This Recession Calls for New Playbooks

By Amrit Ahluwalia

On May 11, the U.S. Department of Education released guidance for the $36 billion in emergency funding available to higher education institutions (HEIs). This new round of funding—authorized by the American Rescue Plan Act—makes $10 billion available to community colleges, $2.6 billion to Historically Black Colleges and Universities (HBCUs), $190 million to tribal colleges, and $6 billion to other minority-serving institutions.

For colleges and universities across the U.S. that focus on creating access and pathways to success for traditionally underserved populations, this funding provides both short-term and long-term opportunities.

In the short term, it creates the capacity for HEIs to keep their doors open and provide the critical programming and services their learners need.

It also creates the opportunity for these institutions to reset their playbooks and adapt to delivering the kinds of education offerings and experiences that learners expect—both today and into the future.

Our postsecondary playbook is outdated

Through 2020 and into 2021, unemployment rates across the U.S. hit historic highs in the midst of the COVID-19 pandemic.

More than 30 million Americans filed unemployment claims in the six weeks following a state of emergency being declared. In contrast, the Great Recession of 2007 to 2009 led to 8.7 million job losses.

The U.S. unemployment rate in April 2020 hit 14.7%—more than three times the March 2020 rate of 4.4%.

This is a fundamentally different recession, and it has shown that higher education as an industry cannot rely on old playbooks to map out its future.

From 2007 to 2009, the “once in a lifetime” Great Recession struck, causing unprecedented joblessness and homelessness. HEIs were severely affected by slashed public funding and reduced household income.

There were three main “plays” that colleges and universities ran to adapt at that time:

1) Wait for increased registration. Historically, HEIs have benefitted from a tendency for individuals to enroll in postsecondary offerings when the labor market sours. Between 1968 and 1988—a period that includes four U.S. recessions—postsecondary enrollment increased 2% for every percentage-point increase in national unemployment. This trend remained in place during the 2007-2009 Great Recession, leading to increased registrations for colleges and universities.

2) Raise the price. From 2007 to 2012, public college and university tuition and fees grew significantly to counteract the effect of reduced state funding. At universities, tuition and fees rose 27% after accounting for inflation, and at community colleges they rose 24%. In the states hit hardest by the Great Recession, prices increased between 30% and 40%. This led to Pell Grant funding, financial aid and student loans rising astronomically through the same period.

3) Cast a wider net. Related to the last point, public colleges and universities turned to out-of-state students—who generally pay higher tuition and fees—to make up for funding shortfalls during the Great Recession. International student enrollments grew 112% from 2007 to 2012 at U.S. public research universities. Across the entire U.S. postsecondary landscape, international student numbers grew 30%. Broadly speaking, the uptick in international students accounted for 17% of the increase in tuition revenue industry-wide—and at some institutions, it accounted for as much as 40% of their revenue mix.

Why the old playbook didn’t work in 2020

There are a few fundamental differences between the pandemic and the Great Recession that limit the effectiveness of higher education’s old recession playbook.

Demand for traditional degrees is waning. In the wake of massive unemployment, people did not rush to degree programming like they did a decade ago. In fact, degree enrollment industry-wide declined nearly 3%.

That’s because the majority of working adults today are millennials, who graduated into the last recession and whose career and life progress stagnated as a result. These individuals still carry significant student loan debts, and won’t be likely to take out further loans for education that they often believe offers poor return on investment.

Instead, we’re seeing rising demand for career-oriented and non-degree education programming. Fully 68% of adults considering education programming in 2020 said they preferred alternative and non-degree credentials.

Desire for online education is rising. COVID obviously severely limited our capacity to travel, not just internationally, but even within countries. This heightened an already growing demand for online access to education and training.

According to Strada Education Network, 46% of American adults report an interest in enrolling in online education. Meanwhile, as postsecondary enrollment fell, “bootcamp” registrations grew 30% in 2020 over 2019.

The competitive landscape for postsecondary institutions today is not what it was during the Great Recession. Students won’t just enroll with a particular program because it’s the only game in town. They’re price-conscious and outcome-oriented consumers who are willing and able to do the research to find the education provider whose offerings align most closely with their needs.

Career expectations are growing. Finally, today’s students have very high expectations when it comes to the career impact of their education investment. According to Gallup, 58% of students enroll in degree programs to achieve career outcomes.

What’s more, students directly tie the value of their education to the career supports offered by their institution. In a survey of alumni, 72% of graduates who attended schools they saw as offering high-quality career resources and support to get a good job, felt their loans were worthwhile. Conversely, at schools where graduates felt career support was lacking, only 9% of alumni felt their loans were worth taking.

This indicates a specific need for higher education institutions across the board to find ways to better align programming with labor market outcomes.

The new playbook: collaborate with continuing and workforce education

Fortunately for most colleges and universities, divisions embedded on their campuses are specifically designed to offer flexible, outcomes-oriented programming in a competitive environment to price-sensitive customers with high expectations.

Continuing education and workforce education divisions make their bread-and-butter operating in this environment.

To continue supporting institutional success through this new recession, it’s essential these divisions have the infrastructure and support mechanisms in place to drive their competitiveness. They need the right tools at their disposal to:

  • Accelerate new offerings to market as quickly as possible
  • Deliver a customer-centric experience that delivers e-commerce best practices
  • Personalize the customer experience for students when they land on your website to make sure they can find the programs and services they need
  • Improve scheduling flexibility to create access for more learners

Critically, by improving the capacity for an institution to serve a wider group of learners with a more tailored and outcome-oriented experience, an HEI can better serve its own alumni who might not recognize that their alma mater is the best place for them to upskill and reskill through their career.

The future of higher education is one that’s seamless, student-centric and flexible. By taking steps now to strengthen continuing education and workforce education units—and by leveraging new funding streams to make that necessary investment possible—an HEI can set out on a path for sustainability and community impact for decades to come.

Amrit Ahluwalia is director of strategic insights at Modern Campus, an industry leading student first modern learner engagement platform, and editor in chief of The EvoLLLution, an online newspaper launched by Modern Campus focused on higher education innovation. Follow him on LinkedIn.

Photo by Jason Pofahl on Unsplash.
Related Posts:

A Year after Prepping for a Hypothetical Recession, Higher Ed Leaders Confront a Real Pandemic and Enrollment Pressures

Will the Scarring Show? Graduating in the Time of COVID-19

Preparing for Another Recession?

Recession Amnesia and the Prospects for New England’s Institutions



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