Higher education faces challenges on many fronts. Competition for students has intensified like never before. High school students are increasingly opting to forego college because they and their parents perceive a lack of value. Ever-growing regulations and accreditation requirements have burdened institutions with additional expenses and staffing needs that create significant financial strain. In addition to all that, concerns about political divisiveness, racial tension, environmental matters, unrest in multiple parts of the world, and general concern about what the future may hold is giving prospective students pause about how best to prepare for life in this quickly changing and uncertain time.
Given all this, what should campus leaders be discussing regularly to ensure they can attract, retain, and graduate students? Well, as a starting point, we think the following things are critical for senior leaders to discuss regularly:
- Enrollment growth alone won’t solve your problems.
We can’t tell you how many colleges are absolutely convinced that if they hit their enrollment goals (let’s save the discussion about the realism of those goals for a later date), then they will be just fine. There’s a simple way to look at this and a much more complicated way, so let’s stick with easy. If inflation is 2% a year, how realistic is it to think you can increase revenue by 2% every year? Now, consider the current cost of higher education and add the aberrant inflation of the last couple years and ask the question again.
Let’s run through the starter list of factors beyond inflation that inhibit annual growth: demographics, speed to creating and delivering new programs, declining perceived value of higher education, students’ increasing needs of for services/amenities that cost money, ever increasing technology requirements/upgrades, facility improvements regularly needed to deliver programs/services, worldwide economic concerns, etc.
In addition to the starter list, employees want/need annual raises to be at or above the CPI every year to minimally keep pace with inflation. Let’s pause there for a moment to do a quick check in about your campus. Are employees regularly leaving in search of greater pay and advancement? Which companies and industries in your town have entry level salaries above what you’re paying custodial staff, facilities personnel, administrative assistants, or even admissions counselors? Is there an understanding among senior leaders that the front line staff and middle managers are critical to retaining students?
You need to be talking about so much more. Read on.
- Student needs won’t decrease after your “pandemic classes” graduate.
Time for a little truth telling. Student mental health issues and lack of academic preparedness were present during the Trump, Obama, Bush, Clinton, Bush, Reagan, Carter, Ford, Nixon (well you get the point) administrations. Talk to your most senior faculty and claims of academic unpreparedness have been present since the Washington administration. The pandemic accelerated these issues and society demands, at least in the case of mental health, that we acknowledge it.
So, all those resources you’ve been pouring into mental health counseling and academic support won’t fade as vaccines become better and better at keeping the germs from multiplying on our campuses. Like COVID, we need to learn how to live with it. Better yet, we need to confront it and collectively learn how to support our students as never before.
Today’s students aren’t unintelligent or weak or lazy. The issues they bring with them to college are real and won’t just go away if ignored. Do we partner with them on how to confront and overcome their issues or do we ignore them to save money? Even the best vaccines aren’t foolproof. One size does not fit all. The students’ needs are real and with us forever. If we want to retain and graduate students, we need to meet them where they are and help them get to where we want them to be.
- The business model does still work but the premises have changed.
We can’t tell you how many times we’ve heard Cabinet members, and not just the CFO, say that the higher education business model doesn’t work. Depending on the assumed premises, it does, or it doesn’t. If state governments would fund their state universities and community colleges like they did thirty years ago, it sure does. If private colleges continued to raise student costs by 8-10% annually while providing excellent financial aid funded by donors, then families could afford it like they did thirty years ago, and the model works.
Those predicates have now gone the way of the dinosaur, but costs associated with the campus structure, academic programs, and the overreliance of labor haven’t changed appreciably. The need for most colleges to have campuses more akin to country clubs than trailer courts continues because students and their parents expect it given the cost. The requirement to have athletic facilities that keep pace with the perceived needs of your athletes hasn’t changed. The trend to continue adding majors and services (while retiring none) to keep up with the competition has intensified…, and the drum for more and more keeps beating.
Face it, families want more amenities and guarantees and you’re trying to give them both at a price they are increasingly unwilling and unable to pay. Many institutions are trying to keep annual increases to a minimum to improve their value proposition. Unfortunately, even if an institution increases its comprehensive cost by only 2% and the admitted students Expected Family Contribution (EFC) increases at that rate as well, it’s unlikely that all the families will be willing to pay the increased amount of the cost hike since any increase is perceived negatively given higher education’s image right now. In this example, even if all the families did choose to accept the increase and enroll, the institution would not make one penny more per student. More on that in a minute.
- A high discount rate isn’t bad or even dangerous by itself.
Let’s have a math lesson. Let’s say we’re partying like it was 1999, and tuition was $20,000 and the college had the unbelievably high discount rate of 30% resulting in an average net revenue of $14,000 per student.
Now, let’s move the party to 2023, but now, the tuition is $45,000 and you’ve let your discount rate rise to the “unsustainable” level of 60% where average net revenue is $18,000.
Now, we can’t compound interest or factor in the cost of living, but that’s pushing a 3% annual increase in net revenue, based on 1999 figures, over a period of 24 years. Net revenue should always be the focus and the discount rate is merely a tool that should be used to reach the desired net revenue goal. Yet, we have oh so much hand wringing over the unsustainable discount rate. We should be wringing our hands over so many other things.
- Your Cabinet isn’t as high functioning managing high level issues as you think it is.
We’ve been in hundreds of Cabinet meetings at many colleges. Many of the agendas include things like:
- Board meeting prep
- Town Hall meeting prep
- Cybersecurity needs
- Lawsuit over unequal gender pay
- Holiday party
- Staff recognition dinner
- Summer hours
- How to pay for conference championship rings
You get the point; not a lot of strategy, but a whole lot of immediate needs. Most of it can be pushed down to line managers, to whom we give the title of Vice President, to handle but which continue to bubble up to the full Cabinet. The times when Cabinet members do seriously ask for strategic decision-making help, they are generally met with deferential “you’re the subject matter expert and we trust you” responses. While that respect may be appreciated by the Cabinet member asking, they wouldn’t put the item on the agenda if they thought they could answer it adequately themselves. True collaboration and tactical/strategic planning among senior leaders are far rarer than what is required to move an institution forward.
- Addition without subtractions leads to multiplication without division.
So, our answers to most issues in Cabinet are this: Just grow and all will be well. We’ll invest money in a new major, a new co-curricular program, a new building, a new mascot, or a new brand. We seldom practice subtraction. Subtraction of academic and/or co-curricular programs, that is, because having a tennis team of 6 pays the coach’s salary (let’s not factor in the cost of the equipment, facility, travel, uniforms, or fuzzy balls). We’ll add to faculty lines for a new whatever-is-hot-in-pop-culture major (think CSI and forensic science programs) but continue to pay for the three sociology (we’re really not picking on sociology as you can substitute tens of programs here) professors who have had a total of three graduates in the last decade because we can’t eliminate any major that some prospective student somewhere might want someday. Besides, who would teach their gen ed courses if they weren’t here? The crux: is constantly adding and doing more really the answer to improving enrollment and retention?
What we’re not talking about are efficiencies and process improvement savings without loss of customer service. We’re not talking about the real reasons students aren’t enrolling or retaining. We’re not talking about the real impacts of demographic change (not just the decline in high school graduates, but the decline in college going rates, the declining belief in the value of higher education, the change in academic interests in college going high school graduates, or much of anything of strategic value to our enterprise).
We keep adding to our cost structure without taking much, if anything, away. That multiplies our problems. Why don’t we? Because we are scared shirtless of division. There might be a vote of no-confidence. Someone we adore might lose their job. I can’t challenge my colleagues because they must know what is best for our students better than I because I’m just a newcomer to this Cabinet and they have oh so much more experience partying like it’s 1999 than me.
We fail to recognize that appropriate conflict is not a bad thing. We should (must) challenge each other. Through those interactions come better decisions and vital compromises.
Conclusion: Reality Bites, so Bite Back
The issues are real and complicated. So are the answers. We can pose the questions and seek the appropriate answers alongside you, or we can go back to 1999 when we wondered if the computer would work on New Year’s Day.
Talk to us. We want to help you discuss the big picture, the real challenges, and the possibilities in a collaborative way that results in meaningful progress for the whole campus. We won’t make the decisions easier, but we’ll help you focus your energies on the most important issues you have yet to confront.
Let others debate pudding over sheet cake for the staff recognition dinner.
Learn more about how Dutcher helps drive your revenue growth.
Dutcher LLC is a company of experienced college administrators who have sat in your seat. We are focused on real solutions, not long-winded reports. We’re real people, not empty suits (in fact, we don’t even like suits). We work to make you and your institution successful.