Coming out of the 2001 recession, public colleges and universities weren’t seeing the upswing in their taxpayer appropriations that they had after previous economic downturns. Tax cuts as well as new expenses, particularly health care, were eating into the public coffers.
I still recall reporting this particular piece because so many of its sources came of age during a time in higher ed when public colleges didn’t charge tuition or were close to free. These college leaders saw the move to privatization—which at the time meant starting separate private foundations to raise money or spinning off law and business schools as independent entities—as a massive shift in higher ed from a public purpose to a private good.
“University Inc.” was how one of my colleagues described the thesis of the article. Of course, what public colleges were considering then in terms of privitization now seems quaint compared to what has happened since—not only at public institutions but also private universities, too.
Over the next decade, every college and university started to look for new revenue streams. Coming out of the Great Recession of 2008, two of the most appealing options for new dollars were online education and international students. Those two areas also attracted a lot of private capital with companies that promised they could help universities build and market online degree programs and recruit and prepare international students.
The result was that “online program managers” (OPMs) and international “pathways” programs became the working strategy for many higher ed institutions over the last decade. In short, OPMs helped colleges quickly build and market online programs while pathway programs recruited international students and gave them the academic grounding to make the transition to full enrollment.
Without the talent or financial capital—or frankly the risk tolerance—to build the infrastructure themselves, colleges and universities turned to these private partners who agreed to put up money and bring the expertise in exchange for sharing tuition revenue.
Now, a few of these partnerships are drawing the scrutiny of the press and policymakers. Some wonder if the tuition sharing model is driving up already inflated college prices. My take is that neither universities nor private companies have an interest in charging more when growing market share is at stake.
One thing is for certain, however: such public-private partnerships aren’t going away. Indeed, they are likely only to increase in the wake of the pandemic.
The Great Resignation and the end of federal Covid funds means colleges are operating with a thin staff and margins:
Last week, Bain & Company released an analysis that found only one-fifth of the entire higher education sector is considered to be in a strong financial position—and that’s based on financial data from before the pandemic (see graphic below).
In other words, absent a return to how higher ed was funded by the feds and states in the late 1960s, colleges will need all the outside help they can get to survive and thrive.
With pressure to grow public-private partnerships in the decade ahead, their specific structures are also likely to evolve.
While the tuition-sharing model won’t go away, even with increased regulatory scrutiny, new designs will emege. One model likely to gain in prominence is where institutions invest their own dollars in campus functions, such as online programs, but still partner with external companies for expertise.
That’s essentially what both the University of North Carolina System and the City University of New York are doing to accelerate their online education efforts. This model follows what institutions have done for decades with their physical assets: using donations or endowments for construction. Investing a university’s money in building new online programs or for services to grow international student enrollment could over time offer a better return on investment and reduces the regulatory issues around tuition sharing.
The pandemic introduced continued uncertainty into higher ed’s business model. Many leaders seem reluctant to embrace even more of it as they attempt to transform their institutions.
Public-private partnerships in higher ed haven’t been without their problems, but by and large, they have allowed colleges to focus on their core competencieswhile allowing others to provide the expertise, the capital, and share much of the risk.
🗓 Mark your calendar for the Next Office Hour on Wednesday, August 24, at 2 p.m. ET/11 a.m. PT. Our topic: what the trends in federal relief mean for higher ed post-pandemic and how colleges can be more innovative to gain a competitive advantage.
Joining me will be Bronté Burleigh-Jones, chief financial officer at American University; Randy Bass, vice president for strategic education initiatives at Georgetown University; and Jessica Wood, education sector lead at S&P Global Ratings.
Accelerate your institution’s digital transformation. Attend IMAGINE 2022 in Seattle to discuss how technology can move your institution forward. Presented by Amazon Web Services (AWS), IMAGINE 2022 brings together higher ed leaders for a day of inspiration, new connections, and actionable ideas. Session details available now. Register today!
Purdue U. is trying to attract remote workers drawn to living in more sparsely populated areas.
Live, Work, Play on a College Campus
Campus life isn’t just for students. Even before the pandemic sent millions of office workers home, Purdue University was working on a program designed to incentivize remote workers to both work and live adjacent to campus.
What’s happening: The Discovery Park District is a sort of a research-park-meets-mixed-use development. It is home to companies of all sizes, across industries, which are attracted to the development by Purdue’s status as a major research institution. But the main attraction for remote workers might just be the access to campus life, where Discovery Park residents are integrated into the community and the university.
“We’ve really treated them like one of the family,” says Greg Deason, senior vice president for alliances and placemaking at the Purdue Research Foundation. “They’ve got library access, Wi Fi access, and Purdue ID cards that allow them to use public transportation, and receive discounts in the community.”
Residents are also invited to special events such as a craft brewery tour, and access university programs, like lecture series and college athletic events.
And programming incorporates Purdue’s academic programs, such as a wine-related event with members of the university’s fermentation and distilling program.
Why it matters: Sounds like fun for the residents, right? But what makes this beneficial to Purdue, the community, and businesses?
“We are deliberately trying to integrate the remote workers into the academic departments that they have an interest in at Purdue,” Deason told Next.
Mentorship is a big one, where remote workers could get involved in activities within academic departments. “All this is going to lead to a stronger ecosystem and new job opportunities for students,” Deason told us.
Deason added many of these new working residents could also play roles in commercializing technologies and help some area startups.
How it works: No affiliation with Purdue is necessary, but residents must be working remotely full-time, currently reside out-of-state, and commit to living in West Lafayette for one year.
New residents are eligible for professional development and networking opportunities, as well as discounts on continuing education programs.
Bottom line: Lifelong education is all the rage in higher ed right now. But colleges and universities are struggling to develop strategies that move beyond traditional continuing education programs.
Purdue’s idea takes advantage of the infusion of remote workers that have been drawn to living in more sparsely populated areas. Rural counties saw a net gain in population from mid-2020 through mid-2021, according to the Wall Street Journal.
Given the number of college campuses in rural or in less-populated areas, the Purdue program could be an example for other institutions looking for new revenue sources and to reuse campus space that has been emptied by declines in enrollment.
In Education Week, Horn writes about how threats to organizations, like the one from the pandemic, causes them to respond with “threat rigidity.” That’s what many schools did during the pandemic: “batten down the hatches and try to get back to business as usual, without tackling more fundamental questions around what the teaching and learning experiences should look like.” Horn lays out in Education Week, and in an excerpt in Education Next, what a reimagined school experience could look like. (Education Week;Education Next).
📉 Columbia Kicked Out of U.S. News Rankings. Ten colleges, including Columbia and Villanova universities and Whitman College, were removed from the 2022 U.S. News and World Report rankings for misreporting data.
What happened to Columbia has received extensive media attention. But the issues at Villanova and Whitman were pretty egregious, too. Villanova inflated its average need-based grant by more than $11,000. Whitman, in Washington state, misreported the average federal debt of its graduates ($4,854 vs. $17,298 in reality) and how many graduated with debt (25% vs. 37% in reality). (Higher Ed Dive)
🔬 Impact of Summer STEM Programs. High school students in STEM summer programs are more likely to graduate with a degree in a STEM field, “with the most intensive program increasing four-year graduation with a STEM degree attainment by 33%,” according to a new working paper. (National Bureau of Economic Research).
⚡️⚡️ ⚡️And finally an update to the last edition of the Next newsletter...where I reported on a Twitter thread from Jon Boeckenstedt, vice provost for enrollment management at Oregon State, who pointed out several inconsistencies with Tulane University’s admissions figures in an Inside Higher Ed article.
Several of you wrote to me about one of Jon’s findings: that more than 900 students seemed to get out of binding early-decision agreements at Tulane.
I finally heard back from Tulane on this. There will be more to come on this story in a future edution of Next, but here’s what they told me for now: 92% of admitted ED students accepted enrollment for the Class of 2026—meaning less than 100 students backed out of their ED agreements, not more than 900.