Dr. Mitchell is a former president of Bucknell University and Washington & Jefferson College and founding principal of Academic Innovators.
Drawing on available data from Higher Ed Dive, CNBC reported in June that 91 colleges or universities have merged or announced plans to close since 2016. Almost half of those closed after the onset of the Covid-19 pandemic.
As a former university president and the founder of a company that provides solutions to academic institutions, I believe there are a number of intersecting reasons for these closures. At top-tier institutions, the combined price of tuition, fees and room and board can now exceed $80,000 per year. Ninety-five percent of higher education institutions in the U.S. rely on tuition to fund operations, CNBC also said. However, consumer preferences have changed, as overall college enrollment dropped from 41% in 2010 to 38% in 2021. State support also remains uncertain, and much of the Covid-19 relief that covered losses as many colleges shifted to approaches like online learning has been spent. Inflation is cutting away at financial aid discount rates—the amount discounted from the college’s tuition sticker price—that, on average, run at 56.2% percent for first-time undergraduate students at private colleges.
To me, the conclusion is painful but obvious: American higher education faces an existential crisis. Boards, administrators and faculty must wake up to the new realities that they face. For trustees, it may be too late to use an incremental band-aid. If the wounds are too deep, boards have a fiduciary obligation to plot a new strategy in an era of rising deficits to modify what the college offers, locate new revenue, seek new partnerships and affiliations, and merge or close. The goal must not be to postpone planning until the institution’s value is reduced to a real estate sale.
Administrations, led by the presidents and their chief financial officers, must offer the data and direction that informs board decisions. One harsh reality is that the senior administration will take the heat for whatever directional changes occur. Further, the faculty can no longer live in a world that no longer exists. They are the “keepers of the flame,” but no matter how much transparency occurs as the strategy discussions unfold, institutional change will happen at a speed to which they are unaccustomed and potentially unwilling to accept.
Many colleges might be ill-prepared for these new realities, but there are some immediate steps they can take.
1. Develop an activist approach that is strategic, not tactical.
Boards should abandon the approach to governance where trustees are updated in their periodic board meetings. Instead, I recommend focusing on the core issues, largely beyond the college gates, that represent a threat to their institution. The first question to address is: Will the institution remain viable and true to its mission and bylaws? If so, under what terms and conditions?
2. Familiarize yourself with potential threats.
Administrators should become better acquainted with the threats they face that are not directly affected by the internal dynamics of a college’s day-to-day operations. To protect the academic heart of an institution, administrators, beginning with the president, must understand and plan to succeed in a highly competitive business environment where the circumstances are increasingly complex.
From my perspective, solutions that overwhelmingly rely on outdated funding mechanisms like tuition no longer work. Large endowments might allow some leadership to kick the can down the road, but there is an endpoint to this approach for all but a handful of the wealthiest places.
3. Explore partnerships.
Colleges can begin to look at partnerships. This might be difficult at faith-inspired private institutions where the mission is tied to a religious identity. But for others, broader academic and administrative partnerships could help produce efficiencies and economies of scale; maintain or even increase academic offerings through consortia and third-party providers; and even offer enough new revenue to begin thoughtful discussions on how to adapt to changing conditions by buying the time for them to do so.
4. Navigate mergers and closures thoughtfully.
Finally, there is the very real prospect that many institutions might merge or close. In one public sector example, Pennsylvania’s state system has merged six campuses. I’ve observed that merger and acquisition talks are being quietly held across higher education. That said, there are a couple of issues that rise to the top. Should these exploratory conversations proceed, three principles must be kept in mind to set mergers up for success:
• The first is focus. Ensure you have a clear understanding of the desired outcome.
• The second is relatability. Like-minded institutions—with common aims, programs and an ability to contribute on a fair, if not equal, basis to a proposed merger—should define the discussions.
• The third is accountability shaped by transparency to all constituents. Keep accreditors; local, state and federal officials; merger partners; and all affected campus constituencies informed as the merger discussions deepen.
Mergers fail when enough groups feel excluded or when the plan is not comprehensive, reasonable and easily understood.
Some colleges will close. For these, it may be inevitable. In these circumstances, however, the process dictates the outcome. Keep in mind that successful closures treat students, employees, parents and alumni with care and consideration. Teachouts and placements dictate public perception. Optics matter. Sadly, this is also often when local and state officials might recognize too late that colleges are not only intellectual centers but also economic engines in their regions.
America is at an inflection point in the evolution of higher education. Leadership matters, and the rules governing the shape of higher education are shifting. I believe the outcome will determine whether America can continue its tradition of decentralized public and private higher education or if the circumstances have changed too rapidly for an orderly realignment.
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