The business model for higher ed is evolving

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Joel Eissenberg
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It should hardly be surprising that the business model for higher ed is changing. The single biggest cost in higher ed has been salaries—faculty salaries, support staff, administration—and no amount of technology has yet compensated for that. Meanwhile, peak high school attendance is projected to be in 2025 and fewer high school grads are going directly to college. Tuition-dependent colleges and universities are struggling to stay in business, and one response is to cut the number of majors offered. From the Boston Globe link:

“Many colleges like St. Cloud State already had started plowing through their budget reserves. The university’s enrollment rose to around 18,300 students in fall 2020 before steadily falling to about 10,000 students in fall 2023.

“St. Cloud State’s student population has now stabilized, Lee said, but spending was far too high for the reduced number of students. The college’s budget shortfall totaled $32 million over the past two years, forcing the sweeping cuts.

“Some colleges have taken more extreme steps, closing their doors. That happened at the 1,000-student Birmingham-Southern College in Alabama, the 900-student Fontbonne University in Missouri, the 350-student Wells College in New York and the 220-student Goddard College in Vermont.

“Cuts, however, appear to be more commonplace. Two of North Carolina’s public universities got the green light last month to eliminate more than a dozen degree programs ranging from ancient Mediterranean studies to physics.

“Arkansas State University announced last fall it was phasing out nine programs. Three of the 64 colleges in the State University of New York system have cut programs amid low enrollment and budget woes.

“Other schools slashing and phasing out programs include West Virginia University, Drake University in Iowa, the University of Nebraska campus in Kearney, North Dakota State University and, on the other side of the state, Dickinson State University.

“Experts say it’s just the beginning. Even schools that aren’t immediately making cuts are reviewing their degree offerings. At Pennsylvania State University, officials are looking for duplicative and under-enrolled academic programs as the number of students shrinks at its branch campuses.

“Particularly affected are students in smaller programs and those in the humanities, which now graduate a smaller share of students than 15 years ago.”

For years, the bright shiny object of higher ed was MOOCs (Massive Open Online Courses). As far as I can tell, few colleges have figured out how to monetize MOOCs, and the typical course would have massive enrollment at the outset, with few students completing the course. In the decades since they were invented, MOOCs haven’t replaced the traditional ‘sage on the stage’ higher ed model. Flipped classroom models (e.g., problem-based learning) have certainly changed teaching in STEM programs at the undergrad level, and in medical schools, PBL is part of most pre-clinical curricula, pushed by the AAMC.

An incentive for administrators to cut majors and programs is that the typical tenured faculty is tenured in a department; eliminate the department and tenure disappears. The AAUP policy is that the university must find a new department home for tenured faculty in such cases, but that just isn’t always possible. Of course, if the college closes, the issue is moot.

American colleges and universities are full of smart and highly motivated people. Over the decades of my academic career, I’ve seen dozens of people leave faculty positions without tenure. In the cases I followed, none of them became unemployed; they all found jobs.

As the aphorism goes: success doesn’t belong to the strongest or the swiftest, but to those most adaptive to change.

US colleges are slashing programs to stay solvent