by Amit Mrig, President, Academic Impressions
2017 has the potential to be a volatile year in higher education, and that was the case even before Donald Trump took office. Regulatory uncertainty, continued economic and demographic headwinds, and shifts in both domestic and international student enrollment trends are just a few of the rapids that higher-ed leaders will need to navigate. At Academic Impressions, as we review current research and much of the best current thinking on paths forward for colleges and institutions, we want to draw your attention to four stats that are likely to have an immediate impact in 2017—but that not many are paying heed to.
Here are four statistics we think every higher-ed leader should know.
Nationwide, we are in the midst of a multi-year decline in the number of high school graduates, which began in 2013. This year, however, will see the sharpest single-year decline in the approximately 10-year downturn (numbers are expected to surpass 2011 figures in 2024). WICHE projects that in 2017 we will have approximately 80,000 fewer high school students graduating, a decline of more than 2%. For institutions that still heavily rely on this population of approximately 3.4 million students, this decline will be significant.
We are already in the midst of a long-term (secular, not cyclical) shift in how students are selecting their colleges and universities—favoring institutions of low cost or established reputation. Institutions "in the middle" have been struggling to compete for years and will find 2017 to be particularly difficult.
We know these demographic shifts are not distributed evenly across the United States; some states are seeing more significant declines than others. We also know that 38% of students choose to attend an institution within 50 miles of their home, so this data could be especially difficult for certain institutions. States like Wisconsin, Illinois, Indiana, etc., are likely to suffer the most.
Changing How We Understand the Market
This series challenges some prevailing assumptions about higher-ed enrollment and shifting demographics, offering interactive data dashboards and provocative analysis.
One of the most striking statistics I’ve heard in recent months was shared with me by my colleague, Rufus Glasper, CEO of the League for Innovation. Rufus, who was previously the Chancellor of the Maricopa County Community College District, has long been interested in the state of community college leadership. According to the League's data, the average tenure for a community college president is alarmingly low - just 2.8 years.
This figure should raise eyebrows across the enterprise of US higher education because of what it represents. Community colleges, which educate approximately 40% of our nation’s undergraduate students, are also the institutions most susceptible to local and state-wide politics given their funding and governance structures.
Secular declines in public funding are likely to continue as states and local governments are unable to fund their critical services. One has to look no further than the state of Arizona and the elimination of state funding to both the Maricopa County and Pima Community College Systems. Enrollment declines in key demographics—both traditional high school graduates and working adults—combined with regulatory uncertainty at the federal level compound these challenges.
Community college leaders need to think outside their traditional mandate and begin to rethink or reimagine their roles in their communities and with the students they serve. Leadership matters under any circumstance, but I think the recycling of leaders at the top of these institutions puts the future of many two-year colleges in jeopardy. This should be a cause of concern for all of us.
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Written for the entire higher-ed landscape -- not only two-year institutions -- this in-depth paper by several leading thinkers as well as past and current college presidents suggests how higher-ed leaders can identify and respond to the early signs that a presidential tenure may be short.
3. 70.5 Years
Internal Revenue Service (IRS) rules mandate that individuals begin taking distributions from their retirement savings plans at the age of 70.5, and 2017 will be the first year we will see such large-scale mandatory withdrawals. (The oldest of the boomers could have taken a distribution in 2016, though many likely took advantage of a grace period allowing them to postpone until April 2017. These individuals would have to take two distributions in 2017).
The baby boomer generation, which controls an estimated $30 trillion of wealth, began hitting the age of 70.5 in the summer of 2016 - and each day, approximately 10,000 new boomers hit this milestone.
Because many of these distributions will come with a large tax bill, institutional advancement leaders should seize this opportunity with programs and messages specifically targeting these situations. There are a number of rules that come into play (work status, type of retirement account, amount of distribution, etc.) but generally speaking, individuals can donate up to $100,000 and avoid paying tax on that amount.
There will no doubt be increased competition for these funds, including from non-charitable sources. Individuals can bypass some amount of the required distributions by investing in certain annuity contracts which could produce additional income for the investor. Institutions would be wise to identify specific messages and campaigns to help donors meet their philanthropic goals while also reducing their tax liabilities.
According to the 2017 Survey of Chief Academic Officers by Inside Higher Ed, 82% of respondents are planning to expand their institution’s online offerings in the next year. This is a remarkably high percentage, especially when you factor start-up costs and an increasingly competitive marketplace.
Institutions are clearly making a big bet that the path towards enrollment growth is online, but the question is whether that's the right bet for all of these institutions. The data point to two important headwinds that these institutions should be aware of:
- The Survey of Online Learning conducted by Babson Research Group and the Online Learning Consortium, et. al, shows continued growth in the number of students taking courses online, yet overall enrollment in higher education has fallen in the last few years. This suggests that enrollment is shifting from face-to-face delivery models to online (or hybrid programs), but that online education is not growing the overall size of the market.
- Online programs carry higher operating costs. A new survey by WICHE found that such programs cost the same or more than face-to-face programs on multiple cost drivers, including teaching, assessment, student and faculty support, technology costs, etc. And these costs don't factor in start-up costs for the infrastructure, which if not already in place, can run into the millions of dollars depending on the size and scope of the offerings.
Given these two factors, each institution needs to consider with care whether expanded investment in online learning is the right response to their specific situation. For some, it will be; for others, it won't.
If you find these four stats provocative - as we did - we invite you to share this article with your colleagues and use it to start critical conversations on your campus.
At Academic Impressions, we keep our finger on the pulse of what's changing in higher education and how higher-ed leaders can respond. So we also invite you to check out our calendar of upcoming conferences offering new thinking and practical strategies for higher-ed professionals.