🚨Two New College Admissions Resources: I have updated two free conversation guides that I produced last year in partnership with Corebridge Financial (formerly AIG Life & Retirement). The two guides cover such topics as finding the right fit in a college, knowing what to look for in a campus, and determining the value of a degree.

• What’s in these guides and more will be the subject of a free webinar that will be simulcast on Facebook Live with Grown & Flown on Monday, December 12 at 8 p.m. ET/5 p.m. PT. More details and register here.

Last week, while at two Chicagoland schools for talks about college admissions for the Family Action Network, one of the high-school students in the audience asked an astute question: How, he wondered, can institutions continue to discount their tuition more and more every year yet stay in business?

While this student prefaced his question by saying that he’s only in high school and not yet much of a business expert, it’s a question even those who lead institutions—particularly presidents and trustees—are asking more frequently these days.

And it’s a question at least a decade in the making.

Tuition discounting is nothing new. My former Chronicle of Higher Ed colleague, Stephen Burd, chronicled the history of the practice in this 2013 Washington Monthly article, and traced it back to at least the 1980s among private colleges in Ohio. But back then, and even through much of the 1990s and the first decade of this millennium, the discounts were relatively manageable for colleges: Think 25% off coupons; not the 50% or 60% or more off coupons that are more common today.

Those larger coupons are more common today because undergrad enrollment at U.S. colleges and universities peaked in 2010-11—and has been falling since before taking a steep fall during the pandemic. So to fill seats, many colleges had no choice but to offer bigger discounts. That in turn meant a hit to a key performance metric for institutions: net-tuition revenue. That’s the cash colleges have to spend from tuition checks after institutional financial aid is factored in. That figure flatlined or fell at some two-thirds of institutions over the last decade, according to Moody’s Investors Service.

Many institutions found they couldn’t keep pace financially, and by 2019, around one-third of public and private institutions had operating deficits. If not for financial assistance from the federal and state governments during Covid, it's likely more colleges would have closed or merged during the pandemic than the handful that did.

As higher ed comes out of the pandemic, the need to drive faster execution on current operations while simultaneously developing longer-term strategies has never been more urgent. That’s particularly true, as I lay out in a new paper, at institutions that don’t have the market position or the financial position to whether the storm.

Market position is not solely about rankings or prestige, as I write in the paper. Rather, it’s how institutions are perceived in the marketplace where they are trying to achieve a unique position—i.e., in undergraduate education, online education, or even specifical academic programs. A college’s financial position is usually a direct function of its market position, but even campuses that don’t have huge endowments can achieve a strong financial position with prudent management.

The question for higher ed is how to derive enough revenue from the legacy biz to drive investment in the future.

Where does higher ed go from here?

The answer mostly comes down to two things:

The first strategy is differentiation. But the way college leaders have long defined differentiation is simply by tweaking the same product offered by thousands of other institutions for the same type of student (i.e. the 18-year-old, well-prepared high-school graduate whose parents attended college). Rather, they need to understand that learners of all ages have vastly different needs and then design very different programs that appeal to them.

That point was driven home again this past week in listening to the latest episode of the Future U. podcast. In it, my guest co-host, Bridget Burns, and I interviewed three different personas of students: an adult student who started her college journey 14 years ago; a first-generation student at a highly selective university; and a Black male student at a predominantly white state institution. All three of these students, as you’ll hear, were involved in programs that were integrated across their undergrad career and the curriculum that gave them a sense of belonging and purpose to their education.

The second thing the decade ahead comes down to is balancing the revenue from the legacy higher ed business while focusing on a future where the legacy business won’t disappear but other revenue streams (i.e. short-term programs, micro-credentials, work-based learning, etc.) will all play a larger role.

I was reminded again these past few weeks about how legacy higher ed is so much like the legacy television business these days. As this piece in the newsletter Napkin Math points out, the challenge for Bob Iger as he returns to run Disney is how to invest in new content (which is the IP of Disney+, not the technology) all while revenue from linear television, which for years created the cash for spending on content, is in decline. In higher ed, the traditional student who paid a substantial piece of tuition is that linear television revenue.  

The suggestion in this piece is that perhaps Disney is too big and unbundling would make its individual parts stronger. That’s long been the question in higher ed: Can unbundling the core product (education) from everything else a university operates (housing and food have long been unbundled, but now there’s opportunity for student health care, online education, career services, etc.) be the answer?

It is clear that the decade ahead will require both financial and human capital that many colleges simply don’t have at their disposal. So unbundling with private partners or other universities in deep alliances does become an attractive option. One approach to this model can have institutions invest their own dollars in these non-core campus functions, such as online programs or health centers, but still partner with external companies for expertise so that the institutions are not giving up lots of money in revenue shares.

By focusing on their core, colleges can produce the intellectual property they’re known for and what differentiates them: a transformative learning experience.

⬇️ Download the paper, Building a Flourishing Institution here (underwritten by Workday; free registration required)

☀️ Good Tuesday morning. Thanks for reading Next. If someone forwarded this to you, get your own copy by signing up for free here.

Turnover at the Top

The succession drama at Disney might be getting all the ink these days, but there is a critical sector in our economy where leadership succession is beyond broken: higher education.

What's happening: Too many university leaders aren’t even making it as long as Bob 2 at Disney did; they’re flaming out, they’re at war with their faculty and also with their boards. This comes at a time when better leadership is needed more than ever before as enrollment is falling and the public increasingly questions the value of the product.

The latest casualty: Kristina Johnson, the president at The Ohio State University for just a little over two years, who is stepping down at the end of the academic year. When presidents of these big universities turn over every few years there is a critical loss of momentum.

The big picture: Unlike in parts of the corporate sector, higher ed isn’t deliberate about grooming its future leaders. It just assumes that someone who is on the faculty who becomes department chair then dean and provost is ready for the presidency.

• I’ve seen time and again in the senior leaders who have come through the Arizona State University/Georgetown University Academy for Innovative Higher Education Leadership over the last nine years—and are often just a step or two away from the top job—that they think their top leaders lack the emotional intelligence (EQ) needed to manage what are essentially mini-cities with a similar diversity of stakeholders, from alumni to faculty to students and parents.

What are the skills needed to succeed in the college presidency? The presidents I’ve seen succeed in my 25 years of covering the industry are risk takers and visionary, but also disciplined enough to focus on their mission and institutional strengths. They are passionate about educational access for students, they are data driven, and most of all, they are strategic communicators with an art for storytelling.

Another thing: 2022 has not been kind to the presidents of the universities in the Big 10 conference. Seven of 14 presidents in the conference have resigned or been fired this year.

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