Alarming for higher education: as many as half the 4,000 colleges in the U.S. may fail in the next 15 years?

I don’t know how many of you reading this blog also read the excellent article written by Michael McDonald and published April 14 in The Boston Globe. In the piece, Small U.S. Colleges Battle Death Spiral as Enrollment Drops, McDonald quotes Harvard Business School Professor Clayton Christensen and his stunning prediction of widespread failure of U.S. colleges and universities.

McDonald traces the demise of Dowling College on Long Island, New York whose dependence on tuition has resulted in fewer classes and classrooms, fewer faculty and staff and a closed residence hall. Dowling is not the only school struggling with high tuition costs, low endowment and a public that is unwilling or unable to mortgage their futures with college debt.

Last year, Moody’s Investors Service downgraded 28 institutions, more than double the average of 12 in prior years.

According to the National Association of College and University Business Officers, the average freshman discount rate was 45 % in 2012, up from 40% in 2008. Higher discount rates translate into less net tuition revenue. And so the downward spiral begins.

Many schools around the country are experiencing the aftermath of the Great Recession, and the unwillingness of families to borrow to pay for college. I don’t think that will change anytime soon.

What can colleges and universities do?

  • What they can do is not what many schools do when faced with decreasing enrollment: they indiscriminately cut budgets. So the mailroom, for example, and the enrollment management and/or admission office are asked to cut the same percentage from their budgets.
  • I know I am biased but the one function that should be given increased support, not less, is the office charged with bringing in next year’s class. That office and those enrollment managers should have the freedom to expand and diversify their marketing and recruitment base and enter into articulation agreements with high schools, community colleges and international institutions, creating a climate for what I call “cohort recruitment.” I was able, in my last managerial position, to implement many of these recommendations and when I left we enrolled the largest freshman class, with better grades, and more international students.
  • Academic deans and program directors should be given the freedom to create new programs both on-line and in the summer that can result in increased enrollments. The new programs should be based on market research and the school’s areas of expertise.
  • Presidents and provosts should create a yearlong academic calendar as well as an effective progression and graduation program.
  • Career counselors need to have a seat at the marketing and recruitment table when strategic recruitment plans are developed.

These suggestions may not fix the problems your school is facing. But they may help to prevent the downward spiral many small colleges are facing today.

This article orginally published to the MJDennis Consulting Blog.


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