Design or Disruption: Change in the Higher Education Business Model

By Robert A. Scott, President, Adelphi University

from the Garden City Patch

Here they go again—“they” being the pundits and politicians repeating superficial assertions posing as serious arguments. The assertions include those regarding student debt; the rise in tuition charges; institutions as slow to change; and a digital future which seems foreign to contemporary institutional leaders.

When it comes to student loans, I have no idea why anyone would voluntarily incur over $100,000 in debt for an undergraduate degree, yet this is the example used by mass media regarding student and parent borrowing. But students and families who assume this debt are obviously willing to “buy” a brand. The average student debt is about $28,000, a sizable sum, yes, to be paid from the average graduate’s first year salary of about $38,000, but a quarter or less of what the media promote as the norm because of those willing to borrow to claim more prestige than they can afford.

As to the $1 trillion in debt trumpeted in the news, let us remember that the government’s low interest rates and generous limits on borrowing make student loans a wise alternative to credit cards.

Tuition increases are often blamed on the amount of federal aid available, yet numerous authoritative studies have concluded that this is not the case. It is true that public college tuition has risen in relation to reductions in state support for higher education, and it is also true that some public and private institutions have pursued a high tuition-high aid strategy for enrollment through the use of tuition discounts designed to recruit talented students or to maintain their enrollments. Nevertheless, the increase in tuition of 9.8% over the past five years is not so far off from the Higher Education Price Index (HEPI) increase of 10.8%., HEPI is the specialized measure of inflation in higher education expenses designed to take into account the cost of goods, materials, and personnel at colleges and universities.

A third assertion is that institutions are slow to change. The indicators for this are the tenure system; the time it takes for institutions to adopt new policies and programs; and the expressed desire to respect heritage and fundamental principles of liberal education before making changes.

However, institutions of higher education are creators of the new, whether new professionals or new medicines and technology, as well as curators of the past and critics of the status quo by asking “why?” and “Why not?” Look at how state officials and corporations look to universities for assistance in economic development.

Higher education has changed dramatically in the last one hundred-plus years. Just think, about 4% of high school graduates went to college in 1900, and now nearly 70% do. Consider the Land Grant Act and the new academic programs it fostered in agriculture, mechanic arts, and technology, and the effects of the Industrial Revolution on experimental science.

Also in the 20th Century, consider the establishment of community colleges; the introduction of mass higher education with the Serviceman’s Readjustment Act; the V-12 Programs which accelerated baccalaureate completion for officer candidates in World War II; the blossoming of schools of business, education, and other professions following that war; and the National Defense Education Act, area studies, and the growth of the National Science Foundation and support for science following Sputnik, among other signs of change and progress.

Yes, university governance can seem slow, but perhaps corporate governance should take more time in making decisions to expand or acquire another company. Perhaps then we would have fewer failed acquisitions.

While university origins can be traced to Bologna in the year 1088, they are as contemporary as today’s society, with a built-in resistance to fads masquerading as progress and a resilience that leads to new relevance. The diversity among institutions is a strong indication of higher education’s ability to change.

The current promotion of distance learning and massive open on-line courses (MOOCs) for free is sometimes presented as a necessary disruption to these so-called somnolent institutions of education. But, one must ask, disruption for whom? It rarely seems that the proponents of disruption want their own children to attend college online. Such new models are for the poor and ill-prepared, for whom post-high school schooling is necessary but for whom society is unwilling to support via community colleges and other forms of post-secondary education.

There is a digital future and it is here now. It also was here long ago, with IBM’s “Columbus” Project and many other forms of distance learning, both synchronous and asynchronous, video and audio. Central questions to ask are about the purpose for online learning: for whom and why? We also need an understanding that technology is a tool, a means, not an end unto itself. And, we must ask, who will pay? The most recent innovations are at universities where the institutions are bearing the cost of development, with faculty acting as entrepreneurs in the development of new approaches. For how long can this model last?

To me, the digital future has three dimensions: the institution as “provider” deciding whether it is offering courses and programs for its current students or for a larger market; the institution as a “partner” seeking alliances with other institutions or with companies which have the expertise to expand its reach beyond the campus; and the institution as “receiver” deciding how it will respond to applicants from high school, transfers from elsewhere, or current students who bring credits from another institution’s MOOCs which are certified by yet a third party as meeting certain academic standards.

Then, there are those in the news who argue that college is not necessary, and examples are given of students who leave campus to start companies because they don’t need a university education. Particular individuals are frequently cited, including Steve Jobs and Bill Gates, among others. In a recent article in The New York Times, students were interviewed about why they left higher education to learn and earn on their own. I thought the reasons given were telling, and believe they are easily answered by campuses focused on student success. These students decided not to pursue continued education at a traditional university because (1) they did not want to be anonymous in large lecture classes; (2) they did not want to tolerate binge drinking; (3) they thought degree requirements were without rationale; (4) they thought that institutions sponsored athletic programs for competition and winning without regard to an athlete’s ability to graduate; (5) they felt that degree requirements restrained them from pursuing new fields, instead of liberating them to explore new areas; and (6) they didn’t think they could find experiences on campus necessary to develop the skills of networking, salesmanship, and leadership. Each one of these “problems” can be solved by a campus, including the last set, all of which are available through university-sponsored internships, student clubs and organizations, and alumni connections.

What is the purpose of college? I believe it is and must be as much about character and citizenship as about careers and commerce. In addition to majoring in a subject, students must learn about and consider the natural world of air, water, and soil we meet upon birth; the world we make, including literature, history, architecture, and manufacturing; and the means by which we mediate between the world we meet and the world we make, including philosophy, ethics, and religion. This is advanced education, a transformational experience of questions, not training focused on answers. But the popular press ignores such ideas.

On-going change is necessary for any institution or organization to maintain its vitality. The forces of demography, economics, and technology are especially powerful, as they have been in the past. In a separate article (see below), I have enumerated ten ways for higher education institutions to assess the effectiveness and productivity of their operations and academic achievements. I believe we can continue to make needed changes by design and not stand by while institutional purpose and integrity are the targets of disruption by unknowing external forces.

Scott, Robert A. “Assuring Effectiveness and Productivity in Higher Education.” Grant Thornton, “On Course,” October 2011.