Trends for 2016

Six Marketplace Demands That Influence Private Higher Education Enrollment

The Lawlor Group conducts extensive qualitative and quantitative research for independent college and university clients throughout the United States. Based on our recent findings combined with several outside studies available to the general public, we’ve identified six “Trends for 2016” in the higher education marketplace that we predict will have a significant impact on student recruitment and enrollment efforts during the coming year.

Download Trends for 2016

1. The Right Stuff

A crowded marketplace is requiring colleges to focus on their sweet spots where quality, relevance, and distinction overlap.

Data

• Students have difficulty finding the right college. 82% of college-bound students say figuring out the best option or fit is an obstacle during their college search process—which tops figuring out the financial aid process (77%) and the application process (63%). Innovation Imperative

• College websites play a big role. 63% of prospective students seek information on a college’s website (71% of those ages 16 to 19), and 89% of them consider it to be a helpful source. Higher income students and white students are more likely to consult college websites, but students of color are more likely to consider them helpful. New America

• Academic information is most important on college websites. 43% of high school juniors say the content they look for on a college website is related to academics (such as program listings, details, and rankings), topping searches about cost (24%) and admission (21%). Ruffalo Noel Levitz

• Quality and relevance still matter more than cost in selection. Among first-year students, the most frequently cited “very important” reason for choosing their college (at 70%) is “this college has a very good academic reputation,” followed by “this college’s graduates get good jobs” at 60%. CIRP

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Stand Out

More students (and families) are becoming acutely aware of the variety of their higher education options, so a college must differentiate itself by:
• Knowing what to contrast against. For example, if admissions overlap is primarily with a larger, public-funded institution, then a private college can tout personal attention and mentoring. But since almost every small college can boast that, then something else must be promoted when distinguishing themselves from each other.
• Communicating with authenticity. Prospective students and their families seek word-of-mouth endorsements or go online to verify any claims a college makes about itself. So in addition to making sure its messaging is authentic, a college should closely monitor third-party sites and social media to ensure their data are current and portrayals are correct.
• Demonstrating relevance. Even communicating what is distinctive and authentic may not suffice if it’s not also aligned with what prospective students actually are seeking. It is essential to translate the value of the educational experience in terms of marketplace relevance.
• Segmenting messages to niche audiences. Technological capabilities for microtargeting still seem to be vastly underutilized in the higher education industry. Communicating with prospects based on a shared affinity can foster more targeted and effective communication—and dialogue.
• Empowering brand ambassadors. Alumni, parents of current students, high school counselors, and other influencers should find it easy to share good news about the college. The key is to continuously provide them with relevant and current information along with the appropriate forums for them to communicate with prospective students and families.

2. The Power of Price

Walking the line between perceived prestige and sticker shock has become increasingly difficult given economic conditions.

Data

Few parents have a personal frame of reference for private college pricing. 42% of Americans age 25 and older have never gone to college. Parents who have gone probably attended a public college, because an average of only 16% of undergraduates enrolled at a private nonprofit institution since 1970. U.S. Census and NCES

Private college pricing has far exceeded the rate of inflation. Thirty years ago, the average published price at a private nonprofit institution was $8,902. Had it only kept pace with inflation, it would now be about $20,000. Instead the average published price for 2015-16 is more than double that figure, at $43,921. College Board

Most students attend a college with tuition and fees of less than $12,000. The mean price of tuition and fees for full-time undergraduates at public institutions is $9,809. At private nonprofit institutions, it’s $33,710. College Board

Many families judge cost based on sticker price. 46% of college-bound students and their parents eliminate a college due to its cost before ever applying to it, and 39% before even researching it (so, presumably, before finding out what their net price would be). Sallie Mae

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Showcase Value

Historically, a college’s published tuition price relayed a degree of prestige. But since today’s marketplace psychographics and accompanying behaviors are much more discerning (and published price can convey that the college is either prestigious or simply overpriced), the accompanying value associated with the price must be made more desirable by:
• Focusing on indicators of quality. All across the spectrum of interactions with potential students, from the navigability of its website to the paper stock of its brochures to the curb appeal of its campus, the college should project quality. Sensory cues create first impressions—and lasting impressions.
• Being responsive. Especially for small private colleges that tout personal attention, responding to the questions and concerns of prospective students and families in a timely manner is a key brand attribute that breeds favorability.
• Demonstrating the achievement of desired results. Along with price and quality, successful outcomes is the other important variable in the value equation for prospective students and their families.
• Offering guarantees. For example, some colleges will offer to make loan payments if qualifying graduates do not land employment within a certain time frame.

3. Wants and Needs

Affordability encompasses not only the ability to pay for college, but also the willingness to pay among those who can afford it.

Data

Average incomes have not kept up with average net price. Median household income, adjusted for inflation, dropped by $3,702 between 2007 and 2014. Yet during that same period, the average net price at private nonprofit institutions dropped by only $900, inflation adjusted. U.S. Census and College Board

Student loan debt is viewed negatively. With the average debt load of $28,950 upon graduation for 69% of graduates taking its toll, 87% of admissions directors at private colleges and universities think their institution is losing potential applicants due to concerns about accumulating student loan debt. TICAS and Inside Higher Ed

Merit aid seems necessary for willingness to pay. From 2008-09 to 2011-12 (the latest data available), the average net price at private nonprofit institutions rose only by an inflation-adjusted $850 for middle-income families and $1,200 for families in the top income group thanks to merit aid, compared to about $1,700 for families in the lowest income group. Hechinger Report

Discount rates at private nonprofit institutions continue to rise. Even though the freshman discount rate reached a record high of 48.6% for 2015-16, freshman enrollment decreased between 2014 and 2015 at 53.5% of the private colleges and universities surveyed. NACUBO

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Provide Aid

Families either need or want their net price lowered from the published price, so a college must ensure it is perceived as affordable by:
• Meeting demonstrated need for the least wealthy. While it’s not always possible to avoid “gapping” everyone, an important indicator of affordability is a college’s commitment to low-income students.
• Awarding high-status scholarships. A high-value competitive scholarship for high-ability students regardless of need could enhance perceptions of prestige (and therefore willingness to pay) more than automatic merit awards.
• Capping reliance on loans in aid packages. This is an initiative that some colleges have instituted specifically for middle-income students. Loans are generally perceived as debt rather than financial aid, so the degree of debt influences willingness to invest.
• Offering cost-saving pathways. Examples include three-year degree programs, dual degree programs for a bachelor’s and master’s degree, and a lock-in tuition cost for four years.

4. Many in the Mix

Because of some key demographic projections, recruiting only “traditional” undergraduates probably will not suffice.

Data

Population changes by geographic region make a difference. Since 71% of first-year students at four-year institutions choose an in-state college or university and half of them attend a college within 100 miles of home, it matters that 32 states will have a decrease in high school graduates for two or more consecutive years over the next decade. NCES, CIRP and NCES

Postsecondary education options are widening. The U.S. Department of Education has initiated an experimental program that allows students to use federal loans to pay for coding boot camps and other short-term certification programs. From 2015 to 2016, the number of boot camp graduates grew by 74%. Course Report

The number of older students attending college is increasing faster. Currently 59% of total college enrollment is students age 24 and under. But since enrollment will grow 9.1% among those age 25 and older versus only 5.5% among those age 24 and under, 43% of college enrollments will be older students by 2021. NCES

Future growth in enrollment will come mostly from students of color. At all higher education institutions during the next nine years, less than a third of the increase in the number of college students is projected to come from white students. NCES

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Serve Many

With marketplace pressures constraining revenue from traditional undergraduate programs, a college must diversify by:
• Offering a variety of degree programs. They should span a range of audiences (i.e., high school students, adult learners), levels (i.e., certificate, graduate), and deliveries (i.e., online, evening).
• Investing in new geo markets. Areas where there are large pockets of alumni who can serve as influencers may be primed for outreach.
• Growing auxiliary revenue. Summer camps, facility rentals, and other enterprises also have the benefit of showcasing the campus.
• Increasing contribution revenue. With generational differences in how alumni prefer to engage with their colleges, donor engagement and cultivation methods are becoming more varied. No matter what, with tuition revenues flattening out for most institutions, generating more revenue from fundraising is a must.

5. Edupreneurial Evolution

Long-standing practices have become unsustainable, requiring proactive leadership and collaborative creativity to find solutions.

Data

Many administrators are skeptical of their institution’s financial model. When asked if they believe their current discount rate is unsustainable, 50% of chief business officers at private nonprofit institutions agreed, 27% strongly. Inside Higher Ed

Small colleges are at the greatest risk. Although its outlook for the higher education industry in 2016 is stable, Moody’s says 59% of its rated small colleges and universities failed to achieve net tuition revenue growth at or above a 3% inflation proxy in 2015. Moody’s

Net tuition revenue growth has slowed. At four-year private nonprofit institutions, annual growth in net tuition and fees dropped from 6.3% in 2010-11 to 3.2% in 2013-14, while auxiliary revenue growth also declined from 5.1% to 2.8%. NCES

A greater proportion of students are being awarded institutional aid. 81.6% of undergraduates at four-year private nonprofit institutions received institutional aid in 2013-14, compared to 75.1% in 2007-08. About 48,000 more students received institutional aid during that period, while only about 38,000 more students qualified for federal grants. NCES

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Continuously Improve

Resting on its laurels is not an option, so a college must constantly innovate by:
• Engaging in data-based decision making. Measurement and analysis are crucial to risk management.
• Collaborating across departments and offices. When paired with an institutional culture that fosters creativity, interaction among colleagues can bring forth better ideas.
• Optimizing the price/discount model. There are a multitude of ways to accomplish this successfully, including (for a select few colleges) via a tuition reset.
• Enhancing the student experience. Satisfied students are the best advertisements for a college, and technology is identifying interventions that help to retain them.
• Exploring partnerships or consortia. Opportunities for operational synergies may come from peer institutions, employers, alumni, and so forth working together.

6. Track and Translate

Heightened demands for accountability require colleges to not only deliver but also prove and communicate successful outcomes.

Data

Students are using social media to check what’s authentic about a college. 35% of college-bound high school seniors consult official college social media accounts before deciding to apply, and 31% consult the social media accounts of current students at the college. Chegg

Most people attend college to boost their career prospects. 85% of first-year students say “to be able to get a better job” was a very important reason in deciding to go to college, followed by “to learn more about things that interest me” at 82% and “to get training for a specific career” at 76%. CIRP

Many new college graduates are underemployed. 51% of college graduates from the Classes of 2014 and 2015 consider themselves underemployed, which includes working in a job that does not require a college degree. Accenture

College outcomes by institution are becoming easier to access. The U.S. Department of Education’s College Scorecard online tool lets people researching colleges sort them by net price, graduation rate, salary after attending, and the percentage of alumni earning more than high school graduates. College Scorecard

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Deliver Outcomes

With families conducting cost-benefit analyses of the return on their educational investment, a college must be accountable by:
• Building career pathways. Examples include aligning learning objectives with workforce needs, incorporating experiential learning in the curriculum, integrating academic and career advising, and connecting students with alumni in their desired fields.
• Helping students translate their experiences. Especially at colleges with a liberal arts focus, student can use assistance in linking what they’ve learned and done to the transferrable skills and abilities valued in the workplace.
• Tracking post-graduate success. The ability to report outcomes first requires establishing benchmarks, building data collection systems, and measuring performance.
• Making results transparent. Data such as retention rates, graduation rates, job placements, graduate school acceptances, and starting salaries should be publicized.

Trends for 2016

Trends for 2016

Six Marketplace Demands That Influence Private Higher Education Enrollment

1. The Right Stuff

2. The Power of Price

3. Wants and Needs

4. Many in the Mix

5. Edupreneurial Evolution

6. Track and Translate

Lawlor Advisory