Sunday, April 14, 2013

Hot Potato

A single college struggling could be a sign of management failure.  Entire sectors of colleges struggling suggests something deeper.

In West Virginia, Bridgemont Community and Technical College will merge with Kanawha Valley Community and Technical College.  They will share one president and one Board, even though they will maintain two campuses.  The article doesn’t mention a new name.  The motivation was budgetary.

Meanwhile, according to a piece by Jeff Selingo in the New York Times, net tuition revenue is “flat or falling at 73 percent of colleges.”  This despite declining state support for publics, and despite years of significant tuition increases.  The “discount rate” -- that is, how much tuition prices have to be reduced to actually fill seats -- is getting so high that tuition increases pretty much cancel themselves out for many colleges.  

The very same day, the Boston Globe reported that private colleges’ market share has dropped from 22 percent in 2006 to 20 percent in 2011, even in the face of significant tuition increases at public colleges and universities.  Discount rates average about 37 percent. but several private colleges in my own neck of the woods are running over 40 percent, with one over 50.  The end of the Globe story lists Massachusetts colleges that didn’t fill their entering classes in 2012; the list is long, and contains some surprises.

Each story contains a budgetary version of “hot potato.”  The community colleges are trying to find savings in presidential salaries even though, in most cases, presidential salaries are rounding error within institutional budgets.  (Most community college boards are unpaid; I don’t know if that’s true in West Virginia.)  Non-elite private colleges have tried to pass along cost increases to students through tuition, but the students are passing the potato by either shopping around for more aggressive financial aid packages or simply enrolling elsewhere.  State legislatures have passed the potato to students by reducing subsidies to public colleges, forcing the publics to start acting like tuition-driven private colleges at the very moment that the business model for non-elite private colleges is coming apart.

Nobody wants to pay the cost of the current model.  

Actually, that’s not entirely true.  As Selingo’s piece mentions, there remains a small slice of high-achieving, high-income high school students who can pay full freight.  The problem is that nearly every private college in America, and a fair number of publics, are chasing that same small group.  It’s nowhere near large enough to support the number of institutions that need it.

Some of the issue is regional; the Northeast has the greatest density of small private colleges, and its population of high school graduates is flat or declining.  But issues of “discount rates” and reduced state support are national.  The tuition spiral is national and spectacular, but as adjunct advocates frequently point out, it’s not as if most of that money is going to faculty.  To my mind, the shift toward adjunct faculty across the country that started in the 1970’s is best explained as a sort of sector-wide institutional holding action.  It’s an effort to maintain an unsustainable model by playing “hot potato” with cuts.  But after a few decades of offloading budget shortfalls onto faculty, most colleges are hitting the limits of that strategy.  

People who are wedded to the idealized version of the current model see these pressures as pure decline.  And there’s a sense in which that’s true.  But it’s also an increasingly glaring signal that we need to experiment with new models.  

The problem isn’t a reduced demand for education.  I have yet to see a convincing argument that we’d be better off throwing everyone into the workforce after high school, or even that we’d be better off if we returned to the college-going rates of, say, 1940.  That’s not the issue.  The issue is that eventually, someone will drop the hot potato.  Rather than digging in our heels to defend an idealized past, we’d be much better off shaping the future.  The transition may not be pretty -- they rarely are -- but it’s necessary, and it may be great.  Forty years of hot potato is enough.  It’s time to let go of some pieties and start experimenting.