As a leader providing business advisory services to hundreds of higher education institutions, Grant Thornton’s industry professionals are not only acutely aware of the industry’s best practices, but we are constantly exploring new means and methods that institutions may employ to cope with and overcome the extreme and unique financial challenges that have been created by the pandemic. One of the ways in which Grant Thornton does so is by obtaining and providing insightful and creative analyses and solutions from luminaries with unique perspectives in the higher education community. Accordingly, I am pleased to announce our partnership with Robert Scott, President Emeritus of Adelphi University, who is serving as a senior advisor to Grant Thornton’s Higher Education practice. Through a series of articles in the coming months, Scott will share his insights on pressing issues now facing the higher education sector. In this first issue, Scott explores 10 strategies to help increase revenues and preserve resources to keep institutions strong for the road ahead. We trust that you will find Scott’s thoughts worthy of your consideration — and our higher education team stands ready to discuss how these insights may apply to and impact your institution.
During 2020, college freshman student enrollment declined by 16%, and overall enrollment fell by over 560,000 students, according to The New York Times. Budget deficits totaled more than $120 billion. Over 650,000 employees lost their jobs; many others had their salaries cut or experienced furloughs, reported The Chronicle of Higher Education. Colleges and universities eliminated degree programs and departments. Some suspended admission to doctoral programs. Increasing numbers of institutions began exploring the idea of a merger or other forms of collaboration to reduce expenses and maximize net revenue.
In addition to those effects that are directly traceable to the pandemic, colleges and universities also face continuing challenges in demographics, e.g., a declining number of high school graduates; changes in the college-going behavior of those who do graduate; public attitudes about college costs and whether students are prepared for upward mobility; family economics and employment; technological requirements for remote learning; reductions in the number of international student applicants; and other threats to traditional sources of revenue. Parents and pundits question the value of college, especially study in the humanities and social sciences, yet we know these are essential in preparing students for earning a living and living a life with meaning.
So, what is a college or university leader or board member to do? Yes, we must be mission-based, student-focused, market-smart, data-savvy, and achieve net marginal revenue, but how is this to be done?
Where should campus leaders start in rethinking revenue streams if new student enrollment is likely to stagnate or decline? The following are 10 strategies to help increase revenues and preserve resources using in-class and online teaching and learning modalities. Presidents, faculty, staff and trustees can use them to set goals and model alternative courses of action.
- Strengthen the retention of enrolled students.
- Re-recruit those who dropped out without a degree.
- Support “articulation agreements” with two-year colleges.
- Recruit adults who did not start college.
- Recruit alumni and other college graduates who need undergraduate, graduate and continuing professional education.
- Create new academic programs in service to society.
- Create joint programs with other institutions to minimize costs and maximize net tuition revenues.
- Craft partnerships with government, business and nonprofit employers.
- Conduct smart fundraising.
- Improve grant-seeking.
1. Strengthen the retention of enrolled students
One of the problems in American higher education is that only 33.3% of those who enter public colleges as full-time students graduate in four years; only 52.8% of those who enter private colleges as full-time students graduate in four years. The six-year graduation rates are 57.6% for public institutions and 65.4% for private in institutions, respectively, reported Cappex. Each student retained to graduation represents a new student success and earned income, as well. Think in terms of magazine subscriptions. Each reader retained means less need to spend money on advertising for subscribers. The same reasoning applies to colleges. With poor retention, more money is spent on recruiting strategies and tuition discounting.
2. Re-recruit those who dropped out without a degree
To learn more about keeping your purpose statement and goals relevant, achievable and sustainable, read “Budget cuts alone won’t amount to financial stability.”
While some of the students who dropped out will graduate from other institutions, the fact remains that there are millions of students who start college and do not finish. Since nearly 3 million students started in fall 2019, but only about one-half graduated, there are many students with degree credits and some college experience who can be recruited to complete college, according to EducationData.org.
In addition, it is estimated that nearly 36 million American have some college credits but never completed a degree. This is a potentially good market for recruiting students. Like alumni who can be recruited for continuing professional education, they are known to the college and have some affinity to it, and may have remained friends with others who are now alumni, noted the National Student Clearinghouse.
3. Strengthen “articulation agreements” with two-year colleges
Even with enrollment decline at community colleges, these institutions remain as important partners for both public and private four-year colleges. The best articulation agreements commit the campuses to develop curricula compatibility to make the transition from one to the other as seamless as possible. The goal is to make the courses at the two-year college articulate with the degree requirements at the four-year institution. As an example of a step to take, some four-year colleges give ID cards to students at the partner two-year schools so as to foster relationships and encourage students to transfer effortlessly.
4. Recruit adults who did not start college
About 63% of the 3.2 million high school graduates aged 16-24 in 2019 were enrolled in higher education. This means that about 1.2 million high school graduates were not enrolled. Since high school graduation is a good indicator of academic potential, these students represent a sizable population of potential students, according to the U.S. Bureau of Labor Statistics.
For colleges and universities, whether public or private, rural communities are a potential source of students. According to Rooted Alliance, Inc., and pending federal legislation, only one-third of rural youth aged 18-24 are enrolled in post-high school education, noted The Hechinger Report.
5. Recruit alumni and other college graduates who need undergraduate, graduate and continuing professional education
The expertise in online teaching and learning gained during the pandemic shutdown can prove especially valuable in reaching alumni and others beyond the normal catchment area of the institution. Most professions and many occupations require continuing licensure certification or continuing education credits, whether through degrees or microcredentials.
With life expectancy increasing, people will need skills not only for improvement and knowledge advancement but also for leisure learning. Colleges could, for example, offer graduates a lifetime subscription for continued learning. This could be especially attractive to graduates of programs such as accounting and engineering who find in their career advancement that they need more education in the humanities and social sciences, the so-called soft disciplines.
6. Create new academic programs in service to society
Engaging in shared governance, campus leaders can survey the strengths of the faculty, curriculum, facilities and networks, as well as regional workforce needs to determine the potential for new academic programs of interest to employers and students.
7. Create joint programs with other universities to minimize costs and maximize net tuition revenues
Many small institutions do not have the resources to develop new programs, yet students are attracted to colleges by the academic programs offered. Small colleges offer on the order of 60 programs, while large institutions offer more than 200. In order to improve their competitive advantage, institutions can collaborate. Neighboring institutions, members of consortia and participants in publicly supported programs can share expenses to provide academic programs and services that are needed but too expensive for any one institution to offer. Examples include undergraduate foreign language classes, graduate programs in audiology, interlibrary loan and joint purchasing agreements. In these ways, institutions can improve access to high-quality programs, share costs and improve productivity.
8. Craft partnerships with government, business and nonprofit employers
While the most vulnerable colleges are located in less populated areas, lack a reputation that reaches far beyond their immediate region and have low endowments and few resources, they often are an “anchor” employer in their region. Colleges are economic engines as well educational institutions.
Colleges collect FICA, federal and state income taxes, and other taxes. When one adds in the restaurant, hotel and other expenditures of those who visit campus during the year for Homecoming, Reunion, cultural events, graduation and sports events, the economic impact grows even more. In addition to employing faculty and staff, colleges operate “hotels” (residence halls), “restaurants” (dining halls), municipal “police” forces (Public Safety) and likely a system to transport students, faculty and staff to and from bus and train stations, take student athletes and fans to sporting events, and connect to the local shopping area.
It makes sense for a college and its community to work together on plans for survival and renewal. Working collaboratively can be mutually beneficial. Among associate degree graduates, 15.8% are unemployed; 12.8% of baccalaureate graduates are unemployed; and 1.6% of those with advanced degrees are unemployed, according to the U.S. Bureau of Labor Statistics. Communities want to help their residents.
Questions to explore include these:
- What can colleges and schools do together to enhance student learning, and teacher and curriculum development through cooperative planning and program implementation?
- What can the college and the municipality do together to provide ongoing professional education and training of employees?
- What can the college and the hospital, nursing home or family and children’s services center do together to enhance the quality and extensiveness of professional training opportunities as well as social services?
- How might the physical assets of the college campus be used to the mutual benefit of the college and the community?
These forms of collaboration can result in new revenues from tuition and fees, as well as from cost saving, and a strong ally in seeking government and foundation support.
9. Conduct smart fundraising.
The pandemic caused panic among many institutional advancement staff, but in fact, philanthropy for higher education increased by 3.6%, without counting the $1.8 billion given by Bloomberg-affiliated charities to Johns Hopkins University. According to a Voluntary Support for Education Survey, giving from non-alumni individuals including parents increased by 7%, in part because of donor-advised funds benefiting from the 2017 Tax Cuts and Jobs Act. The lesson is that continued communications and relationships with alumni, parents and friends is essential, even in a Zoom environment, stated Inside Higher Ed.
10. Improve grant-seeking
Colleges and universities are familiar with grant proposals for government agencies, corporations and private foundations, but 2020 was totally new. Under the CARES Act Higher Education Emergency Relief Fund, $14 billion was available higher education institutions. In addition, the Paycheck Protection Loan Program awarded 679 institutions and related foundations potentially forgivable loans of from $150,000 to $10 million each. Institutions with solid relationships with their banks or good access to smaller banks were able to secure much-needed funds with the high likelihood of the loans being forgiven, according to the U.S. Department of Education.
The Fund for Improvement in Postsecondary Education has many programs for colleges and universities, including a forthcoming program on post-high school opportunities for rural students, noted Congress.gov.
These are among many grant opportunities available.
College and university leaders and board members must be mission-based, student-focused, market-smart and data-savvy in order to maintain and enhance full-time-equivalent enrollment and net tuition revenue. Above all, they must not compromise admission or academic standards in an attempt to enroll more students. Lower retention and graduation rates are likely to be the result.
Across the industry, we’re seeing many institutions embrace the ideas outlined in this article in response to the financial strains caused by the pandemic. While some strategies are easy to achieve, others will require significant investment, cultural shift and strategy refinements. Fortunately, we are beginning to see institutions recover and find a new and sustainable normal that achieves their mission without eroding their focus on students and programs and diluting brand. In our next issue, Robert Scott and I will focus on rethinking expenses, where we’ll offer innovative methods to controlling costs.
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Dennis J. Morrone
National Managing Partner, Not-for-Profit & Higher Education Practices
Dennis Morrone is the National Managing Partner of Grant Thornton's Not-for-Profit & Higher Education Practices.
Iselin, New Jersey
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