The state of the union

The shrinking pool of potential students is putting new pressures on US universities. But if some are learning to adapt, others seem to have a 'nascent death wish'. Jon Marcus reports

July 3, 2008

Paul Zink is likely to be the last person who will ever graduate from Antioch College. His name was the last of 101 to be called alphabetically to the stage in April at what will almost certainly be the 156-year-old US university's final commencement ceremony.

Financial problems were compounded by deteriorating campus infrastructure. This badly hit enrolment at the small liberal-arts school in Yellow Springs, Ohio, which is known for encouraging social activism among alumni, who have included Coretta Scott King, the activist and wife of Martin Luther King, evolutionary scientist Stephen Jay Gould and Twilight Zone creator Rod Serling.

Many more American universities are at risk of closing or being forced to merge with competitor institutions as the number of traditional university students begins to drop and as other factors begin to change the way Americans consider higher education.

Since the mid-1990s, the number of US high-school graduates has increased steadily as the children of the baby-boomers reach their teens, providing a steady supply of applicants to universities. It peaked last spring at 3.34 million - a year earlier than predicted - and is now expected to fall until at least 2015, when a new wave of students, which will include unprecedented numbers from Asian and Hispanic families, graduate from high school. The pool of white high-school graduates - those traditionally most likely to go to university - will continue to slide, from nearly 2 million this year to 1.6 million by 2022. By then, almost half of all public high-school graduates will be non-white.

Referring to the group he describes as "the American prototype", James Samels, the president of consulting firm The Education Alliance, says: "The demographic, at best, has plateaued. That shift is happening faster than people expected. And if universities don't change their ways, if they're not going to be more businesslike, more will be out of business by way of consolidation and merger, or they will become defunct."

US universities, which were once regarded as among society's most stable institutions, have proven shakier than was thought. Over the past 20 years, 200 have merged or closed, more than 50 during the previous enrolment downturn of the early 1990s - so many that alumni of the schools formed the Closed College Consortium. But this association, too, appears to have closed.

But this time higher education faces more than just a change in demographics. There is steep competition from new, more flexible for-profit universities, an unstable economy, a looming energy crisis, relentless pressure to provide amenities and the soaring costs of healthcare for employees. Long-deferred campus maintenance, which contributed to Antioch's demise, scares away prospective students, only making matters worse.

"There's a perfect storm, a confluence of factors that will require that a majority of institutions understand who they are currently serving in ways they perhaps haven't been as deliberate about," says Jim Scannell, a former enrolment manager at Boston College, Cornell University and the University of Rochester. He is also president of the enrolment-management consulting firm Scannell & Kurz, which held the first national conference on the subject last month for top university administrators. Registration was brisk and the conference had 115 representatives from 59 universities and seven other higher-education organisations, including several university presidents. They discussed topics such as "Strategic planning in challenging times" and "Is American higher education at a turning point?"

Students and their families are responding to the changes by taking advantage of the expanding choices on offer from for-profit universities, such as the University of Phoenix. These often provide courses at night and at weekends in premises close to where students live and work. A few more traditional universities have begun to explore that market - which is among the fastest-growing in the US - but they have been much slower to take full advantage of it, while their tuition fees have continued to rocket.

"The value proposition has caught up with American higher education," Samels says. Students want to know about things such as universities' job-placement and graduate-school acceptance rates. "The choosy consumer now is far more sophisticated in measuring the value of education."

In particular, small private universities - governed privately rather than by the state - are facing the greatest financial pressures and are finding it difficult to persuade students of their worth. "In a time when brand awareness is becoming more significant, the question of why am I paying $40,000 (£20,335) or $50,000 a year for an institution that is not necessarily known outside its region is much more pressing," says Brent Keltner, a former educational researcher at the Rand Corporation and now a senior vice-president of the consulting firm Eduventures. "The demographic trend is only accelerating that. It's putting pressure on institutions to clarify what their educational advantage is."

Most universities, however, have been slow to catch on. "About a third of them get it, about a third of them don't and never will, and about a third of them wait for conversations such as this one to be educated about it," Samels says.

Some dramatic change is under way. The decline in the pool of high-school graduates varies from state to state - the numbers will fall by 10 per cent or more in the Northeast and Midwest but will increase in the Sunbelt states of Arizona, Florida, Georgia, Nevada and Texas - and private universities are competing fiercely where the market is expanding. Northern schools, for example, have opened recruiting offices in Florida and Texas or branch campuses in those states. Even Antioch has campuses in Washington State and California, which are doing well and will continue to operate after the money-losing flagship campus closes.

Public universities (under state governance), too, are vying for students outside their home states because out-of-state students pay higher tuition fees, helping to keep finances in the black.

The poaching has become so bad that some states, including Florida and Georgia, have instituted so-called brain-drain scholarships for high-achieving students who agree to go to universities near home.

"Everyone's competing for the same pool of students," says Kim Reid, senior analyst for enrolment management at Eduventures - or going after new ones. More schools are offering distance education or promoting programmes for adult learners. They are also preparing for the influx of Hispanic and Asian-American students, who will often be the first in their families to go to universities.

But many of those students are expected to take a staged route to gaining a higher education qualification, starting at a technical school or two-year community college before transferring to a public university. This will create additional problems for private universities, some of which are now teaming up with community colleges and trying to get in on this shift to a two-stage approach.

"Community college enrolments are bursting at the seams, and that's because a greater share of the college-eligible population is choosing to go to a low-cost, stay-at-home community college for the first two years," Scannell says. "The four-year schools need to make sure that they are poised to serve those students for their final two years."

That's just one thing that they need to do, Samels says. Another is to whittle away at costly and superfluous academic programmes. And this is something that faculty unions, alumni and other interests may make difficult to achieve. "Is there a nascent death wish in American higher education?

Is there a lack of nimbleness that's going to do us in? That's a real fear," he says.

"The outcome of this could be something that many of those involved in higher education could find distasteful, which is that faculty may have to teach more hours, students and faculty may have to expect or demand fewer amenities, there may have to be more part-time adjunct faculty use," Scannell echoes, "and there are a lot of people in the academy who think that that's a pretty bad idea, particularly for first-year students."

He adds: "There could be some very difficult decisions made down the road. Clearly, it's not going to be business as usual. But if these decisions aren't made, people may not stay in business."

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