Everybody’s worried now — from InsideHigherEd.com by Kevin Kiley
Excerpts:

EASTON, PA. — A year ago, the notion that Smith College — with a $1 billion endowment, high student demand, and frequently cited educational quality — was raising existential questions, particularly about its economic model, seemed a fairly radical notion.

But an idea that seemed striking in the past  — that elite liberal arts colleges might have to make significant changes in the next few years if they are to remain relevant (or present) in the current educational market — is now the hottest topic in the sector.

A conference this week here at Lafayette College entitled “The Future of the Liberal Arts College in America and Its Leadership Role in Education Around the World,” drew more than 200 college administrators, including about 50 college presidents, out of an invite list of U.S. News and World Report’s list of top national liberal arts colleges. Judging by the turnout, the discussion, and the fact that several other conferences addressing these questions are scheduled over the next few months, it’s clear that the questions are on everybody’s mind.

In his opening talk Monday night, Lafayette President Daniel H. Weiss laid out four major challenges facing liberal arts colleges — affordability, public skepticism about the value of a liberal arts degree and college in general, decline in the share of U.S population who fit the demographic patterns of students who traditionally attend liberal arts colleges, and questions about how to incorporate technology into the college and serve a generation of students that is increasingly networked — most of which was addressed in various forms throughout the day Tuesday.

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From DSC:
Many people haven’t liked the messages that I’ve been trying to get across these last several years:

  • That the price of higher education is too high.
  • These high prices have changed — and continue to change — the dynamics of our classrooms across America (and inside our students’ heads/thinking).
  • The predominant business models are not sustainable.
  • We are in a game-changing environment and the perfect storm continues to develop.
  • We must reinvent ourselves to stay relevant and helpful to future generations. The costs of not doing so are enormous and truly have life-long impact.
  • We need to experiment with new business models.
  • There is danger in the status quo.
  • That far more affordable means of obtaining an education are going to continue to materialize (and then asking, what do we want to do about this? How can we ride this wave and not get crushed by it?)
  • The future will have team-based content with extensive analytics — being enabled by a growing set of powerful technologies.

I am encouraged by this conference — and the turnout of 200 college admins and 50 college presidents — because it appears that this perfect storm within higher ed is now being taken more seriously.

Also relevant:

  • The world changed, colleges missed it — from The Huffington Post by Tom Vander Ark
    Excerpt:
    A bunch of colleges are going out of business, only they don’t know it. They pretend that trimming costs and jacking tuition is a solution. They haven’t come to terms with a world where anyone can learn anything almost anywhere for free or cheap.

 

"The American Dream: Fraying of the Folklore" San Francisco Chapter of the National Association of Business Economics. February 29, 2012

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From DSC:

Note the troubling picture here for higher ed — the real median household income continues to decrease in the last several years, yet in those same years, there have still been increases in the cost of tuition.  That is, I’ll bet the going rates of higher ed degrees in California are not at their 1998 prices/levels.

 

Staying Relevant

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Also see:

Education 2.0 isn’t coming. It’s here. And the way you’re educated will be changed forever. — from bostinno.com by Dave Balter

Excerpt (emphasis DSC):

Sometime in late 2010, I sat down with angel investor Josh Abramowitz in NYC.  I asked him to invest in Smarterer, a business whose purpose was to validate people’s digital, social and technical skills.  What I encountered for the next hour wasn’t someone merely evaluating my specific business concept – it was an attack on the entire higher education system.

Josh argued that our higher education system was on the verge of crumbling.  Not because there weren’t marvelous educators or exceptional institutions, but because colleges and universities were charging exorbitant sums that weren’t equal to the return.  Our educators were burying our students with tremendous debt. But increasingly sophisticated learning and credentialing opportunities were emerging online, and they were free or nearly free.  And this disparity would lead to a full-fledged education revolution, he predicted.

What the Universities need to know is that what’s coming for education is something like the shift the music industry failed to see until it was too late.  Things will never be the same again.  Instead of griping about how hard it will be to tap their endowments to pay for education, they should be thinking about how to take advantage of the changes.

To save their universities, here’s the three-pronged ecosystem that every University Leader should start thinking about…

Also see:

smarterer.com -- show what you know

 

Below are the concluding paragraphs of Introducing Bennett Hypothesis 2.0 [by Andrew Gillen, Center for College Affordability and Productivity, with emphasis below from DSC)

Original Bennett Hypothesis + a couple refinements + Bowen’s Rule = Bennett Hypothesis 2.0.

The original Bennett Hypothesis held that increases in financial aid will lead to higher tuition, but the empirical evidence testing the hypothesis is inconclusive. The next generation of the concept, Bennett Hypothesis 2.0, adds three refinements.

1.  All Aid is Not Created Equal
2.  Selectivity, Tuition Caps, and Price Discrimination are Important
3.  Don’t Ignore the Dynamic Story

These three refinements not only help explain the mixed empirical evidence, but also provide a better understanding of the relationship between financial aid and tuition. While the first two refinements weaken the link between the two (lessening our concern about Bennett Hypothesis 2.0), the third refinement strengthens the link, implying that we should almost always be concerned about financial aid leading to higher tuition.

Given the current structure of the higher education system, Bennett Hypothesis 2.0 implies that the government will always be fighting a losing battle to increase access to college or improve college affordability since “additional government [financial aid] funds keep providing revenues that, under the current incentive system, increase costs.”54  As higher financial aid pushes costs higher, it inevitably puts upward pressure on tuition. Higher tuition, of course, reduces college affordability, leading to calls for more financial aid, setting the vicious cycle in motion all over again.

Bennett Hypothesis 2.0 exacerbates rather than causes out of control spending by colleges, the ultimate cause of which is Bowen’s Rule. Nevertheless, that is no excuse for ill-designed financial aid programs to pour fuel the fire.  As Bennett noted:

“Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”55

Those words remain just as true today as they were a quarter century ago.

From DSC:
This report seems to show that the current system is only serving to expand the higher ed bubble even further; surely a pop will be heard in the future (if it hasn’t already at some individual colleges and universities).  Such a financial aid system seems to be causing one of the elements of the perfect storm — the cost of higher ed — to mount its waves to an even higher level.  (Keep in mind I created the image below in September 2010, but many of these forces are still with us today.)

The perfect storm in higher ed

 

Does The Online Education Revolution Mean The Death Of The Diploma? — from fastcoexist.com by Michael Karnjanaprakor, CEO of Skillshare
As the options for self-education explode, what does a college education mean? And how can we measure what a good education is?

Excerpt:

What we’re witnessing is a bottom-up revolution in education: Learners, not institutions, are leading innovation.

From DSC:
I post this in hopes that those of us working within higher education will strive all the harder to:

  • Create innovative solutions
  • Reinvent ourselves
  • Stay relevant
  • Reduce the costs of obtaining an education

 Also see:

From DSC:
For those who don’t think that the conversation is moving outside of academia, here’s yet another example:

 

Enstitute U -- A community that educates and prepares Millennials to be valuable and actively participating members of the economy, and society at large, through apprenticeship, hyper-focused curriculum, and real-life projects that have real-life consequences.

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E[nstitute] was founded on a very simple idea: If you want to be the best, you have to learn from the best. We are creating a community that educates and prepares Millennials to be valuable and actively participating members of the economy, and society at large, through apprenticeship, hyper-focused curriculum, and real-life projects that have real-life consequences.

E[nstitute] is a two-year educational program built on an apprenticeship model that provides an alternative path to traditional post secondary education. E[nstitute] is a full-time commitment.

Also relevant:

An infographic series on the current crisis facing higher education — from educationnews.org

  • Video
  • Infographic Part I
    A breakdown re: how an economic bubble forms, expands, and bursts; a comparison of the higher ed bubble to the housing bubble, and a look at the first major contributor to college’s bubble behavior: the rising cost of tuition.
  • Infographic part II:
    Analysis of the second and third big factors in blowing up the higher ed bubble: the student loans crisis, and the unforgiving post-graduation job market.

 

 

Has the higher-ed revolution begun? — from mindingthecampus.com by Charlotte Allen

Excerpts (emphasis DSC):

It’s happening, almost overnight: what could be the collapse of the near-monopoly that traditional brick-and-mortar colleges and universities currently enjoy as respected credentialing institutions whose degrees and grades mean something to employers.

The most dramatic development, just a few days ago, was the decision of robotics-expert Sebastian Thrun to resign from his position as a tenured professor of computer science at Stanford in order to start an online university he calls Udacity that he hopes will reach hundreds of thousands of students who either can’t afford Stanford’s $40,000-a-year tuition or who can’t travel thousands of miles to one of the bricks-and-mortar classes he used to teach.

Besides threatening to up-end universities’ traditional control of educational credentials, Thrun may also drastically change the shape of for-profit education. Udacity is being operated by Know Labs, a Thrun-founded for-profit enterprise funded by the venture-capital firm Charles River Ventures. Know Labs’ ultimate aim, according to Thrun, is to offer high-quality online courses that will be either free or cheap (the company is in the process of developing a business model). Thrun has estimated, for example, that if he and Norvik had charged only $1 apiece to all 160,000 enrollees in their artificial-intelligence course last fall, they could have easily recouped their costs. By contrast, the majority of existing for-profit colleges charge relatively high tuition that has made those institutions highly dependent upon their students’ federal grants and loans. It’s unlikely that anyone would have to borrow in order to take an Udacity course.

Also see:

Obama wants lower college costs, higher dropout age — from edweek.org by Alyson Klein

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SOTU_Blog.jpg

Excerpt (emphasis DSC):

President Obama gave college affordability a prominent place in his domestic agenda during his annual State of the Union address, calling directly on universities to hold down costs in order to make higher education more accessible to the middle class. He outlined a set of proposals that include threatening universities with a loss of federal money if they are unable to tamp down tuition.

“Let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down,” Obama said in his hour-long address. He didn’t offer specifics, however, and the blueprint document the White House sent out to accompany the speech didn’t get specific either. But advocates expect him to lay out more concrete details in the coming days.

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State higher education spending sees big decline — from HuffingtonPost.com by Christine Armario

Excerpt:

MIAMI — State funding for higher education has declined because of a slow recovery from the recession and the end of federal stimulus money, according to a study released Monday.

Overall, spending declined by some $6 billion, or nearly 8 percent, over the past year, according to the annual Grapevine study by the Center for the Study of Education Policy at Illinois State University. The reduction was slightly lower, at 4 percent, when money lost from the end of the American Reinvestment and Recovery Act was not taken into account.

The funding reductions, seen across nearly every state, have resulted in larger class sizes and fewer course offerings at many universities and come as enrollment continues to rise.

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Beware: Alternative certification is coming — from The Chronicle by Richard Vedder

Excerpt (emphasis DSC):

As college costs rise, however, people are asking: Aren’t there cheaper ways of certifying competence and skills to employers? Employers like the current system, because the huge (often over $100,000) cost of demonstrating competency is borne by the student, not by them. Employers seemingly have little incentive to look for alternative certification. That is why reformers like me cannot get employer organizations like the U.S. Chamber of Commerce to take alternative certification seriously. But if companies can find good employees with high-school diplomas who have demonstrated necessary skills and competency via some cheaper (to society) means, they might be able to hire workers more cheaply than before–paying wages that are high by high-school-graduate standards, but low relative to college-graduate norms. Employers can capture the huge savings of reduced certification costs. And students avoid huge debt, get four years more time in the labor force, and do not face the risks of not getting through college. Since millions of college grads have jobs which really do not use skills developed in college anyhow, alternative certification is more attractive than ever.

Addendums on 1/26:

  • President Obama: ‘Higher education can’t be a luxury – it is an economic imperative’ — from annarbor.com by Ryan Stanton
  • Survey finds that dwindling financial aid contributes to fewer college options — from the NYT by Daniel Slotnik
    Excerpt:
    College freshmen entering school last fall were less likely to attend their first choice of college, a function of both competition and cost, than at any other time since 1974, and fewer received financial aid through grants or scholarships, according to an annual survey of nearly 204,000 high school students.
  • Pressure remains for higher education: Moody’s — from Reuters
    The financial conditions of many U.S. colleges and universities will likely not improve much this year, as states continue cutting funding for public schools, students become more price sensitive, and areas for other revenue remain stretched, a lead rating agency said on Monday.  “During the past year, public and political scrutiny of colleges and universities, both not-for-profit and for-profit, has escalated and we expect that the sector will remain under the microscope in 2012 and beyond,” said Moody’s Investors Services in a report outlining why it is maintaining a “mixed outlook for U.S. not-for-profit private and public colleges and universities, mirroring our 2011 outlook.”

Stormy waters ahead as ‘disruptive forces’ sweep the old guard — from timeshighereducation.co.uk by Sarah Cunnane
Online education will turn the academy inside out, argue US authors. 

Excerpt:

Graduation rates in the US have fallen, and states have slashed funding for higher education. As a result, public universities have raised tuition fees, and many are struggling to stay afloat during the recession. But two authors working in the US higher education sector claim that the academy has a bigger battle on the horizon: the “disruptive innovation” ushered in by online education.

This disruption, they say, will force down costs, lure prospective students away from traditional “core” universities, transform the way academics work, and spell the end for the traditional scholarly calendar based around face-to-face teaching.

Clayton M. Christensen, the Kim B. Clark professor of business administration at Harvard Business School, and Henry J. Eyring, advancement vice-president at Brigham Young University-Idaho, outline their ideas in The Innovative University: Changing the DNA of Higher Education from the Inside Out.

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The perfect storm in higher ed

 

Also see:

American Association of University Professors -- Program Closures

Excerpt:

The financial crisis that began in 2008 and the ensuing reductions in state support for higher education have led to devastating cuts at colleges and universities across the country. A growing number of institutions are eliminating majors, graduate programs, or even entire departments; the map above tracks program closures that have been reported in the media since the start of the crisis.

This map is not comprehensive. It is designed solely to highlight media coverage of program closures, which is sometimes flawed and can quickly become outdated, and does not reflect the ongoing casework of the AAUP’s Committee A on Academic Freedom and Tenure.

Population of needy college students is exploding — from The Washington Post by Daniel de Vise

Excerpt (emphasis DSC):

A higher education official from Wisconsin who attended the recent Council of Independent Colleges conference in Florida made a remarkable statement during a question-and-answer session.

There is a group of students who enter college with such dire financial need that the amount the federal government expects their families to contribute to college is effectively zero. In Wisconsin, that zero-pay population has grown by half in a single year: from 42,641 students in the 2008-09 academic year to 65,800 in 2009-10.

The data come from Rolf Wegenke, president of the Wisconsin Association of Independent Colleges and Universities, and surely they mirror a national trend.

Incoming college students have grown markedly more needy since the 2008 economic downturn.

From DSC:
This perfect storm that continues to amass must be addressed.

How can all institutions of higher education — across the board — cut tuition costs by 50% or more?

That should be the #1 question boards are asking themselves throughout 2012 until they have some ideas/answers — then begin experimenting with implementing those pilots/ideas/potential directions.  If not, the conversation will continue to move outside of academia and fewer people will even care what those of us inside higher ed think.  The development of a Walmart of Education has become a sure thing in my mind — it will happen. In fact, it’s already started.

 

Do not underestimate or discount the disruptive power of technology! Daniel S. Christian -- June 2009

 

From DSC:
The tidal wave of technological change swept over Blockbuster and the article below shows how it drowned Kodak as well. These players were once at THEE top of their games…now they are either bankrupt or soon to be bankrupt (if things don’t change fast).

This relates to higher education as well, but I don’t think that we’ve seen anything yet (though 2012 may change that). Higher ed may have a limited window of time left before the conversation moves completely out of academia and higher ed as we know it gets left behind. The word “reinvent” and the phrases “staying relevant” as well as “lowering the price” should be at the top of the agendas for boards at most academic institutions of higher education throughout America (and other nations as well). I use the word most here because some folks will likely continue to pay enormous prices to get the name brands that they’ve been paying $50,000+ per year for.

If companies eventually don’t care who accredited your degree but rather what you can DO for them, watch out. The barriers to entry will plummet.

 

You Press the Button. Kodak Used to Do the Rest. — from technologyreview.com
Kodak saw the shift from analog to digital photography coming. Here’s why it couldn’t win.

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Excerpt (emphasis from DSC):

But the industry landscape was completely different in the digital era. Barriers to entry were significantly lowered and the industry was flooded by entrants with a background in consumer electronics, such as Casio, Samsung, and Hewlett-Packard, not to mention Japanese camera manufacturers including Canon, Nikon, and Olympus. Large parts of Kodak’s competence base related to chemistry and film manufacturing were rendered obsolete. The vertical integration that had previously been a core asset to Kodak lost its value. Digital cameras became a commodity business with low margins. The problem facing Kodak wasn’t just that film profits had died but that those revenues could not be replaced.

Once images became digital, Kodak’s business model of “doing the rest” was effectively destroyed. Doing the rest used to entail a large and complex process that only a couple of companies in the world could master. Today, it is done by the click of a button.

Related graphic from DSC:

From Daniel S. ChristianAlso see:

 

12/15/11 addendum re: the conversation moving away from higher ed:

Excerpt (emphasis DSC):

No single blog can adequately capture or represent what was going on at Learning 2011. But if you are intrigued, I suggest you go to www.Learning2011and see what the agenda and the presentations looked like for yourself.
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What I sensed, and what I am trying to describe here, was an accelerating transition in workforce education from a higher education-centric model to a learner-workplace-centric model. In a world where higher education institutions have dominated, controlled, and driven the conversation about quality, content, access, and results; the balance of power is shifting away from that more monolithic tendency to a far more disaggregated power structure where good information, metrics, and results that can be validated against third party standards are the “coin of the realm”.

 

Official calls for urgency on college costs— from the New York Times by Tamar Lewin

Excerpts:

As Occupy movement protests helped push spiraling college costs into the national spotlight, Education Secretary Arne Duncan urged higher-education officials Tuesday to “think more creatively — and with much greater urgency” about ways to contain costs and reduce student debt.

“Three in four Americans now say that college is too expensive for most people to afford,” Mr. Duncan said. “That belief is even stronger among young adults — three-fourths of whom believe that graduates today have more debt than they can manage.”

Also see:

Addendum later on 11/30/11:

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(Official Department of Education Photo by Joshua Hoover)

“My chief message today is a sobering one,” said Secretary Duncan yesterday at the annual Federal Student Aid conference in Las Vegas, Nev. “I want to ask you, and the entire higher education community, to look ahead and start thinking more creatively—and with much greater urgency—about how to contain the spiraling costs of college and reduce the burden of student debt on our nation’s students.”

As of 11/20/11 (~2:00pm EST)

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As of 8/24/11:

usdebtclock.org

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From DSC:
With the increase in globalization — and from what I’ve seen happening in the financial systems (i.e. how what happens in Europe affects the financial systems in the U.S./Asia/other and vice versa) — it seems clear that we are all in this boat together.  If that’s true, what does that mean for:

  • Businesses and economies around the world?
  • The ability of families and individuals to afford the increasing cost of getting a degree?
  • Higher educational systems — and business models — around the world?
  • How do we resolve such massive problems?
  • What does all of this mean for how we should be educating our students?

 

Addendum on 11/21/11:

  • Debt committee: Why $1.2 trillion isn’t enough — from money.cnn.com by Jeanne Sahadi
    Excerpts:
    That’s because under the most likely scenario, reducing deficits by $1.2 trillion won’t stop the accumulated debt from growing faster than the economy.

    Thus, to stabilize the debt, Congress would need to pass a debt-reduction plan worth $4 trillion to $6 trillion, budget experts say.

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