Recently in Higher Education Tuition and Costs Category

Reshaping the Future in Higher Education: Walking New Paths

Since my February entry highlighing "traumatic change" in higher education, I've continued collecting news items about the changes underway as the reshaping of higher education continues. As you might guess, nasty items appear far more often than good news. This post, in honor of the recent arrvial of spring, focuses on the good news that higher education may emerge from the present turmoil better prepared for the next 20 years.

The common element: coping with shrinking resources

Here's what makes me hopeful. Presented in the order collected.

• Eastern Arizona College, a community college, is pushing to offer 4-year degree programs. That makes a great deal of sense if the programs offered meet commuity need just as the 2-year programs do. Let's hope that Arizona's major public universities support the change. Interest in lower-cost bachelor's degrees is good. This is way to do it.
• Median salaries for top administrators in higher education didn't increase in 2009-2010. At a time when public opinion increasingly is skeptical of how higher education invests resources and tuition increases are large, keeping top administrative salaries level is a good thing. Inside Higher education provided the details.
• Berea College has spent months in discussions about the future. Berea is a special place where students work for the college in return for their education. A 43-year old student proposed capping the highest administrative salary at no more than 6 times the lowest salary on campus. The practical impact: about $120,000 a year for the president, down quite a bit from his 2008 level of $266,000. Note that before this proposal the president had already announced a 12 percent reduction in his salary.
• A new emphasis on completion rates is emerging with support from foundations (Lumina, Gates) and a new Complete College America organization. Inside Higher Ed reported the details early this month. Any move to more emphasis on outcomes is welcome.
• Hamilton College trustees unexpectedly made the donations needed to allow the college to expand financial aid and offer need-blind admissions when many private sector schools are pulling back from financial aid commitments that expanded over the last 10 years.
• St. Michael's College will consider using "open source" software for liberal arts courses so that faculty might spend less time in course preparation and more time with students. Might this even lead to financial savings that come with higher course loads? Read more about a change that will spark controversy and create discussion about a difficult topic: the impact of faculty teaching loads on the cost of higher education. 

That's all for now 

• Join me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/newsletter-subscribe.html 

Middlebury College: CPI + 1% = revolutionary tuition increase policy

Middlebury College is a remarkable place. And the president, Ronald Liebowitz, is a remarkable president.

I've never been to Middlebury and I've never met the president. (Although I did select the Middlebury website as a Link of the Week pick back on April 24 2009 for "frank talk on the financial crisis" by the president.)

The news broke in public this week that Middlebury has adopted an new, almost revolutionary tuition increase plan: tuition and other fees will rise no more than 1 percent above the Consumer Price Index (CPI), now and in the future.

The president addressed this and other financial issues on February 12 in a "Public Address on College Finances." You really do have to read his frank, realistic admission that the ways of the past 10 to 20 years (rising endowments, easy credit, and routine tuition increases sometimes as much as 4 percent above consumer inflation) are dead. From 1996 to 2008, FTE employment at Middlebury rose by 584 to 1,000 people, an increase of 72 percent as facilities, academic programs, and enrollment grew. The new target: 850.

The era of empire building is over in higher education. In many areas, Middlebury College will shrink. And it will be a better place for the early adoption of realistic plans to shape that shrinkage.

The change in tuition pricing is significant.

Private sector colleges and universities have used an "education price index" to justify raising tuition and fees far more than the CPI and the annual income of most American families. But not to worry: easy credit and a willingess to incur debt through low-cost loan programs combined with steep tuition discounting to shore up private sector enrollments.

Higher education had its own version of the housing bubble.

Tuition and fees increase: 1% above CPI

Liebowitz reminds us that Middlebury began to make severe financial changes in the summer of 2008. Today the college is projecting a reduced but balanced budget through 2015 with an FTE of 850 people supporting a slightly larger enrollment of about 2,400 students.

Today, the future of Middlebury is different but bright.

Read the entire presentation for a complete picture of the change underway.

See if you don't agree that Middlebury is indeed a remarkable place.

Public opinion poll: 60% of Americans don't trust colleges and universities

If other colleges and universities (public and private) adopt similar policies of fiscal restraint, public opinion might become more favorable than it is now. If you think that public opinion isn't a problem, read the new public opinion poll results just released: 60 percent of Americans believe that colleges and universities are "focused more on the bottom line than on the educational experience of students."

That's all for now 

• Join me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/ 

What's the state of higher education in the United States?

"Traumatic change" might be the best two words to describe what's taking place right now and will continue to take place in the immediate future as available resources continue to shrink and schools from Yale University to San Francisco Community College adapt to meet the shrinkage.

Are people at your institution still whistling past the graveyard?  

Over the last two days I've made a quick "copy and paste" collection of news stories that illustrate the change. Had I started a week ago, this would be a much longer list. Here's the array that's come along in the sources I monitor, presented in the order received. No doubt I've missed a few.

• Resistance to "hefty" salary increases for presidents in Idaho at a time of severe budget limitations, defended on the grounds that they are necessary to get the best leaders. Public universities everywhere can expect increased scrutiny of how money is spent. Stories like this only increase the intensity of that scrutiny.

• The largest endowment decrease since World War II, coupled with increased spending from remaining endowment resources on financial aid and general operations. InsideHigherEducation offered another review of the problem, focusing on the differences between small schools that never had large endowments and wealthy institutions entangled in hedge funds.

• A voluntary retirement incentive program at the University of Illinois flagship campus to reduce faculty and administrative numbers. In Michigan, we remember these well as part of an auto industry effort to reduce high salary commitments.

• Williams College ended the "no loans in our financial aid packages" policy that many predict is the first of more to follow at similar institutions. Princeton started the "no loan" trend back in the 1990s to get better yield from middle class students not willing to go into debt for a Princeton degree, partly in the face of generous merit scholarships from second-tier institutions. Both reflected a resistance to debt levels in the face of higher tuition. How high can tuition discount rates go in the private sector to maintain enrollment levels?
 
• "Soaring salaries" at the "very top of the pay scale" at regional Washington state universities from 2007 to 2009, compared to large tution increases at the same time. Another example of increased public scrutiny of how higher education spends money. 

• A "financial state of emergency" in Nevada declared by the Board of Regents. Will academic program reductions be far behind? Reducing programs is underway now at many private and public institutions at both undergraduate and graduate levels.

• Yale University freezes salaries for president, provost, deans and other high level administrators as a symbolic step to help cover a $100 million budget gap.

• Cancelling an entire summer session program at City College of San Francisco to help balance the budget there. 

Shrinking Resources of Every Type

Almost everyone can add similar stories from their own states. Resisting the change underway is a foolish enterprise. Helping to shape the change is not. Cutting salary costs is underway. Cutting academic program costs is underway. The resources available to virtually every college and university, from Yale to the University of Illinois to City College of San Francisco will not be the same over the next 10 years as they have been for the past 20 years.

A New Brand Reality

"Brand strength" will not save individual colleges and universities from change. 

Careful adaptation to new financial realities (lower private giving, lower state appropriations, lower endowments, higher resistance to debt) will force higher education to focus on the "best of the best" at every institution. "Brand" might actually reflect real differences from one place to another as academic programs offered are reduced. That isn't necessarily a bad thing.

Private sector higher education: shrinking over the next 10 years?

In the proverbial interests of full disclosure, I am an Alfred University alumnus, have never attended a reunion event, and have been a very occasional donor. That last category was just frequent enough to keep me on the "alumni and friends" list of people who receive regular updates from the university president, Charles Edmondson. I read everything that arrives.

The president's Memorandum of December 11 focused on the "fundamental challenges" that Alfred had to meet to "remain the unique institution that you remember."

A quick summary of the future enrollment challenge:

• New York state high school graduates will decline nearly 20% by 2019. The decline is greater in the NY areas where Alfred has traditionally had its greatest recruitment strength.
• The projected decline is even higher among students most likely to enroll at a private sector college or university.
• Demographic trends are not much better in New England and the Mid-Atlantic states.
• AU has never recruited well in the South and West and there's no reason to expect that to change enough to balance the nearby demographic decline.

For making public comments like these, the president tells us he's been accused of spreading "gloom and doom." I hope most people view this as trying to create a realistic view of what's possible and what's not in the next 10 years.

Tuition discount: $19 million from $54 million 

Tuition discounting plays a major role here. For the current academic year, the president wrote that $19 million from a total budget of $54 million is supporting financial aid awards. This year about 35 percent of the university budget isn't available for salaries or facilities or regular operations.

We as alumni are asked to "temper your distress with patience and understanding" as "probable" reductions in programs, "including a sports team," are determined.

With 2,100 graduate and undergraduate students, Alfred is several hundred students larger than when I graduated. It is more likely than not that in future years enrollment will shrink rather than stay the same. That's not "gloom and doom," that's a realistic interpretation of the likely impact of current demographic and economic conditions.

Survival in the Private Sector 

Private higher education is not about to disappear in the United States. But few instititions have the reputation and the resources to continue over the next 10 years as they have operated in the past 10 to 15 years. That golden era of enrollment growth and facilities expansion just about everywhere is over. 

If Alfred University and others like it survive and thrive it will be in no small part because presidents like Charles Edmondson are willing to talk about "gloom and doom" in public and ask "alumni and friends" to support uncomfortable change. 

Tuition Discounting Increasing in the Private Sector of Higher Education

Getting information about college and university tuition discount rates is as challenging as finding the Holy Grail.

Tuition discount rate (the amount a school has to reduce the "sticker price" to enroll students) is an important indicator of strength in the market place, for everyone from University of Chicago competing against Ivy League rivals to far less well-known schools competing against regional public universities. Not many people like to admit it, but without substantial tuition discounting the private sector of higher education would look far different than it does today.

The current financial crisis (and that's still very much the environment for both the public and private sectors) in higher education has placed even greater strains on tuition discount rates. That fact was confirmed at the 2010 meeting ("Securing a Better Future") of college presidents hosted by the Council of Independent Colleges on Florida's Marco Island.

A reporter for InsideHigherEd was allowed to sit in on a meeting where presidents talked about the need for higher tuition discounting to maintain enrollment for the freshmen entering in 2009. The reporter promised not to mention any individual colleges. No individual discount rates were reported.

Steady enrollment but less tuition income

Here are some of the important points of that meeting:

• "Most" colleges met enrollment goals.
• A "large majority" said their discount rates had increased.
• When talking about increased applications this year, a "bubble burst" as presidents acknowledged that there are not enough high school graduates to translate this increase into more students. (Without an increase in accepted students who are likely to enroll, pressure on tuition discounting will not ease.)

Other problems identified:

• Banks that have reduced lines of credit and increased interest rates.
• More reliance on "adult" students to maintain total enrollment levels and thus a change in the traditional profile of many colleges.
• Interest only in academic programs with strong individual reputations. Parents are reluctant to spend $$$ on private sector tuition for programs without perceived strong rewards.

Private Sector Transformation

While "paradigm shift" is an overused term, the college president who used those words at the CIC meeting was on target. Many if not most private sector institutions will be far different 5 and 10 years from now than they were 5 years ago.

Obviously, "securing a better future" isn't going to be easy. The journey starts with presidents who can talk frankly to faculty, staff, students, and alumni who may have different views of just what "better" means.

Tomorrow I'll write about one president who is doing just that: Charles Edmundson at Alfred University.

That's all for now 

• Join me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/ 

Reed College, Tuition Discounting, and the Future of Private Colleges & Universities

Reed College is controlling the tutition discount rate by increasing enrollment of new freshmen who can afford a $50K per-year cost without an increased college contribution.

NACUBO last released a tution discount report in May 2009, based on a survey for discount rates for the entering freshmen class in 2007. At that time, NACUBO reported little change from the previous year. The average discount rate based on responses from 253 private sector schools was 39.1 percent, up slightly from the 37.8% of the previous year, as reported by 367 participants. (Should one wonder what was happening that so greatly decreased the respondents?)

Since most schools don't talk much in public about their discount rates, not everyone understands quite what this means. Simply put, many colleges and universities are not getting anywhere near the published tuition price from the enrolled freshmen class. On average, they received just over 60 percent of the "sticker price" charged. The rest went back to the students as scholarships and grants to "discount" a cost that students and their families either would not (merit aid) or could not (need-based aid) pay to attend a particular institution. How much wiggle room is left for even higher discount rates?

The current economic plague has put new stress on the discount rates at private sector schools. We've heard quite a bit about application and deposit rates that suggest that enrollment at many if not most private sector schools is strong despite the current state of the economy. What we haven't heard much about yet is the impact on the discount rate.

If you're a betting person, expect the average tuition discount rate to rise. The question is how much capacity individual schools have to raise it to maintain enrollment numbers and academic profiles without pushing already stressed budgets to the breaking point.

Reed College: Limited Admission for "Needy Students"

Reed, for instance, was just favored by this New York Times headline: "College in Need Closes a Door to Needy Students." Reed can no longer afford to admit as many students who need "tution discounting" without serious cuts in other parts of the college's budget that the trustees are not willing to make. As a result, the economic profile of Reed freshmen in 2009 is about to rise. (Reed College president Colin Diver has published a letter to alumni and parents about the NYT article and Reed's overall policy on financial aid awards, which never included merit awards.)

Expect more changes. Expect that not all colleges can meet the challenge of controlling the discount rate while reaching previous goals of enrollment size and profile. A likely result? Fewer students or a higher admission rate the lowers the academic profile. NACUBO reports that in 2007 the colleges with the highest discount rates were those with the lowest tutions and lowest enrollments. They face the greatest challenge.

The NYT article reports that Reed is hoping for a rapid economic improvement so that the current financial aid changes are only temporary. While we all hope for that, I'd not bet on it as a strategy for the future for private sector institutions.

That's all for now.

• Follow me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/ 

Illinois Legislature Voting on Bachelor's Degrees at Community Colleges

After my May 8 blog entry about myopia in Arizona re options to lower the cost of higher education, there is news from the Chicago Tribune that Illinois has the chance to do the right thing and allow a community college to offer bachelor's degrees for the first time.

Harper College is making a fifth attempt to win approval in the state legislature to offer two degree completion bachelor's degrees for firemen and police officers who have completed associate's degrees at the college. Previous efforts have passed the lower house but been defeated in the Illinois Senate by what the Tribune describes as "fierce opposition from four-year colleges and universities."

Harper is optimistic that this year it will prevail. And it should.

Community Need Should Prevail Over 4-Year Sector Self-Interest

It is long past time for the 4-year sector to move past a self-serving opposition to allowing community colleges to offer 4-year degrees that are natural extensions of the 2-year degrees now available. In this case, tuition for the programs would be $8,000 and people enrolled in them would save time on money on commuting to another 4-year public university.

In the present economic circumstance, these are compelling reasons to grant approval in addition to demonstrated need for the programs.

Consider these points raised in opposition by lobbyists for 4-year sector schools and reported in the Tribune article:

• "It would encroach on their mission,
• "create duplicative, unnecessary programs, and
• "fundamentally shift the structure of higher education in the state."

What sounds especially silly is the comment from the Illinois Board of Higher education:

• "Our fear is that by allowing Harper to offer bachelor's degrees, they would be diluting the mission of community colleges," said Don Sevener, a spokesman for the Illinois Board of Higher Education.

Last time I looked, it was the mission of community colleges to serve the educational needs of their communities. How is that mission diluted by offering need-based 4-year degrees to residents of a community college district?

Let's hope that the Illinois Senate does the right thing this time and shows Arizona the path to the future. 

That's all for now.

• Follow me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/ to receive my monthly newsletter and Link of the Week selections.
  

Arizona Searching for Lower Cost College Degrees

This qualifies as a rant.

The Arizona Republic is today reporting on how the Board of Regents in that state is trying to figure out how to provide lower cost bachelor's degrees to students by offering them in some way other than through the state's 3 research universities. "Everything is on the table."

Options being considered include:

• Creating a new university in Yuma.
• Purchasing a community college.
• Building "several regional state colleges" around the state.
• Letting the research universities start "university quality" programs in partnerships with muncipalities. (An ASU proposal.)

Lower down in the article is this news:

• "A network of community colleges offers certificates and two-year degrees; some programs allow students to earn up to three years' worth of credits before transferring to the universities. Community colleges don't offer four-year degrees, and efforts to change state law to allow them to do so have been unsuccessful."

And thus the rant.

Community Colleges Should Offer 4-Year Degrees

Why have efforts to change state law so that community colleges can offer 4-year degrees been unsuccessful?

That's a simple, low cost way to expand the availabilty of bachelor's degrees. Other states, including Florida, have taken that route. In New York, some once-upon-a-time 2 year colleges have been 4-year technical colleges for several years now.

If research universities really want to get behind this lower-cost movement, then perhaps ASU and others will lobby in the Arizona legislature in favor of letting community colleges move in this direction. Let some community colleges become "regional state colleges" and create the additional facilities needed. More convenient that people having to live in Yuma. Less expensive than creating new regional colleges.

Many "Community" colleges in today's world will best serve their communities by expanding to include 4-year degrees that meet community needs. No logical reason exists not to give them that option. 

And as the expansion to 4-year degrees takes place, plan to keep faculty teaching loads similar to those at community colleges. If the faculty don't have research expectations, then teaching loads can be higher. And instructional costs will be lower. In some cases, much lower.

End of rant.

Thanks to my friends at Academic Impressions for running a blurb on this in their daily news summary.

Tuition and Costs... More on Middlebury College

Not long after sending today's email to newsletter subscribers with Link of the Week selection of Middlebury College for the clear and forthright presentation of information about how the college was reacting to the financial crisis, came two emails adding new information that's worth repeating here.

The first email was from Roland King, vice president for public affairs at NAICU, that expanded the Middlebury tale further:

• "I salute your selection of Middlebury as your link of the week.  Across our nearly 1,000 members at NAICU, it's at or near the top of those that "get it" in providing clear, candid, and believable communications to its constituents on difficult issues.

"In a couple of speeches I've given on communications over the past month, I've highlighted Middlebury Magazine's winter issue which adopts the same approach to communicating with alumni and donors.  The special report in that issue on how the current economic climate is affecting the college is a candid and revealing account, that lays out simply and clearly where things stand with Middlebury's endowment, where the college's money comes from and how it's spent, and a wonderfully honest and open interview with Middlebury's chief financial officer."

Miami University Weighs in from the Public Sector

Not long after came a second email from Claire Wagner, director of news and public information at Miami University. Claire wrote with a link to a special page created at Miami to update the University community on what's happening there. 

Visit "Financial Factors Affecting Miami" and you'll find 11 updates from the president and deans of each major administrative area since October 2008 including financial FAQs and a PowerPoint from a campus financial forum.

Thanks to Roland and Claire for adding more to the original Link of the Week information. And thanks to Middlebury president Ron Liebowitz and Miami president David Hodge for clear talk on the extraordinary challenge facing higher education today.

That's all for now.

• Follow me on Twitter at http://twitter.com/HighEdMarketing
• Subscribe to "Your Higher Education Marketing Newsletter" at http://www.bobjohnsonconsulting.com/ to receive my monthly newsletter and Link of the Week selections.

In late December, I wrote about two private sector schools that had already announced no tuition increases for 2009... Benedictine University and Merrimack College.

Today, we have four more to add to the list:

• Wheeling Jesuit University
• Sierra Nevada College
• Lake Erie College
• Yeshiva University

Far from a stampede for sure, but this is still early in the year and the full impact of diminished college savings plans, restricted credit, and increase unemployment hasn't yet been felt. Financial aid award letters are on their way now to families and everyone will soon start to have a better idea of the economic impact on yield.

Lower than normal tuition increases are popping up like crocuses in the spring. Today we'll take a look at how these four schools are announcing their freeze, how prominent it is on their website, and peek at the language used to announce it.

Wheeling Jesuit University

At Wheeling the tuition freeze wasn't included today on the home page or on the first admissions page. The January 22 press release page did turn up in a Google search. The president's comment noted the "national and international financial crisis" that motivated the school to "take a more radical response" than usual efforts to keep tuition increases as low as possible." The freeze applies to both graduate and undergraduate tuition.

Included at the end of the release is news that the athletic program is expanding with the addition of new junior varsity sports in the hope that the move "encourages more high school student-athletes to look at us and discover a chance to continue to compete athletically while earning an excellent Jesuit education."

Sierra Nevada College

As at Wheeling, there was no sign on the home page of the tuition freeze announced on February 6, but a search for "tution freeze" from the home page went right to the press release announcing the decision. 

The release quotes the college president: "The board felt this was a very tough time for families, both of students who are already here and potential incoming freshmen." Reaction from several students is included and that can be summed up by the response of one: "Awesome." The release also notes a likely need to increase fund-raising to compensate for decreased tuition revenue. 

Lake Erie College

Alas, the Lake Erie College website was down and under repair when visiting to check the announcement. A search for the college's February 19 press release found it at a local TV station's website. The release notes that the college is offering "a glimmer of hope for those interested in attending a small, private college."

Included is the news that Lake Erie, like many others, has experienced a record number of applications this year... 1050 for a 35 percent increase over the same time a year ago. The freshmen enrollment goal in September is 400. Obviously, the college is concerned about yield despite the application increase level.

Yeshiva University

Noting "painful belt-tightening" at the university, President Richard Joel said in the press release of January 26 that a freeze was needed because "we must do everything we can in these challenging times to make our unique undergraduate experience affordable and accessible." The freeze is only for undergraduate tuition. The announcement also notes that scholarship funds are increasing for the new year.

The freeze itself was not on the home page today, although a link to the president's message about overall consequences of the economic situation, including non-facutly staff reductions, was included. Curiously, a link in the release and on the home page to a video of the president talking about the freeze doesn't go to a video, but to a message the the video is "only available on Yeshiva University premises."  

A Trickle or a Torrent?

How many more schools will actualy freeze tuition this year? Obviously impossible to predict, other than to say that more will follow these first six. And others, as some have already done, will lower tuition. Stay tuned. Each school that moves in this direction increases the pressure on another place, especially competitors, to do the same. The list will grow. That's certain.