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The Rise of the Informed Consumer
The document explores the changing landscape of higher education, focusing on informed consumer behavior and student return on investment. It highlights factors influencing college attendance decisions, including demographic shifts, economic conditions, and the impact of choice overload. Additionally, it discusses the importance of evaluating the return on investment for both students and institutions in making informed choices about education.
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The Rise of the Informed Consumer
- 1. The Rise ofthe Informed Consumer and Student Return on Investment Todd Bloom, Ph.D. November 5, 2012
- 2. Welcome & Overview • The Higher Education Marketplace • Overview of Students’ College Attendance Decisions • A Closer Look at Choices and Choice Process • A Closer Look at Information • Student Return on Investment Framework 2
- 3. Impacting Students &Institutions 3
- 4. Impacting Students &Institutions Plan & Learn Institutional Student Success Effectiveness Who are our Who am I? students? Who is My aspirations? struggling/succee ding? VIRTUAL How to What’s my path? STUDENT FAIRS intervene? 4
- 5. Impacting Students &Institutions Engage & Enroll Institutional Student Success Effectiveness How do we best DIGITAL Where do I go? reach students? MARKETING (HE) What info How do we PRINT MARKETING do I need? get a best fit? (HE) CONNECT Who will How do we ensure support me? a great start? 5
- 6. Impacting Students &Institutions Progress & Succeed Institutional Student Success Effectiveness How am I doing Are student versus my goal? supports working? How do I Are they on- get help? track? Where are they What next? now? 6
- 7. The Higher EducationMarketplace
- 8. 17.6 M undergradsin U.S. higher ed today: 37% 32% 36% Enroll part-time Work full-time Graduate in 4 yrs What are these buyers’ preferences and requirements? 8
- 9. Factors that Impactthe Higher Education Marketplace Demography – Fewer high school graduates nationally – Demographic shifts having different impacts in different parts of the country – Greater racial and ethnic diversity…. McGee, Jon, (2012). Disruptive Adaptation: The New Market for Higher Education. Eden Prairie, MN: Lawlor Perspective. 9
- 10. Factors that Impactthe Higher Education Marketplace K-12 student demographics (2010 to 2020) • flat for students who are White; Black; • increase 25% for students who are Hispanic; • increase 36% for students who are Asian/Pacific Islander • increase 17% for students who are American Indian/Alaska Native HE student demographics (2010 to 2020) • flat for students who are White; American Indian/Alaska Native • increase 25% for students who are Black; • increase 46% for students who are Hispanic; • increase 25% for students who are Asian/Pacific Islander 10
- 11. Factors that Impactthe Higher Education Marketplace Unemployment – Affected all types of families during recession – Continues to influence economic behavior & choices Family income – Median income now similar to 1996 – Real income declined for all family types McGee, Jon, (2012). Disruptive Adaptation: The New Market for Higher Education. Eden Prairie, MN: Lawlor Perspective. 11
- 12. Factors that Impactthe Higher Education Marketplace Home values – Source of financial risk for many families – An anchor to mobility Family debt and savings – Families change in habits during recession (saved more) – Will those habits stick? McGee, Jon, (2012). Disruptive Adaptation: The New Market for Higher Education. Eden Prairie, MN: Lawlor Perspective. 12
- 13. Factors that Impactthe Higher Education Marketplace What other macro factors do you believe are dramatically influencing the higher education marketplace and how? Partner, Discuss, Share 13
- 14. Overview of Students’College Attendance Decisions
- 15. When making economicdecisions… “A consumer is making a choice to maximize expected utility or minimize expected cost.” Hal R. Varian, Berkeley Economist people.ischool.berkeley.edu/~hal/Papers/sigir/sigir.html 15
- 16. When making decisionsabout attending college… Students compare the costsof college with expected income gains and other benefits. Office of the Under Secretary, U.S. Department of Education. (1998). Factors Related to College Enrollment. Washington, DC: The Department. 16
- 17. College Attendance Decisions Charles F. Manski& David A. Wise’s five factors that are most associated with enrollment: 1. Academic aptitude 2. Family income 3. Cost and aid 4. Quality of high school 5. Labor market conditions theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf 17
- 18. College Attendance Decisions Other important factors in a student’s decision to enroll, such as: Family expectations The decisions of peers theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf 18
- 19. College Attendance Decisions Some students are early adopters, who assume from an early age that they will go to college. Their decision is where to attend. Other students make an intentional decision in middle or high school that they will go to college. Where to go is their next decision, which tends to be based on resources, academic achievement, and other traditional factors. theop.princeton.edu/reports/forthcoming/ANNALS_03_Grodsky,R iegle-Crumb_Manuscript_June2009.pdf 19
- 20. College Attendance Decisions When making decisions about attending college… What other factors do students consider? Partner, Discuss, Share 20
- 21. A Closer Lookat Choices and the Choice Process
- 22. Students have morechoices than ever… FOUR-YEAR? PUBLIC? TWO-YEAR? PRIVATE? TRADE SCHOOL? LIBERAL ARTS? FOR-PROFIT? ONLINE? BLENDED LEARNING? IN-STATE? MOOC? OUT-OF-STATE? 22
- 23. Number of Degree-Granting Institutions in the U.S. 1980-1981 – 3,231 Colleges 1,274 2-yr colleges 4-yr college 1,957 nces.ed.gov/fastfacts/display.asp?id=84 23
- 24. Number of Degree-Granting Institutions in the U.S. 2009-2010 – 4,495 Colleges 1,721 2-yr colleges 4-yr. colleges 2,774 nces.ed.gov/fastfacts/display.asp?id=84 24
- 25. Can people havetoo much choice? Study #1 - The Jam Study: • Researchers set up two tasting booths for jam – one with 24 different flavors and one with 6 • 60% of customers went to the booth with 24 choices, and 40% went to the booth with 6 choices • 30% of the customers with 6 options bought jam, while only 3% of the customers with 24 options made a purchase Iyengar, Sheena S., &Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006. 25
- 26. Can people havetoo much choice? Study #2: • Students in an introductory college-level course were given the option of writing an extra credit essay. • Half the students were given a list of 30 possible topics, the other half a list of 6. • Students with the list of 6 topics were more likely to write the essay than the group given the list of 30. • Students given fewer choices for topics wrote higher quality essays. Iyengar, Sheena S., &Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006. 26
- 27. Can people havetoo much choice? Study #3: • Customers chose chocolates either from a display of 30 or 6. • Customers reported greater enjoyment selecting from the display of 30 chocolates. • Later, however, customers who selected from the display of 30 chocolates were more dissatisfied and regretful of their choices than the customers who chose from the display of 6 chocolates. Iyengar, Sheena S., &Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006. 27
- 28. Can people havetoo much choice? Conclusions: • Having extensive choices in a trivial context can be de-motivating (perhaps even more so in the context of significant decisions). • The only context in which people are more comfortable with extensive choice is when they have previous experience with some of the options. Iyengar, Sheena S., &Lepper, Mark R. (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology, 79(6), 995-1006. 28
- 29. Can people havetoo much choice? Information can add to the problems of choice overload: • Too much • Varying quality • Too little • Trustworthiness But high quality information can overcome the negatives of choice overload. www.nytimes.com/2010/02/27/your-money/27shortcuts.html?_r=0 29
- 30. A Closer Lookat Information
- 31. Where do studentsturn for information about college choice? Peers: One study showed that conversations with friends increase the probability of college enrollment. But if a student’s preferred college isn’t popular with peers, the student is less likely to enroll in that particular college. theop.princeton.edu/reports/wp/Fletcher%20THEOP.pdf School Counselors & Admission Officers: College choice can be shaped by data. In one study, providing graduation data increased enrollment by 15% in the college with the higher graduation rate. www.aei.org/papers/education/k-12/filling-in-the-blanks/ 31
- 32. Where do studentsturn for information about college choice? Online Tools: http://www.nasfaa.org/WorkArea/linkit.aspx? LinkIdentifier=ID&ItemID=10761 32
- 33. Where do studentsturn for information about college choice? Online Tools: 33 Image from www.mmm.edu/become/aid/options/index.html/
- 34. Where do studentsturn for information about college choice? Online Tools: 34 studentloans.gov/myDirectLoan/financialAwarenessCounselingLanding.action
- 35. Where do studentsturn for information about college choice? Online Tools: www.consumerfinance.gov/payingforcollege/ 35 Image from http://money.cnn.com/2012/04/11/pf/college/consumer_bureau_
- 36. Student Return onInvestment Framework
- 37. Assessing Return onInvestment What information should students know when making decisions about college? 37
- 38. Assessing Return onInvestment What do you think? Please discuss in small groups: • What are good measures of student return on investment? Consider… o Student Body Profile o Finances & Financial Aid o Alumni Profile • What other categories and measures would you add? Report back to whole group 38
- 39. Assessing Return onInvestment Student Body Profile 4 yr graduation Average GPA? rate? Average GPA in Retention rate? major? % participating in Levels of student international engagement? study? Quality of career Levels of civic placement? engagement? 39
- 40. Assessing Return onInvestment Finances & Financial Aid What are tuition & Amount of need- fees? based awards? Amount of non- % of students with need-based loans? awards? Average student Loan default rate? loan amount? 40
- 41. Assessing Return onInvestment Alumni Profile Levels of % who go on to satisfaction? graduate study? Rates of career Levels of civic placement? engagement? Rate of alumni giving? 41
- 42. Assessing Return onInvestment What factors are most important to the student? Please discuss in small groups: • Prioritize the factors – rank order • Distribute 100 points among the factors Report back to whole group 42
- 43. Assessing Return onInvestment What is the value to institutions in reporting an SROI to students? Please discuss in small groups: • How might the institution change what it offers students? • How might you do your work differently, if at all? Report back to whole group 43
- 44. SROI Are you interested in continuing this conversation? Hobsons is interested… Assembling group of interested institutions in developing an SROI index. Contact me for more information. 44
- 45. Thank You! Todd Bloom Chief Academic Officer Hobsons tbloom@hobsons.com (952) 807-5345 @Todd_Bloom 45
Editor's Notes
- #2 Assuming most or all of you have a college degree or two and that your degree was the second or third biggest purchase of your life…Was your degree a good value? Do you feel like you got what you paid for? Anyone want a refund???Are you still deriving benefits from the degree – or has the dividends shrunk over time?Do any of you wish you had shopped around more before attending the institution? What additional questions would you have asked?THIS SESSION we’ll dig into consumerism and SROI and what it means for your institution
- #3 Higher ed marketplace: Very high level overview for contextStudent decision-making and collegeChoice and information impact one another --- an informed consumer is often a more selective consumer, but maybe notThen we’re going to try to build out a framework for an SROI analysis that will highlight what you/this group sees as the most important factors in SROI
- #8 Dramatic changes in both K12 and HE – due to many macro factors, but mostly economic, the consumer of education is changing So too must the providers
- #10 UNEVEN distribution of HS graduates: From 2008 to 2021 = Increases of more than 15% projected for 8 states; increases between 5% and 15% projected for 8 statesDecreases of 55 or more projected for 16 states and the District of Columbia
- #11 What are the implications for how these consumers will behave? What will their preferences be?How will they be supported by society (e.g. voters and gov funding of HE)?
- #15 Because of these factors, student college attendance decisions are shifting as wellLook at attendance decisions through the lens of a consumer
- #18 Higher achievement = more likely to enrollHigher income = more likely to have a parent with college degreeMore aid Higher quality of of HS = higher income = more likely to have a parent with college degreeTricky – pro-tracked unemployment = less likely
- #19 First generation – spoke with Assoc Supt of College Readiness in El Paso – parents don’t want their kids to leave home.Peer group is incredibly powerful, though more so in earlier years – again linked to family income
- #20 There is some fascinating info on selection…Where to go? Did you know that being male more than doubles the odds of attending a first-choice schoolIn the end, social context and expectations matter John Ogbu’s study (1978) of educational achievement differences between majority and minority groups across several societies reinforces this point (Vietnamese ed attainment and college participation in Australia = low, but opposite in U.S.)
- #21 There is some fascinating info on selection…Where to go? Did you know that being male more than doubles the odds of attending a first-choice schoolIn the end, social context and expectations matter John Ogbu’s study (1978) of educational achievement differences between majority and minority groups across several societies reinforces this point (Vietnamese ed attainment and college participation in Australia = low, but opposite in U.S.)
- #25 OVER 30 years = 29% increase in number of institutions
- #28 Buyer’s remorse????
- #30 NAME SOME POOR QUALITY INFORMATION THAT prospective college students encounter:LoansSelectivityTCO/CostPersistence challenge
- #33 Uniform financial aid award letter (Financial Aid Shopping Sheet)Know Before You OweDATA Button and SAR
- #35 Financial Awareness Counseling
- #36 Consumer Financial Protection Bureau Cost Comparison Worksheet (now being revised from beta)
- #37 Rather tough marketDecision-making and choice behaviors that may be out of our controlProliferation of informationHOW DO WE CLARIFY OUR VALUE TO OUR PROSPECTIVE STUDENTS?