How the Changing Non-Traditional Marketplace is Forcing Universities to Make Tough Decisions

AUDIO | How the Changing Non-Traditional Marketplace is Forcing Universities to Make Tough Decisions
Institutions that have historically dominated the non-traditional space are being forced to innovate to remain competitive and viable.
The following is the first installment of a two-part interview with Javier Miyares, president of the University of Maryland University College (UMUC). UMUC has forged a reputation for quality in online and distance education, and is one of the industry leaders in this space. However, as the postsecondary marketplace has changed over the past few years — with the growth of for-profit institutions and the rising number and quality of online degrees — UMUC finds itself in a far more competitive space. In this first part, Miyares discuss some of the challenges UMUC is navigating in the changing marketplace.

Click here to read key takeaways.

1. What are the biggest challenges UMUC faces when it comes to competing against the rest of the postsecondary marketplace as a public institution?

We believe our greatest advantage is the quality product we offer. We’re also aware that this needs to continue to evolve, we need to innovate, we need to bring in new technologies, analytics, competency-based education, to be constantly improving the education we provide our working adults. To do that we need to generate revenues to invest in improving that quality. The only way [to do this], given that we get very little state support, is to invest in the always-evolving academic programs we offer. The only way we can generate those revenues is by growing.

We have a model that’s very scalable. We were able to grow to 98,000 students a couple of years ago. The marginal cost of adding each student is fairly small. It’s that extra margin we get when we grow that will provide the ongoing improvement of our academic programs. What we face is that we’ve historically had two markets: the military market and the domestic market. The military are about half of our students. What we face on one hand is that market is shrinking. There have been reports [the Army] plans to shrink over the next five to seven years, about 20 to 25 percent of the current level. That’s huge for us. [The public market] is a fairly small estate. Already, the number of high school graduates is declining. That means in five years, those high school graduates will be the age of our students and that cohort will be shrinking.

On the other hand, the competition from for-profits [and other universities with fairly well-established names] is a threat to our future health. The University of Florida Online, for example, has become a recent phenomenon growing out of Florida. It became obvious to us that simply [maintaining our status quo] presents challenges to UMUC; challenges that can only be overcome and addressed by developing a national footprint beyond the military.

The heart of the question we’re addressing at this point is: “What’s the best business model that will allow us to grow a national footprint beyond the military market?”

2. How have these challenges impacted the college over the past few years?

On one hand, our enrollments have declined over the last two years. The big driver in the declining enrollments have been our overseas operations. We have the contract with the Department of Defense to provide onsite higher education to American troops overseas, in Europe, the Middle East and Asia.

Particularly in Europe — because of the draw down of the military from the European theater — our enrollments have been hit significantly. Then, on top of that, there have been changes to the military tuition assistance program to stretch the available dollars so they can serve more students. Those policies have tremendously impacted our enrollments in Asia.

Stateside, our enrollments have declined by a few points, so overall we have seen over the last two years a decline in enrollments. Because we are a tuition-driven institution and we get very little state support, any declines in enrollment equals declines in revenues. The model we use, through which we provide quality at an affordable price, requires volume. The shrinking volume presents a problem to us.

At the same time, we have been investing in innovation. It means we had to make some very difficult decisions. We laid off about 70 people this spring, about 60 last spring; overseas the number of full-time faculty in Europe has been halved. In Asia, it’s down by about a third. The number of employees in our headquarters in Germany and in Tokyo have been reduced by 50 percent.

We have had to make very difficult adjustments because we wanted to make sure we would continue to invest in the innovations on our academic side — in the analytics, in competency-based education, in moving away from textbooks to open-learning resources, moving to adaptive learning. Those are making our curriculum very fresh and very related to the skills and knowledge needed by employers.

This interview has been edited for length.

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Key Takeaways

  • The ‘traditional’ markets sought after by institutions catering to non-traditional students are diminishing, forcing institutions to look for new marketplaces to serve.

  • There are a number of elite universities entering the non-traditional marketplace, creating a viciously competitive environment for all universities currently in that space.

  • Institutional leaders are being forced to make tough calls in order to ensure it’s possible to invest in the kinds of technologies and innovations that will help them compete.

This is the first of a two-part interview with UMUC President Javier Miyares discussing the transforming higher education marketplace for institutions serving non-traditional students. In the second part, he discusses the possibility of transforming the public institution’s business model to remain competitive.

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Readers Comments

Gwen A. Parker 2014/09/26 at 1:31 pm

It’s interesting that Miyares is talking about expanding his institution’s target market when so many others are saying to narrow your focus for better results. I guess I understand the transition away from serving primarily military students, but will the shift be toward a specific type of adult/non-traditional student or just to the group broadly? I hope the thinking behind this decision will be addressed in the next piece.

Linda Bars 2014/09/26 at 2:11 pm

It’s refreshing to hear a senior administrator give such honest answers about the challenges the institution is currently working through. I’m interested in how some of these realignment issues were communicated to staff, especially with layoffs happening on some satellite sites and not others. How these types of changes are positioned can have significant impact on staff morale and performance.

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