Higher Ed: Next Bloated Industry To Go?

We are witnessing major industries in the US undergo massive transformations; financial services will be refashioned and refocus, while the auto-industry will radically scale down and transmogrify in an attempt to survive.

I recently came across a post at Newmark’s Door referring to the forthcoming hollowing out of higher education in America — the bursting of a bubble a la real estate and oil. Craig Newmark offers up some interesting articles on the state of higher ed in America.antioch

One piece, the Coming College Bubble, at Forbes.com, sees consolidation on the horizon with many independent colleges choosing between shutting down, merging or being acquired. The article looks at the decision of 157 year old Antioch College to shut down its flagship campus.

Another article, Planning for Contraction, comes from the Inside Higher Ed and is a sobering commentary for the post-secondary education industry. Its been a great run and it is over was the basic tone of the article.

I don’t know the history of the higher ed boom directly, but most of the campuses I have visited over the last 20 years have been great places; from Tallahassee Community College & UW-Tacoma to UT-Austin & DePaul University. Campuses today are fresh, technically advanced and filled with intelligent diverse communities. Universities and colleges are concentrated havens of knowledge, liberty and opportunity.

They’re so inviting that I have been engaged in higher ed –at least part-time– for 14 of the last 18 years. Hopefully higher ed leaders can conserve all of the improvements and manage the lean years to come. If you are an administrator, find yourself a Joseph to manage whats ahead.

The challenge, of course, is that the needs and composition of students, industry, and state are constantly changing. Federal, State, and Local funding will all be decreasing in the years ahead. So doing the same thing (like GM or Ford) won’t get the weaker colleges and universities through what is ahead.

The articles painted a pretty bleak future for higher ed in America and given the central role that higher education plays in American socio-economic life, the rough road ahead could have a devastating multiplier effect on the US economy. (Same argument used by Wall Street for a bailout, same argument Detroit is now wielding)

With those 2 articles on my mind, I came upon an Op-Ed by Arthur Levine, Higher Education in the Age of Obama. I assumed there would be some hope for me in this article. Didn’t happen.

Levine was sobering for a purely political reason; the piece argues that higher education is likely to be a very low priority for the incoming administration. The reality of demographics have pushed higher ed down the list of national priorities. From Levine’s piece:

A number of pressures will now require the new president to rethink this array of important proposals because he won’t have the resources to carry out this agenda. First, discretionary dollars will be eaten up by the $800 billion bailout, additional federal funding for economic relief, the continuing cost of the Iraq war, and declines in tax revenues.

Second, support for education has diminished as a priority for the American people. During the 2000 presidential election, Americans ranked education either first or second among the nation’s priorities. In 2004, it fell to fifth. In 2008, it dropped off the priority list.

Third, the primary citizen advocates for increased education funding have shifted their focus to health care. Baby Boomers, who constituted more than half of the electorate until this election, single-handedly made education a priority because they wanted good schools for their children. Today, with most of their kids graduated or largely through school, Boomers are now focused on aging and frail parents, who are absorbing an increasing share of their time and resources.

The sheer size of the Baby Boom generation ensures that every politician running for any office, from dogcatcher to president of the United States, quickly develops a platform that emphasizes Boomers’ interests. As a result, elder care, health insurance and Social Security have become the new priority — and will likely continue to overshadow education in the years ahead., since the first Boomers reached retirement age this year.

Clearly not all institutions will be affected in the same way by all of the above, but it does sound like an industry facing some huge shakeups or should I say, opportunities. The whole baby boomer thing means smart universities/colleges will figure out a way to win advocates (and customers) among baby boomers in their communities (both physical and virtual — there are far more boomers on facebook than you think). There also might be ‘retire/live/learn’ options for boomers that colleges and universities can offer in order to ‘fill space’ in the future?

There are also opportunities in those dying brands of independent colleges like Antioch College. We recently heard that the Christian Science Monitor and US New & World Report are going virtual. Universities are in many ways content providers (higher value maybe) just like media outlets and therefore can retain value in new forms. Clearly there are opportunities to transfer portions of their brands/content/experience/value to the online space. I mean if someone is going to attend University of Phoenix online they would be likely to attend Antioch College Online wouldn’t they?

Like so many of our great industries and social sectors, higher education has grown huge, bureaucratic, and in many cases bloated (think 24 hour coffee shops in dorms). The ongoing trends of globalization, technology, and innovation continue to pressure societies and economies and America’s world leading system of higher education is going to have to respond just like other great institutions.

The campus as a vibrant market has always been one of the reasons that campus entrepreneurs exist. As our system of higher education undergoes these massive transformations, entrepreneurs of all sorts will push the change with new models, services, and firms. The best will reap incredible rewards.

One thought on “Higher Ed: Next Bloated Industry To Go?

  1. Alex Gudich-Yulle

    David, I hope you are doing well. It was great meeting you a while ago and I hope you are doing well. I just thought I would share something going on at George Mason University that is somewhat relevant to your posting above.

    The student group we have founded as part of the Ashoka Changemaker Campus initiative has submitted a Quality Enhancement Plan proposal to the administration of GMU to enhance student learning by incorporating social entrepreneurship into existing curriculae and providing better learning opportunities outside of the classroom for those interested in creating effective social change or using the power of business to have a positive impact on society. For more info on the QEP process you can go to http://qep.gmu.edu

    If anyone is interested, the QEP proposal can be found here: http://blogs.gmu.edu/qep/proposals/7-social-entrepreneurship-at-george-mason-university-everyone-a-changemaker/

    You can read the full proposal by clicking the “LINK TO PROPOSAL” button.

    Any and all comments would be greatly appreciated, the more comments we drum up the bigger our impact will be on the planning committee that will be deciding which proposal to move forward with.

    Alex Gudich-Yulle
    Mason ChangeMakers
    New Century College
    George Mason University

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