Two trends college seekers should understand

This report (PDF) from the Boston Consulting Group outlines five trends to watch in higher education.

Two of these are especially important for students searching for a high-quality education: declining revenue and calls for transparency.

BCG reports that declining revenues may lead to “one-third to one-half of all U.S. universities going bankrupt over the coming decades.”

Some details on colleges’ failing finances:
– The percentage of top public universities’ revenue that comes from state appropriations now ranges from 1 to 36 percent. (One percent! How does that institution still qualify as a public university?)
– Enrollment has slowed, and is expected to decline, so colleges and universities can no longer depend on tuition as an ever-increasing source of revenue.
– Endowment portfolios have been underperforming.
– Federal agencies also have less money to give, including the NSF and NIH.

So, how are colleges compensating for these losses? Some tactics:

  • steep increases in tuition and fees
  • cutting tenured faculty in favor of adjuncts
  • cutting entire programs (including some that might surprise or disappoint you)
  • deferring billions of dollars in maintenance
  • less expensive alternative certificate and degree programs (online, hybrid, shorter in duration, sand/or vocationally focused)*
  • recruitment of more out-of-state and international students, who, at least at public universities, pay higher tuition than do in-state students

Note that we’re not seeing a disinvestment in college athletics.  You can see how much your favorite university spends on college sports in this spreadsheet; check out by how many millions of dollars each athletic department is subsidized, despite the popular belief that major football teams make money for their schools.

Another place where spending is increasing is university administration. Beware the college that has an ever-growing list of vice presidents, vice provosts, deanlings, or bizarrely named administrators in a Byzantine org chart.  (I once met an “executive associate vice chancellor.” Note the three adjectives, none of them explanatory or illustrative of the job duties.)

Here, instead of just being a Negative Nellie, I’ll highlight a college that seems to be doing it right: Claremont McKenna College, whose Student Affairs website explains “The Office of the Vice President for Student Affairs, Admission, and Financial Aid is really just two people, Jeff and Julia, who oversee a wide spectrum of programs at CMC to ensure that the College is running smoothly for students.” I admire that lack of administrative bloat.

Not surprisingly, stakeholders are asking for a greater return on investment in higher ed, especially since the rapid increase in the cost of a college education comes at a time when median family incomes are stagnating. Furthermore, recent college graduates are experiencing a soft job market and high debt loads.

The good news: stakeholders expect greater transparency, and colleges, universities, and higher ed consortia are starting to deliver. We can now discover, for example, exactly how much a college or university spends on average educating each student. During the college advising process, I find this data for my clients and use it to help them make especially informed college choices.

If you’re going the DIY route, Michelle Kretzschmar compares the data available in various college search websites and these databases’ ease of use.


*From what I’ve seen so far, I’m not a fan of these plans, as you really do get what you pay for; if you know of one that looks especially promising for first-year, first-time college students, I’d love to hear about it.