The Wall Street Journal and The Economist recently treated us to dueling perspectives on the value of higher education. The Wall Street Journal reported on a recent poll (in conjunction with NORC) revealing that 56% of Americans think a 4-year college degree is a bad bet—as recently as 2013, 53% had positive perceptions. The Economist retorted that this is not true for the average college graduate citing two perspectives which suggest that the return on the 4-year college degree remains strong. Who’s right? I suspect they both are. The key, like the devil, is in the details.
In this series, we will be looking more closely at financial and programmatic models of higher education, presenting tools for understanding your institution’s performance through benchmarking, introducing concepts from financial analysis to help institutions analyze their mix of academic programs, looking at the challenges of introducing financial analysis techniques in academe, and looking at the concept of the institutional value proposition.
The next several years will be very challenging. Institutions faced with fiscal and enrollment challenges should be taking action to reset business models by taking a hard look at program mixes and administrative efficiencies. Mergers and partnerships are also viable strategies to increase the viability of such institutions. Failure to address these challenges at their onset will make campus closures more commonplace.