Shifting Landscapes, Changing Assumptions Reshape Higher Ed

In 1852, Massachusetts became the first state to provide all its citizens access to a free public education. Over the next 66 years, every other state made the same guarantee. Based on a factory-model classroom and inspired in part by the approach Horace Mann saw in Prussia in 1843, it seemed to adequately prepare American youth for the 20th century industrialized economy.

Massachusetts may again be a geographic hotspot that signals the displacement from the old to the new.

Just as key sectors of the American economy have experienced huge and disruptive transformations—shifts that have resulted in radical change from one way of thinking or organizing to another—higher education is transforming.

Case in point is the recent announcement by MIT and Harvard of their collaboration and creation of online courses through EdX. Courses are offered free of charge, and students will be able to earn certificates in mastery.

Other Ivy League colleges are competing to create online classes without the Ivy League price tag and without the Ivy League admission hurdles. In a recent article in The New Yorker magazine, Stanford University President John Hennessy said, “There’s a tsunami coming.”

This MIT-Harvard initiative points to something much deeper within the higher education fabric. A paradigm shift is occurring in American higher education, and many of the traditional forms of higher education may be headed for oblivion.

A convergence of forces driving change in higher education is forcing us to ponder such fundamental questions as what a university is, what a course is, what a student is and what is the meaning of a college credential. These drivers of change may be re-creating our views on these essential questions.

Disruptive technologies, the eroding sustainability of the higher education business model, tuition tipping points and onerous student debt burdens are increasingly forcing people to question of the value of a college degree. Approximately half of Americans think the higher education system is doing a poor or fair job in providing value for the money spent, according to a recent survey by the Pew Research Center.

Parallels to health care

Similarities are clear in the evolutionary shifts that hospitals experienced in the 1980s as the central structure in the U.S. health care system and that colleges are experiencing now as the central structure in higher education.

In the ’80s, changes in funding formulas created seismic shifts in the hospital industry. Hospitals strategically transformed their organizational structures as a result of changes in funding. Many hospitals closed, consolidations and mergers became commonplace, large systems formed, new health organizational models arose and patient care was turned upside down. A similar shifting landscape is occurring in higher education.

On state university campuses across the nation, the concept of consolidating campuses and academic assets has gained traction as state support for higher education declines.

We’re now beginning to see a wave of college closings and merger discussions. Forces of change could accelerate the pace. The higher education system is arguably different from the hospital industry. Many institutions have endowments, and students pay upfront with large government subsidies. But for some institutions, endowments are being tapped and the sense of a higher education bubble about to burst is taking hold.

Even elite institutions such as Harvard, Yale and the University of Michigan are feeling the pinch. Harvard’s endowment supports operations that are critical to Harvard’s educational and research objectives. In FY2011, distributions from the endowment contributed almost a third of the university’s operating budget, supporting Harvard’s academic programs, science and medical research, and student financial aid programs.

“With severe economic downturns fundamentally changing how we must approach our current activities as well as plan for our future,” Harvard Management Company’s leadership asserted in November 2008, “It is reasonable to estimate that reliance on endowment to fund operations has increased.”

According to the Yale Endowment Report 2010, there is a “Recognition of increased budgetary dependence on endowment income.”

And according to the University of Michigan Office of the Vice President for Communications, “The actual dollars dispersed for operations increased in FY2011, as they have every year since 2006.”

Concurrently, external support for research from governments, corporations and foundations is becoming increasingly difficult to come by, and academic institutions are bearing a greater share of the ever-increasing costs of research. Accompanying all this is a growing sense that tuition increases are becoming politically untenable.

Higher education structural shifts

Structural shifts are happening around the country. In Georgia, officials are preparing to consolidate eight of the state’s 35 public universities and colleges.

In Colorado, the state medical school—a coveted asset for research universities—was recently merged into the University of Colorado-Denver.

For six months, the University of Maryland’s governing board of regents examined merging its Baltimore school into its campus at College Park.

New Jersey is among a number of states to consider mergers and consolidations. A plan is underway to overhaul New Jersey’s public university system—including a merger of Rutgers-Camden and Rowan University.

The higher education industry is on the verge of a transformative realignment, as today’s economic realities force higher education to rethink its fundamental business model.

Just as national reform helped change the U.S. health care industry and just as deep-seated reforms and changes in European higher education have taken place over the past 25 years, we may see national reform initiatives occur in such areas as state-university relationships, educational outcomes, quality assurance and funding.

It is predicted that the American higher education landscape in another generation will look significantly different from how it does today.

What are those convergent forces driving this metamorphosis and how are they coming together to change the American higher education landscape forever?

We plan to work with NEJHE on a series of pieces exploring the interrelated drivers of change enveloping higher education today.

Next: “Disruptive Innovation: Rethinking Assumptions About Higher Education” … Observers of higher education will note the increasing prominence of disruptive innovation as a driver of change. Consider that by 2015, 25 million postsecondary students in the U.S. will be taking at least some of their classes online. If the trend continues, by 2018, there will be more full time online students than students that take all their classes in a physical classroom, according to “The US Market for Self-paced eLearning Products and Services: 2010-2015 Forecast and Analysis” published in the Ambient Insight Comprehensive Report in January 2011.

How does this disruptive innovation change our thinking about higher education?

Philip DiSalvio is dean of University College at University of Massachusetts Boston.



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