Laying Down a Higher Education Innovation Challenge

By John O. Harney

Some notable developments in higher ed …

... As Southern Maine goes, so goes the nation? College faculty and administrations get along a bit like Congress and the president. In the tradition of shared governance, the administration may offer a sharp change in business policy; the faculty applies the brakes. But at the University of Southern Maine, faculty leaders and President Theo Kalikow are working together to address the challenges that stand in the way of economic sustainability. In the spring, after announcing a plan to fire a dozen tenured and tenure-track professors, dismiss 35 staff members and eliminate four academic programs to help cover part of a $14 million budget hole, Kalikow said if faculty could identify $1.26 million in savings by the end of May, she would spare the faculty jobs. They tried to. Ultimately, the faculty and Kalikow agreed on a balanced FY15 budget, including cuts of $1.56 million from 16 faculty retirements and one staff layoff, as well as cuts in spending on energy, equipment, research and external consultants. It’s a rare example of the collaboration, though not perfect, that could save some higher education institutions (HEIs) from extinction. The value of this alliance will be tested further next year by a shortfall projected to top $12 million.

… Southern New Hampshire University—a star of the higher ed new models arena with its traditional brick-and-mortar campus, robust online programs as well as competency-based College for America—signed a memo with the New Hampshire Institute of Art (NHIA) exploring a merger. “Mergers” usually occur between a weak partner and a strong one. But as the NHIA acting president wrote to his colleagues: “It is important that you know a merger would not involve the institute being subsumed by SNHU, but instead living comfortably under the SNHU umbrella.” Data from the New England Association of Schools and Colleges document a steady trickle of mergers and closings over recent decades, but experts believe the pace will pick up as demographic pressures bear down on New England and new alternatives to traditional colleges emerge.

… If you want an overpriced coffee that takes forever to brew, go to Starbuck’s and get a Grande. And if you want help earning a college degree, work at Starbuck’s. A Starbucks’s program launched in June would help thousands of its employees get a free online degree from Arizona State University. The plan got a lot of ink, but also led ThinkProgress to suggest what a lot of others have been whispering: The federal government could use the $69 billion it already spends to subsidize college education through grants, tax breaks and work-study funding and cover the $63 billion tuition spent at public colleges. “This would mean anyone could avail themselves of a free college degree and it would also likely incentivize private universities to lower their prices in order to compete.”

… Pressure is building on whether college is worth the price. Andrew Rossi’s critically acclaimed film Ivory Tower contrasts the struggle for quality, affordable education with colleges spending millions on football stadiums and big administrator salaries. But William Deresiewicz, author of Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life, observes that the low unemployment rate and high wage premium for college grads shows: “College is not only still a good investment; it is the best investment you can make.” The earnings premium is part of the problem, he adds, noting that students “know they have to go to college, and they also know they’re probably going to have to take on debt to do so.”

… Higher education sustainability is not only about the bottom line. It’s also about learner-centered quality pegged (sometimes excessively) to income success. At institutions like Clark University, that means blending of traditional liberal arts education with practical real-world projects. Clark President David P. Angel told The Chronicle of Higher Education that the approach has helped Clark increase applications and make students more valuable to the organizations they’ll work for when they graduate.

These are among the new forces swirling outside as NEBHE pursues an ongoing initiative on higher ed costs and new models, underwritten by the Davis Educational Foundation and recently rebranded as the Higher Education Innovation Challenge (HEIC). The initiative will provide HEI leaders, including faculty, with key tools, data and frameworks for effective campus-based work. It will also encourage them to collaborate with one another and with entrepreneurs in the higher education innovation ecosystem. A goal of the the challenge is to transform higher ed’s operating model in a way that lowers the cost of credentials to students, while maintaining quality, improving completion and leveraging technology.

Some brief history on the work: In November 2012, the Davis Educational Foundation published An Inquiry into the Rising Cost of Higher Education. One angle was that the current number of degree-granting institutions (about 250 in New England and 4,600 nationally) is not sustainable. Conventional thinking is that Ivies and other highly selective HEIs are safe because of their reputations as are state universities because of their public roles. But hundreds of colleges that rely heavily on tuition, have low endowments and are not well-differentiated are at risk.

In 2013, NEBHE and the foundation convened more than 300 higher ed presidents, trustees and CFOs for a frank discussion about costs and the higher ed business model. Around the same time, NEBHE’s journal published a landscape-style piece titled Exploring Higher Education Business Models (If Such a Thing Exists).

In spring 2014, NEBHE floated a draft of a whitepaper called In Search of a Common Language: Understanding Higher Education Business Models. In the weeks that followed, NEBHE engaged numerous college and university leaders in conversations regarding the whitepaper executive summary.

The readers with whom NEBHE shared an advance copy suggested that the piece would generate both praise and discomfort. Praise, because too few commentators and scholars have looked seriously at issues of sustainability, even as HEIs face daunting, possibly lethal, challenges. Discomfort, because, as many faculty observed, “we’re not businesses!”

Some kind of higher education business model does indeed exist, though its elements are rarely agreed-upon. And the term itself is offensive to academics and others who see higher ed becoming too business-oriented. What’s more, university stakeholders don’t see students as “customers.”

Nonetheless, business models sometimes hide in plain sight. Some of our readers noted that it would make sense to use Moody’s analytics as a baseline for stimulating conversation among HEIs. (On a personal level, my daughter was accepted as a freshman to an increasingly selective university, but only if she’d spend her first semester overseas. I’m all for study-abroad, but this was obviously a business strategy to micromanage dorm and class space.)

More broadly, NEBHE plans to move beyond the whitepaper to real solutions, including engagement with faculty and other key campus-based constituencies.

Financial sustainability, diversity and quality are a key troika. The expert readers noted that:

  • As middle-tier independent HEIs become unaffordable, they may disappear or be bought by for-profits as was the case five years ago when New Hampshire’s financially struggling Daniel Webster College was acquired by ITT Educational Services.
  • Higher education must become more diverse, serving more audiences, applying multiple tuition and fee rates, exploiting its physical resources and technology, and shifting the focus to student engagement and programs based upon aspirational student learning outcomes.
  • The student diversity evident on “accepted student” days is gone by the time classes get underway because HEIs have not figured out how to serve the demographic groups that are growing fastest in New England.
  • Some expressed concern about how to move from the thinking to the doing. What does education’s future look like? How do you move your institution there?
  • We must build much greater capacity in American higher education not through the construction of new campuses, but through an adept use of partnerships and technology that could be less costly to create and better suited to the learning behaviors of digitally native students.
  • Networks of institutions should pool resources to buy goods and services that don’t differentiate them from one another, while investing in the things that do make each qualitatively unique.
  • Some readers protested that the draft was too prescriptive in making suggestions, whereas it should focus more on helping institutions to start their own conversations based on their explicit institutional missions, changing demographics and digital technologies.

Then there were the general discomforts about faculty (though no other group has as crucial a role in higher education). Is the 60-year-old art historian who’s wracked his brain learning how Titian’s work informed Manet’s less valuable than the 30-year old biochemist who rose through the ranks in a STEM-impassioned economy? How do their values translate into the economics of the HEI? Don’t tomorrow’s students need quality art history and biochemistry.

Also, what about the whole role of adjunct or contingent faculty. They may be superstar guest lecturers, they may bring the perspective of professional jobs in the “real world” outside or they may be patching together low-paid teaching gigs. Are they more or less valuable than the tweedy tenure-track stereotype? Among other impacts, contingent or adjunct faculty are resulting in less of higher ed’s vaunted tradition of shared governance.

Readers wondered how HEI sustainability might be aided by structuring incentives to reward faculty who advance student retention and progression and visit off-campus employers to keep a finger on the pulse of workforce needs.

While readers noted that some faculty will always be worried about “corporatization,” they emphasized that the full participation of faculty was crucial. Among other things, they advised that when working with faculty, focus on the context of professional development or diversity, rather than cost containment. And they warned that different vocabularies resonate with community colleges versus research universities. Yet every kind of campus needs to be looking at broadening “learner segments.”

Several of the expert readers lauded NEBHE and Davis for being out-front on this issue. They emphasized that HEIs should reexamine the budget process when it is not yet a crisis—when there is still time to meet the Higher Education Innovation Challenge.


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