An increasing number of individuals are beginning to ask if the high costs charged by universities for any college degree continue to be justified in terms of the returns around the investment. This kind of thinking hasn’t yet were built with a substantial effect on college enrollment rates, but according to Roger Brinner, Partner and Chief Economist in the Parthenon Group, in as short a period as 5 years, this might not be the case. When that happens, universities who don’t do something to address this potential problem today may be facing revenue crunches as a result of shrinking tuition payments and simultaneous cuts in federal and state funding.
To avoid this, Brinner proposes that college and university presidents and other higher education leaders work to make a college degree a better value for current and potential students. And something of the most effective ways to do that is to reap savings which will come from embracing online learning.
\”The confluence of flat or declining enrollment, unsustainable tuition inflation, the federal government fiscal crisis, and mounting student debt has established a severe business headwind that won\’t be resolved through ever higher tuition,\” said Dr. Brinner said. \”To say that this is a difficult situation could be an understatement; this means education leaders have to get new ways to operate. Simply increasing prices isn\’t an option.\”
Brinner spoke in the gathering of university presidents from 30 New England-area schools organized through the Boston Higher Education Innovation Council and The Parthenon Group. He explained that those who hope that higher education will continue to be the counter-cyclical industry it\’s been in years past C rebounding once the economy is on the downswing, benefiting from the number of people leaving the workforce to join an academic program C need to prepare themselves for the other side from the cycle. Based on Brinner, the number of students signing up for college is set to stagnate because the economy slowly rebounds from the recession brought on by the 2008 economic climate collapse.
However, this will not be the only real downward pressure on higher education revenue. Brinner also highlights that the Great Recession wiped up a large amount of wealth from American families and it is unlikely the slow economic recovery will allow them to make up the losses anytime soon. This means, that all large expenses C college degrees included C will get additional scrutiny, with some opting out of a university either because they will be unable to afford it or will think it not well worth the money.
\”Without the expected counter-cyclical tailwind, and given demographic alterations in the traditional college age group, enrollment trends are projected to stay flat for the following five to seven years,\” Dr. Brinner said.
On the fiscal side, Dr. Brinner said expanded government support or relief are unlikely. State and federal education budgets will remain crippled. The united states economic recovery is going to be tepid or worse: at best, a powerful housing recovery will partially offset coming federal fiscal restraint; at worst, the \”fiscal cliff\” can create havoc.
The schools that embrace online learning as a means of bringing down the price of tuition will jump in front of their competitors when it comes to attracting students. Although every school faces its very own set of circumstances that affect the value that such changes can bring, almost every type of an institution could benefit from at least converting large beginner-level courses C that typically draw hundreds of students per section C for an online format.
\”While online learning generates excitement and controversy in equal measure, its effective use is key to the way forward for education since it is the factor that will keep costs down and increase access in the long run,\” said?Robert Lytle, Partner and Co-Head from the Parthenon Group\’s Education Practice, Private, who addressed the BHEIC gathering with Dr. Brinner.