David Miller
by David Miller
Wed Nov 12th 2008 at 9:53am UTC

Higher Ed: Next Bloated Industry to Go?

We are witnessing major industries in the U.S. 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.

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. It’s 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 talent, 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 what’s to come.

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 U.S. economy. (Same argument used by Wall Street for a bailout, same argument Detroit is now wielding, right?)

With those two 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 U.S. 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. There will not be enough ‘bailout’ money for everyone getting in line.

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.

7 Responses to “Higher Ed: Next Bloated Industry to Go?”

  1. Michael Wells Says:

    “Like so many of our great industries and social sectors, higher education has grown huge, bureaucratic, and in many cases bloated.”

    I think this is key to many of the core problems. It can take months to get the simplest decisions made, or forms approved. Inter-department rivalries, rather than the merits of an issue, drive many basic decisions.

    Many of the organizational structures in colleges go back to the Renaissance. Not a bad time for ideas, but also not a good model for business. Things like tenure and faculty senates have their merits, but haven’t been updated in generations.

    The colleges take it out on faculty and students, in the process alienating their workers and customers. I have a son in law with a liberal arts Ph.d. who’s only offered adjunct teaching jobs as colleges try to cut costs. I sat in on faculty union-administration negotiations last summer and the University was astonishingly non-responsive.

    Finally, like so many institutions, universities have been victims of the culture wars of the late 20th century. Hopefully this distraction can be set aside and real issues addressed.

  2. Zoe B Says:

    One part of the impending ‘market adjustment’ for undergraduate education is the growing discrepancy between the amount of debt students acquire before they graduate and the yearly income they can achieve afterward. This debt will prevent a lot of graduates from becoming homeowners, and probably also will cause them to delay childbearing. We may see a decrease in the number or percentage of college graduates among the general population. Moreover, for decades there has been a policy (and a trend) for nurses and police to acquire 4-year undergraduate education (versus hospital-based nurse training programs and policy academies). This trend may reverse, if the cost of education is not rewarded in the paycheck.

  3. Mike L Says:

    Quote: “if someone is going to attend … online …”
    Yes, the bricks-and-mortar-folks are thinking “if”, but the online-folks are thinking “now”.
    My former Bricks U. closed our department because of costs. So I teach online for someone else. Motivated, diligent students! Love it! Bricks U. did me a great favor …

  4. Daniel Carins Says:

    Further to Zoe’s point, the ever-diminishing returns from an undergraduate degree will surely reach equilibrium where the rewards do not justify the outlay, which will mean would-be graduates instead become skilled tradespeople, artisans, or even entrepreneurs willing to take some risks and start their own businesses.

    Given there’ll be more psychology, law and history graduates, there will be fewer plumbers and electricians and more and more households needing their services: meaning that it will soon be the brainy thing to do to not go to university, and university degrees will become badges of caring so much about class, privilege and symbols of success that you’re even willing to lose money and earn less.

    Damn, that’s already the case…

  5. David J. Miller Says:

    Many great points from all. Daniel’s last point and the ‘cultural/policy’ ideal that all attend college is misguided.

    Also, many creative class jobs from software engineer to graphic designer do not necessarily require traditional BAs. at the same time, there is greater demand for advanced degrees and therefore BAs remain a requirement for many..

  6. Fred Says:

    A society that does not invest in its future is one that is in decay.

  7. RF Says:

    Peter Drucker famously said, the research university would not survive the transition to knowledge-based capitalism. Get ready not just for concentration but for mass disintermediation.

    Our system of “education” was built for Fordism and is Fordist through and through.

    The entire thing is “broken” to use Bill Gate’s phrase, though extending its intent.

    The creative economy will require a leap in human development that goes far beyond what mass public education and the modern research university did under Fordism. This will be wholesale reinvention toward flexible, life-long human development, beginning in early childhood and continuing through life.

    My hunch is that schools as we know them will cease to exist in a generation or two. Universities will be less real estate, buildings and formal classes and learning or creativity-enhancement will take place through immersion.

    Our school based system was good for a century or two, but human beings have always learned by doing and engaging. Our next system will support and enhance that natural process.

    And the place or places that get their first, like the US did with mass public education, will enjoy a massive first-mover competitive advantage.