Published on 2017/01/30

Five Key Trends Affecting the Tides of American Higher Education

The EvoLLLution | Five Key Trends Affecting the Tides of American Higher Education
The institutions that can rapidly innovate while maintaining—and even improving—outcomes, all while doggedly pursuing their unique missions, will be the ones that succeed over the long term.

2017 promises to be an interesting year in American higher education. Although nobody quite knows what all of the incoming Trump administration’s actions will mean for colleges and universities, higher education institutions still need to prepare for a rapidly changing landscape in order to survive and thrive. In this piece, I briefly discuss five of the key trends facing higher education this year.

Trend 1: Concerns about the price tag of higher education continue to grow louder

Over the last several decades, tuition and fees across all types of colleges have consistently risen far above the rate of inflation or the growth in median household income. This has led more than a dozen states to limit how much public colleges can increase tuition, while private non-profit colleges also face pressure to limit tuition increases in an effort to enroll price-sensitive students. At the same time, the costs of operating a college continue to increase thanks to factors such as rising maintenance costs and healthcare premiums. Colleges will either have to find a way to become more efficient or be able to raise revenue from nontraditional sources in an effort to reduce their reliance on tuition dollars.

Trend 2: More colleges consider competency-based education programs

One potential way for colleges to lower the price for students is to allow them to move at their own pace instead of being tied to the traditional semester model. New competency-based education models that focus on working adults with a significant amount of life experience provide the opportunity for students to earn a credential quicker than traditional programs if they are able to master the course material at a faster pace. At least 600 colleges are now considering competency-based programs, up from about 50 colleges with active programs in 2014. Notably, competency-based programs are less expensive for students (particularly as federal financial aid is more commonly available) and also appear to be less expensive for colleges to operate.

Trend 3: A growing number of colleges scramble to meet enrollment and revenue goals

The competition for students in much of the country is increasingly fierce, with colleges working harder than ever to attract a limited pool of students. This is particularly true in the community college sector, in which enrollment falls when the economy strengthens, and in regions such as the Northeast and Midwest with little to no population growth. A recent survey showed that fewer than half of all midsize public and private colleges met both their revenue and enrollment goals last year, while the typical private college discounts its tuition by nearly 49 percent for first-year students. What’s more, 23 for-profit and 14 non-profit colleges closed in 2016, the highest number since before the Great Recession began. Small colleges may need to pursue strategic alliances or creative marketing strategies in order to stay afloat.

Trend 4: The federal government explores making colleges “share the risk” on student loans

The federal student loan system is facing criticism in light of recent data showing that a much smaller percentage of students are paying down the principal on their loans than was recently reported and a government report showing that the price tag to taxpayers of income-driven repayment programs is much larger than previously estimated. As a result, Congress and the Trump administration are likely to consider steps that hold colleges accountable for whether their former students repay their loans. Senator Lamar Alexander (R-TN), chairman of the Health, Education, Labor, and Pensions Committee, has expressed interest in risk sharing and a number of researchers (myself included) have proposed systems designed to identify colleges that are underperforming relative to their peers. However, colleges will likely lobby against any risk-sharing proposals due to the potential that it could hurt their bottom lines.

Trend 5: Students, their families and policymakers demand that colleges offer better career placement services

 In spite of concerns from some faculty members that higher education is about more than getting a good job, students and their families are increasingly expecting that colleges help them on the path to a career. A recent Gallup poll of college graduates found that as many respondents found the career services office to be not at all helpful as very helpful—and that positive experiences with the career center were strongly correlated with the graduate’s view of their college as a whole. It will become increasingly important for colleges to help students obtain in-college internships and their first job out of college in light of earnings data for former students now being publicly available through the College Scorecard.

To summarize, colleges are under a great deal of pressure to demonstrate their value to an increasingly skeptical pool of prospective students as well as to policymakers. Institutions that can rapidly innovate and generate results while staying true to their core values are likely to do well in the coming years.

On the other hand, colleges that are slow to react to the changing world may struggle to enroll students and meet their revenue projections—possibly leading to further erosion of market share and the inability to operate in the future.

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