March 2010 Lawlor Focus

Five Disruptive Forces Impacting Private Colleges and Universities

College leaders and enrollment management professionals are actively engaged in multiple admission activities this month—implementing yield activities for the final recruiting of the current class, which overlaps with the early stages of lead generation for recruiting the next class. This professional multitasking often results in marketing initiatives that focus on tactics rather than strategies. Yet “the big picture” for higher education reveals several disruptive forces that must be confronted now with strategic thinking that takes into account real changes in the marketplace.

1. Cost structure issues—Unlike other countries affected by the world recession, the U.S. has failed to protect higher education funding, which is exacerbating the fact that many colleges and universities have failed to manage their costs. Several states are planning dramatic cuts to higher education spending that will affect not only public institutions, but also private colleges and universities. For example, the governor of Missouri has proposed eliminating the state’s scholarship grant for students who attend private colleges, and states like California are poised to discontinue theirs for public and private college students alike. Institutions’ operating budgets are so constrained that some colleges are eliminating athletic teams, cutting academic programs and exploring ways to lay off tenured faculty without declaring financial exigency.
   
   
   
2. Increased competition—For-profit universities now educate about 7 percent of students who enroll at degree-granting institutions each fall, and enrollment at the University of Phoenix is larger than the undergraduate enrollment at all of the Big Ten schools combined. In addition to deploying aggressive marketing campaigns—such as this Kaplan University commercial—and offering virtual student clubs and organizations, for-profit universities are pursuing growth through such means as purchasing struggling private colleges to acquire their regional accreditation. (With accreditation, the for-profit’s students become eligible for federal financial aid, which enables more students to enroll.)
   
   
   
3. Growth in underserved populations—Although minority populations are not projected to become the majority in America until approximately 40 years from now, 2010 could be the tipping point year when minority births outnumber white births in the United States. The U.S. Department of Education, the Gates Foundation and others are sponsoring initiatives to create a “college-bound culture” among Hispanic youth.
   
   
   
4. Public disillusionment—The results of a new poll show that 68 percent of Americans feel it will be harder for the next generation to attain the American dream than it was for theirs, and 58 percent think America itself is in decline. When it comes to the ability to afford higher education, a Public Agenda study found that 69 percent believe many qualified people cannot get access to a college education. Both the ability and the willingness of families to pay for college are being challenged by national trends of declining wealth, rising unemployment and tightened access to credit.
   
   
   
5. Calls for oversight—A new report concludes that U-CAN and College Portraits, the voluntary accountability systems designed by private and public colleges, respectively (in part to preempt federal regulation), both contain “serious flaws that undermine their utility as engines of accountability” and limit their usefulness to prospective students and families. Meanwhile, the U.S. Department of Education is being urged to “to crack down on colleges that use restrictive policies on transferring academic credits from one institution to another” and encouraged to develop a “Race to the Top”-style program for higher education.

Private colleges and universities cannot ignore these trends’ potential to strain their current business models and challenge ineffective student recruitment methods and messages.

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Even though private colleges and universities are facing exposure to this “perfect storm” of disruptive forces, the financial operations of public institutions are arguably even more threatened. Public institutions may end up providing a more limited experience to fewer students for a longer period of time—and for more money. The public will expect more and want to consider other options that provide a fulfilling educational experience that can be completed in a timely manner and provide meaningful guidance and direction for career success. Delivering on this kind of promise moves the discussion from the cost of college to making the necessary investment in education and future success.

Emphasizing your institutional value proposition—especially by reiterating to each prospective student the “so what” of relevant features and benefits—can provide a competitive advantage as today’s frugal marketplace of prospective students and their families seeks to maximize the worth of their educational investments.

Idea sharing will be among the activities at Summer Seminar 2010, as senior enrollment professionals from throughout the nation gather to discuss the innovative thinking that’s required to deliver an educational experience that is accessible, affordable and sustainable for students and the academic enterprise.

In the news

Dana College, a small Lutheran institution with a residential campus near Omaha, is being sold to a new for-profit company that intends to retain the college’s tenure system and does not seek to offer online-only programs. Dana’s financial stability has been challenged by stagnant enrollments, and the for-profit company official who will become the college’s president believes, according to Inside Higher Ed, that an infusion of marketing funds will enable the college to attract more students.

Did you know?

Among 18- to 24-year-olds, a record 39.6 percent were enrolled in college during 2008.

Source: Pew Research Center