Authored by Joanna Young
The list of challenges facing higher education is long: At the top are state disinvestment, increasing competition for research dollars, price pressure, Title IX and new market entrants. Yet our economy depends on the success of higher ed institutions; a well-educated workforce is critical to the U.S. economy.
Our industry is poised to see a wave of integrations and closures. Moody’s predicts a tripling of college closures in coming years. Generally, the smaller the institution and the endowment, the more susceptible the college. The largest and most well-endowed institutions may feel immune, thinking they are “too big to fail.” Yet in reality, in the digital economy, no institution is immune. Leaders and boards of directors should plan today for how to transform themselves tomorrow.
The Competition Is On
Reliance on net tuition remains high, averaging more than 45 percent nationwide, 10 percent higher than during the most recent recession. Tuition is rising at rates of 7 to 8 percent, well above the inflation rate. Competition for students is increasing. In many regions (for example, the Midwest and Northeast), the number of high school graduates is declining, and many public institutions are competing for out-of-state and international students, who pay more and thus subsidize in-state students. This combination presents a challenge.
To perform well in the face of such challenges, institutions need to invest deliberately and heavily in two things: talent and technology. In particular, “top 100” institutions that pride themselves on quality of education and research should have quality of technology and talent to match.