Higher education's recession reinvention

Higher education's recession reinvention

New economic normal forcing smaller institutions to expand academic, business models

Five years after the Great Recession’s official end, higher ed endowments and fundraising are finally recovering, but there is no rising financial tide that’s lifting all boats—especially smaller ones that depend heavily on tuition.

Instead, a new “economic normal” is being keenly felt at smaller, tuition-driven universities and colleges, forcing campus leaders to diversify their academic and business models to sustain their institutions. “The big boys, the Harvards with their $35 billion endowments, they don’t have to change their model, they’re fine,” says Donald J. Farish, president of Roger Williams University in Rhode Island. “There aren’t too many schools that are in the position to have that model.”

The enrollment pressures smaller schools face vary depending on their location, says Chris Kimball, president of California Lutheran University and chairman of the Council of Independent Colleges.

“Particularly in the South and the West, the numbers that are going into high school are there in a way they may not be in the Northeast,” Kimball says. “The challenge is how do you help make sure those students go on to finish high school and are prepared to go on to a four-year institution—and how is your institution prepared to welcome them so that they’re successful.”

Smaller schools are therefore beefing up their continuing education and online programs, while reducing the time it takes students to earn a bachelor’s degree in efforts to find new revenue and prove their value to cost-conscious families. Here are strategies that six smaller, tuition-driven institutions are following to ensure continued financial stability.

Leveraging the landscape

The top financial priority at many small schools is maintaining enrollment in a time when middle-class wages remain stagnant, the housing market remains sluggish and many families are more skeptical than ever about the cost of a college education.

“We’re in great danger in higher education right now of having a product that might be wonderful but not enough people can afford it for us to stay in business,” Farish says. “We are creating a lot of misery in society for people who can’t get to where they want to go financially.”

Undergraduate tuition at Roger Williams has been frozen for the last three years. The university, which has 3,735 students, also guarantees freshmen that their tuition will not rise during their four years of study. The university was to decide in June whether to hold its $29,976 tuition steady for fall 2015.

“We need to reduce the price of college,” Farish says. “We’re looking to say, ‘How can we raise more money and put that right back into reducing our list price—and our net price, too?’”

There is a large, unmet need for adult education in Rhode Island, where 80,000 people have a high school diploma but no college degree, Farish says. He is envisioning a competency-based system where adults could complete degrees more quickly. These programs, because they’ll be online, will be cheaper than the undergraduate program to operate. “We can charge a reasonable price and still turn a profit, and use that profit to subsidize the residential operation,” Farish says.

Roger Williams has also tapped its scenic home alongside a New England bay to bring more students to campus. It has been growing its tiny summer school programs steadily over the last two years, an increase which is “just scratching the surface,” Farish says.

“The best time of year in Rhode Island is the summer. We’re on the water and it’s like a resort—and there’s almost nobody [on campus],” he says.

Farish believes Roger Williams could generate a few million dollars of revenue each year from its summer school. “None of these other revenue streams individually begins to look anything like what we can get from undergraduate tuition, although collectively they can add up to something,” he adds.

Enrollment shifts

Another institution that may leverage its summer landscape is Linfield College in Oregon’s picturesque Willamette Valley. While there are no plans to start a summer school, the college may rely on some of its renowned faculty members to lead writing workshops or other programs for adults and undergraduates, President Thomas Hellie says.

‘We’re in great danger in higher education right now of having a product that might be wonderful but not enough people can afford it for us to stay in business. We are creating a lot of misery in society for people who can’t get to where they want to go financially.’ —Donald J. Farish, Roger Williams University 

“We need to remain committed to our core mission but also develop sources of income that, while aligned with our mission, are not directly tied to the traditional fluctuations of the economy,” he says.

Linfield, which has about 1,650 students on its main campus, has long-established adult education programs that served the college well with increased enrollment during the recession. As the job market has improved, though, there has been a decline in the number of adult students while enrollment of undergraduates, which dipped one year, has returned to normal, Hellie says.

That trend is being seen elsewhere in higher education. “I think we are going to as challenging years ahead as we’ve had before,” says Kimball, of California Lutheran and CIC. “As the economy improves, I think you’ll see more people opting to work rather than get schooling.”

Pursuing new markets

When John Comerford became president of 550-student Blackburn College in rural southern Illinois last year, he realized it had excess enrollment capacity and could add an additional 200 students without needing more buildings or much more faculty.

But he didn’t think his institution should focus on recruiting the wealthiest high school graduates with the highest standardized test scores.

“That market is glutted, the other colleges are already pursuing those students with everything they’ve got,” Comerford says. “Let’s go find part of the market that other people are not pursuing. For us, and our mission, it makes a lot of sense to focus on first-generation students who tend to come from lower-income families.”

Blackburn’s $18,000 tuition is the lowest sticker price at any private school in Illinois. It is now the first college in the state to allow students to enroll for free if their families cannot pay any tuition, Comerford says. The college collects about $11,000 in federal and state grants for each of those students, who still have to cover about $4,000 to $5,000 for room and board.

The initiative jibes with Blackburn’s status as a “work college,” which means every student is required to work on campus. In its first year of focusing on first-generation students, Comerford says, applications and accepts are up 50 percent and deposits are double what they were last year.

“There’s a lot of space in the market to do the right thing and also help the institution,” he says.

Community involvement

Higher education also can boost its pool of potential students by being more involved with local high schools, says Kimball, of California Lutheran.

One has to be prepared to look at the regional marketplace, and take a hand both in shaping it and also in accepting that students are going to look and be prepared differently than was the case a generation ago,” he says. California Lutheran and other Southern California colleges have been working with high schools to counsel students about higher education, and to let them know that private institutions can be an affordable alternative to public universities.

“We have to make sure that students in local and regional high schools and elsewhere see us as a viable option, whether they’re looking for a smaller, more nurturing environment, whether there are particular programs that we offer—and many of us can make the case that we get students through to bachelor’s degrees more quickly and better prepared than our bigger counterparts do,” Kimball says.

California Lutheran also relies on teachers and principals who graduated from its school of education to do outreach.

Flexible course work

Since the recession, many institutions have prioritized reducing tuition costs. Bellevue University in Nebraska has launched its online “Flexxive” program, an “all-you-can-learn” model that now lets a small number of students earn credits at an accelerated pace.

The program, which will likely be expanded in the future, could save students 50 percent on their degrees, President Mary Hawkins says.

“The program was also designed, the Flexxive part, to give them more time where they need it and allow them to go faster when they’re getting it,” Hawkins says. “This model is really having some significant impact on the university.”

The students in the program are taking 25 percent more credits than anticipated, she adds.

The university advises students to use work experience to test out of some course requirements. Students also are encouraged to earn more community college credits to reduce the number of courses they have to take—and pay for—at Bellevue. “It increases the number of community college students who transfer to us,” Hawkins says. “In addition to being very altruistic, it’s a good business model.”

The average debt for Bellevue graduates is $16,000, below the national average, Hawkins says.

In another enrollment initiative, Bellevue's International Programs Office and College of Business have formed a partnership with a two-year college in China to bring 97 students, who will pay full tuition, to the Nebraska campus in 2015. Bellevue is examining additional partnerships with another college in China and one in Mexico, Hawkins says.

Three-year programs

At Hartwick College in Oneonta, N.Y., about 10 percent of the 1,500 students are in the three-year degree program, launched in 2009, President Margaret Drugovich says. The program doesn’t force students to attend in the summer, but requires an extra course each semester and participation in a January term. Students don’t pay extra tuition for the additional credits.

“I would say almost of all of the students who participate in the program want to do it for different reasons, but cost is really an issue for every single one of them,” Drugovich says. “Most of them will go on to graduate school; most of them are very good students. And being able to save one year of the cost of education is really important to them.”

Hartwick also started a fundraising campaign in 2010, with a large part of it going to an endowment that would support scholarships. Tuition for 2014-2015 will be $39,260.

“This is the first time in the college’s history that we have made fundraising for endowment the largest part of any single campaign,” Drugovich says. “We really believe that, in the future, families will be expecting colleges and universities to take an even greater role in creating a more affordable experience, and that guides a lot of our decision-making here.”

Matt Zalaznick is senior associate editor of UB.


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