1. Changes in Families’ Ability &
Willingness to Pay for College: How
Should This Affect a College’s Strategy?
Dan Lundquist Matt Scotty
The Stockade Consulting Group National Education Loan Servicing
3. Situation Analysis 2014
Price tags continue to increase fueling anxiety
But there are fewer college-ready students from
families who are able or willing to pay
Though they see the value of a college education,
families hedge more (negotiate and borrow) and
will “settle” for a second-choice college if it saves
them money (up front in tuition or longer-term in
loans)
8. Situation Analysis 2014
61 percent of colleges didn’t meet goals by May 1
(up from 60 percent a year ago)
71 percent of private bachelor’s institutions didn’t meet
goals by May 1 (up from 59 percent a year ago).
32 percent of all institutions – in violation of
NACAC’s principles of good practice – reported
recruiting students after May 1 who committed to
other institutions (up from 29 percent last year).
SO expenditure/revenue tensions rise…for
colleges and for families
9. Situation Analysis 2014
Education (and credentialing) is “evergreen” and can't be killed.
Its importance and value are inherent parts of society; and given
structure in the form of highered institutions BUT… the past two
decades of increasing demand and price elasticity have led to some
purposefully inefficient practices most can no longer afford
If allowed to continue with what are viewed as outmoded policies
and practices the structure be driven to change by market forces
(consumer choice) and regulation (government policy)
Kodak presumably had more business savvy than highered and
look what happened to them.
To be fair, MOOCS won't do to highered what digital did to
Kodak… but there is no reason for us to pass our leadership
obligation
10. Reality Check: You Say…
The 2014 CFO Surveys
conducted by Gallup and Inside Higher Ed
11. CFO Findings
SUSTAINABILITY
Just over one in four business officers (27 percent)
strongly agree they are confident about the
sustainability of their institution’s financial model over
the next five years; fewer (13 percent) strongly agree
their model is sustainable over 10 years.
FACULTY
Few business officers perceive that faculty are
realistic about their institution’s financial challenges.
Are we “hostages to collegiality?”
12. CFO Findings
BUSINESS MODEL and OPERATIONS
Just 4 percent of business officers responding strongly agree
that the business model of for-profit universities is sustainable;
over half (51 percent) say the same about elite private universities.
Health care costs: Nearly half of business officers (49 percent)
strongly agree they have experienced increases in health care
premiums for employees; nearly as many (46 percent) say the
same regarding student premiums. Four in 10 business officers
strongly agree their institution is more focused on the cost of
providing health care and benefits than it was five years ago.
Enrollment: Most business officers (92 percent) say retaining
current students is a very important strategy to increase revenue
in the near future.
13. CFO Findings
Efficiency: Many business officers (45 percent) say that using
technology tools, such as business analytics technology, to
evaluate programs and identify problems/potential
improvements is a very important strategy for reducing
operating expenses at their institution.
But fewer than half say their institution has the program and
performance data and information it needs to make informed
decisions.
Collaboration: About six in 10 (59 percent) agree or strongly
agree they were well-informed about campus issues, including
budget, prior to accepting the job at the institution.
Debt: Only 3 percent strongly agree their institution should
take on significantly more debt than it has now; seven times as
many (21 percent) strongly agree their institution has increased
the use of debt to finance projects.
14. An Alternative View: They Say…
2014 Colleges & University Presidents’ Survey
conducted by Gallup and Inside Higher Ed
15. Snapshot of Findings
Seven in 10 presidents said their institutions would face
budget shortfalls and increased competition for students
this year, in a climate of cutbacks of state and federal aid.
But fewer than a third said they expected to take the sort of strong
actions – cutting administrative positions, freezing salaries,
changing faculty roles or teaching loads – that would suggest deep
concern, let alone panic, about their institutions' financial futures.
Nearly two-thirds of presidents are confident about the
sustainability of their institution’s financial model over the
next five years -- but that proportion falls to half over 10
years.
16.
17.
18. Where Solutions Will Be Found:
DISTINCTIVENESS: not only having special value but having your
value KNOWN and APPRECIATED
OPERATIONS: 85% see serious sustainability challenges yet fewer
than a third are doing anything about this (per KPMG).
EXAMINE, AFFIRM or CHANGE your business models (cost
overhead, mergers, etc.) prioritize what's important, cost it out,
match against realistic revenue, draw a line and eliminate below-
the-line.
Sacred Cows (tenure, course loads, health care, TIAA, B&G,
academic and extracurricular programs, etc.) will kill us.
Highered may be “evergreen” but very few individual institutions are!
COLLABORATION: call it getting rid of silos or creating synergy, no
institution is optimized… insist for on-going efforts and culture
change.
19. How Solutions Will Be Driven:
Survey after survey shows there are two sources of viable,
reliable intelligence on today’s campus
The revenue producers
The financial gatekeepers
There are no universal Silver Bullets
Each campus culture and college market position is unique,
requiring custom intel garnered from our experience
Who better than vested “owner-operators” to bring data and
insist that acknowledging reality is not a lowering of ambitions?
There will be winners and losers in the years ahead, and the
“winners” will be those who proactively adapted – not panicked
or capitulated – early.
Let’s go home feeling empowered. Highered deserves no less.
