BY BRIAN C. MITCHELL
Earlier this month, Jeff Selingo wrote in The Washington Post about the coming era of consolidation among colleges and universities. Mr. Selingo based many of his comments on findings from a study by Parthenon-EY Education to which he also contributed.
The study concluded that more than 800 American colleges exhibit factors that call into question their sustainability over the long term. These factors include:
• having enrollments under 1,000 students,
• tuition discounts higher than 35 percent, and
• high debt payments for recent campus capital improvements.
As expected, nearly 80 percent of these potentially unsustainable colleges are small – with fewer than 1,000 students – but nine percent have more than 10,000 students.
Seth Reynolds, a managing director at Parthenon-EY Education, offered two important observations. The first is that “small and large colleges that are thriving . . . have either found a strong niche or they operate at a large scale.” The second conclusion is perhaps even more telling:
“But for most institutions, the path forward is not one that they can take alone. They need to shift their mindset and consider collaboration in ways they haven’t before.”
Some may consider these bleak conclusions. But they do not mean that the sky is falling for American higher education.
Mr. Selingo notes that higher education is primarily a location-bound, highly regulated, bricks-and-mortar industry with wide variations in capacity to reflect changing American demographics. He notes that the report suggests that circumstances will force many institutions into deeper partnerships with one another.
The report also suggests that the biggest obstacle to deeper partnerships is pushback from various constituencies, including trustees, faculty members, students, and alumni.
Mr. Selingo concludes that “if the current rich diversity of the American higher education system has any hope of existing another few centuries, campuses need to rethink their long-held position that the best way to survive is to operate on their own.”
Greater Collaboration, Even Consolidation, May Be No-Brainer
There is a good deal of common sense embedded into this logic. Many colleges and universities – including a good number whose names are widely recognized – operate on older, unsustainable financial operating models that lack coherence and transparency.
Looking at ways that combine a mix of people, programs, and facilities to create not only efficiencies and economies of scale but also new opportunities for students and faculty is something of a no-brainer.
Or, at least it should be.
The problem is that the spark that triggers the kinds of changes that higher education institutions must make is missing. The protectors of the historic traditions that shape the governance of these institutions support, at best, incremental change and point correctly to the relative handful of closures and mergers annually to make their case for the status quo.
The root of the problem is perhaps that no one is talking about overall health, focusing instead on trend lines and a murky future. Many argue that solving the growing income disparity in America, or waiting it out for more robust economic growth, will largely make the concerns over sustainability in higher education go away.
Lessons From the 1800s on Changing Higher Education Landscape
History doesn’t support this analysis. There have been distinct phases of growth in higher education. One in particular in the 19th Century illustrates the kind of future that might be in store for American colleges and universities.
In the 19th Century, the predominant trend that followed a period of expansion in American higher education was a surprising number of mergers and closures, especially as the Civil War deaths decreased that generation’s ability to support colleges and universities across the country. By the end of the century, a new commitment to public, professional, and graduate education reshaped the higher education landscape.
The point is that change happens and that the record supports an unsteady and uneven evolution ahead.
As we look at the Parthenon-EY Education study, it is essential to think through how best to prepare for change. The worst case is that either side – whether incrementalists or disruptors – wins. It is far better to imagine a negotiated evolution.
Disconnect Between Data & Perception Must Be Reconciled
To do so, we must do a much better job of linking data with a more thoughtful education of key higher education constituencies to produce a common understanding of the issues. It must begin with the recognition that American colleges and universities are – overwhelmingly – tuition dependent, endowment poor, and debt ridden. Many are open enrollment institutions with archaic management practices. And most important, governance practices and constituency perceptions must be brought into better alignment with what the data suggest.
There’s a tremendous opportunity to manage the crisis to a more sustainable future. But it must start with a recognition that the fundamental disconnect between what the data tell us and what uninformed campus communities think is happening must be reconciled quickly.