done with good information. It’s critical that, when changing the pathway, students understand the costs and implications of going in a different direction, and that students are always making well informed choices that are informed by data and by a really good understanding of the different credentialing pathways.

That level of structure—I’m only describing one aspect of that structure—ensures that students who are coming in through many of these non-traditional pathways succeed. Non-traditional students respond incredibly well to this structure and it shows in persistence and graduation rates. They respond well to it in terms of their ability to stay on course, to complete and to move on to good things.

That structured approach—which obviously evolves slightly from institution to institution—is built on good understanding of the curricular options and where they lead, as well as a great understanding of how students progress and what any particular pathway requires. This knowledge allows students working with a good advisor to identify a pathway that is personalized to their needs and goals, and that is super important. That need for personalization seems to come above all else, from what we’re seeing and learning.

There’s a movement just taking off across the two-year sector in particular that is referred to as the Pathways Movement. This movement is focused around a concrete concept: Get students on a good credential path, help them stay on that path and support them through to completion. There are a variety of techniques to achieve this, but the pathway approach is critically important to crafting a student experience that increases the likelihood of success.

Evo: So you’re seeing increasing numbers of institutions investing in academic support to make sure students stay on track?

DG: More and more colleges and universities are investing in these kinds of structures and I would actually frame it using current industry terminology: We’re really talking about the implementation of user-centered design on campus. Higher education leaders are using user-centered design to pivot their institutions around one objective, which is not to just to get the student in the door, but to get the student in the door and out again with a credential.

The entire incentive structure that applied to higher education began to shift in 2006 with the Spellings Commission. Before that, the incentive structure for universities and colleges was centered around getting students in the door. They were paid on the basis of enrollments. Now things are shifting. Tuition costs are going up, the cost to taxpayers is going up, and the pressure on higher education to produce a workforce-ready population is going up. As such, the incentive structure has shifted over the last 15 years toward completion. And it’s important to note, it’s not just about completion itself, but meaningful completion. This is to say, we’re not just interested in students earning credentials, but we want them earning credentials that are meaningful to the student and can help them achieve a sustaining career.

This re-orientation in the industry is the response to a different set of incentives, which are now oriented much more to a blend of access and completion rather than access alone.

It’s also important to frame this shift in terms of the changing demographics. In the recent past, there were enough high school graduates that, if a student dropped out, they could be easily replaced with an incoming freshman. Enrollment numbers were relatively easy to sustain. That’s no longer the demographic situation in many places.

All this combines to create an environment where it’s in the institution’s best interests to reorient themselves to design and offer a student experience that encourages student success. Some of the most innovative institutions we’re seeing are acutely aware of the financial incentives driving student success. But more than that, for many institutions, it is more expensive to lose a student and replace them than it is to keep a student. Higher education leaders are being incentivized, both through incoming revenue and through potential costs, to do everything possible to keep students enrolled because now the student success agenda is tied to financial sustainability. Institutions need to keep generating revenue, which means keeping students.

Evo: In states where performance based funding is becoming the reality, do you think that’s an effective mechanism to reward institutional performance or is it simplifying it a little too much?

DG: Outcomes-based funding is still in its early days. There’s some interesting research coming out on the effects of outcomes-based funding, but the practice is still pretty varied in its implementation and the evidence for or against its value is still pretty limited. There’s still a good debate to be had and a lot of learning to do, but that’s only one of the market incentives at work here when we talk about driving institutions to focus on student success.

We’re beginning to see a lot more consumer information available to prospective students that students from different backgrounds are using in to inform their enrollment decisions, both in terms of the colleges they’re looking at and the programs themselves. This emergence of consumer information is applying pressure. There are also the cost pressures I previously mentioned that are bearing down on the institution, where it’s more expensive to replace a student than to retain them. These factors combine to create an environment where it’s in institutions’ best interests to focus on student persistence and completion.

The policy incentive is of course an important and potentially very powerful aspect of this completion conversation, but it’s not the only incentive working in this direction.

Evo: What are the most significant roadblocks standing in the way of institutions investing in the development of a persistence- and completion-focused environment for their students?

DG: Changing gears to shift from customer acquisition to retention is immensely hard in any industry. But when people think about higher education specifically, we have to recognize the sometimes-glacial pace of change.

These organizations have unique cultures and structures. They’re managed in specific ways and many of them are public, which means they answer to public boards of directors. All of this is to say that a lot of the decision-making apparatuses that enable greater nimbleness in other industries don’t exist in higher education.

What’s more, in higher education, the change management approach is more deliberate and more consultative, which means that the process can be slower going and that makes it hard to change quickly. We’re seeing that play out in the way change is currently happening across the higher education industry.

Evo: Is there anything you’d like add about the value of investing in support structures around students?

DG: We’ve covered the value of investing in small support structures during this conversation, but it’s important to note that there are two components to getting these structures into place.

One of them is to develop the business platforms that enable you to improve student supports, much like the iPASS (Integrated Planning and Advising for Student Success) system developed by EDUCAUSE. That’s the easy part, even though it’s not easy. The second component is to actually allow those platforms to work with other support platforms the institution already has in place, and to identify and address the gaps that come out of this work.

Institutional leaders who embark on this are going to begin to fundamentally think differently about how they organize instruction and advising. That’s really when the hard stuff happens, when you’re really thinking about how to fundamentally change the basic processes of the industry. However, the work is well worth it and the rewards are considerable. When you look at the institutions that are leading the way, the gains that they’re making in student retention, equity and attainment gap elimination are just profound. The work is well worth it.

This interview has been edited for length and clarity.

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Key Takeaways

  • Higher education’s entire incentive structure—from the way funding is distributed to institutional cost and revenue calculations—are now geared more toward retention and completion than access alone.
  • As the student demographic becomes more non-traditional, institutional leaders need to direct their retention efforts towards building support structures aimed at developing pathways to help keep students on track.
  • Though the incentive structures have changed, higher education institutions don’t typically have the management design in place to be nimble so the pace of change for colleges and universities is slower than in other industries.
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