February 2009 Lawlor Focus

Tracking the Trends in the Higher Education Marketplace

Several recent news reports and research findings are reinforcing the significance of some of the issues we identified last month in "Trends & Tips for 2009: Seven Circumstances that are Shaping the Private Higher Education Marketplace" (.pdf). We noted that current economic conditions are straining students' ability to pay, which in turn is resulting in more "buying down" (choosing colleges they perceive as less expensive) and "swirling" (attending multiple institutions on their way toward a degree) behavior. Updated evidence of these trends indicates the following:

Unpaid tuition bills are on the rise—According to the American Association of Collegiate Registrars and Admissions Officers, more than 65% of surveyed registrars said they had noticed an increase in unpaid bills during the fall semester.

More families are applying for financial aid—The U.S. Department of Education reported that 1.4 million more students filled out the FAFSA in 2008 than in 2007, representing an increase of more than 10%.

More Americans think a college education is out of reach for many—Public opinion research by Public Agenda and the National Center for Public Policy and Higher Education revealed that 67% of the public say that many qualified people cannot get access to a college education.

Consumer spending is down—The latest numbers from the Department of Commerce showed consumer spending in the U.S. fell for a record sixth consecutive month, dropping by 1%. This decrease in purchases has pushed the savings rate up as consumers exercise what Forbes is calling "America's New Frugality."

Financial concerns are driving students away from their first-choice college—The Higher Education Research Institute's 2008 CIRP data showed a 34-year low of 60.7% of students attending their first-choice college, even though 77.8% were accepted to their first choice. Being offered financial aid was a "very important" or "essential" consideration to 43% of students in choosing which institution to attend, a 36-year high. And 49.4% of students were planning to get a job in order to cover expenses, the highest proportion at any time during the 32 years the question has been asked.

Retention rates are declining—A survey by ACT, Inc. showed that 69.6% of first-year students at four-year private colleges returned to the same institution for their second year, the lowest level in the 25 years the survey has been administered.

Enrollment is rising at community colleges—Newspapers throughout the country are running their own versions of the Associated Press story "Recession Sending More Students to Community Colleges," which notes: "The two-year schools are reporting unprecedented enrollment increases this semester, driven by students from traditional colleges seeking more bang for their buck and by laid-off older workers." And Inside Higher Ed published "The New Reverse Transfer," highlighting "a growing number of so-called ‘reverse transfers' who leave four-year universities to attend community college."

In our trends report, we also noted that in the midst of affordability concerns, students are seeking unfiltered evidence of a college's value proposition—which is making word-of-mouth marketing even more essential, especially via online social media. Updated data in this area indicates that:

The social networking audience is growing rapidly—eMarketer estimates that 41% of the U.S. Internet user population visited social network sites at least once a month during 2008, an 11% increase from 2007. Projections show that 40% will create content on social networks at least once a month in 2009.

More colleges are using social media for their admission activities—A longitudinal study by the Society for New Communications Research found that among four-year colleges and universities in the United States, adoption of social media increased from 61% in 2007 to 85% in 2008.

Lawlor Recommends

Private colleges and universities need to overcome the word they've owned for decades—"expensive"—and replace it with "value." To do so will require supporting your value proposition with meaningful evidence of what students obtain from their educational investment.

Certainly, social media has become a necessary channel for communicating your value proposition. Given the high premium placed on transparency these days, the marketplace is demanding unfiltered evidence that reinforces perceived worth. So delivering authentic messages to prospective students requires a strategy for communicating with them where they already are, via online social networks.

But also consider hosting more yield events starting now and through the spring that focus on paying for college and what students get for their money. During these events, the "quality" attributes that are associated with private colleges and universities (such as personal attention) must be framed in terms of their outcomes, such as honing a student's ability to take the initiative. Focus on specific examples that illustrate how student experiences translate into the development of skills employers seek. During times of economic struggle, people tend to correlate desired learning outcomes with job placement, so be sure to highlight faculty advising, career services, alumni networks, and the successes of your graduates.

Today's dynamic market conditions are demanding that thought leadership and intelligent solutions intersect. If you're seeking ideas—from the strategic to the tactical level—for communicating your institution's value proposition, consider attending our Summer Seminar in Minneapolis on June 11 and 12. This year's topic is "Asserting the Value of a Private Higher Education in an Age of Frugality.

In the news

Business Week, under the headline "With Funds Tight, College Students Get Creative," reports that "e-mail pleas, peer lending, and a new pay-for-grades site are supplementing traditional college funding plans." Due to the precariousness of the student loan industry and plunges in the financial and housing markets, college students are not only seeking out online peer-to-peer lending sites, but also launching their own web sites to solicit donations from acquaintances and to recruit strangers as financial sponsors.

Did you know?

More than 50% of colleges and universities surveyed in the fall of 2008 reported an increase in the number of students utilizing their career centers, according to the National Association of Colleges and Employers.