US universities get creative at moneymaking as enrolment falters

Small colleges are renting out dormitory rooms, licensing coffins and selling their own ketchup

July 22, 2018
Niagara Falls
Source: Getty

Some 14 million people a year travel to see the natural wonder that is Niagara Falls, most of them between July and September, when hotel rooms in the area are all but impossible to come by.

But there was a supply of rooms just four miles from the falls sitting empty and unused every summer: the student housing at Niagara University. So this year, the university decided to rent out those rooms on Airbnb.

At $129 (£99) a night for four beds, two baths, and a full kitchen, the dormitory suites are a great deal for visitors to the region on the border between the US and Canada. But they’re also a new source of revenue for the university, something that Niagara and other higher education institutions in the US can badly use.

“We all do need to think differently,” said Mary Borgognoni, senior vice-president for operations and finance. “We are tuition-dependent. We rely on our enrolment. And you see fluctuations in enrolment.

“If there are ways to bring in other sources of revenue, that helps.”

Small private institutions are in particularly dire need of dollars. Struggling through a decline in enrolment that is entering its seventh year, a quarter of them ran an operating deficit last year, according to a report from the bond-rating agency Moody’s, which said that expenditure in all higher education is outpacing income.

As they near the limit of what students are willing to pay, US universities are becoming creative at finding new sources of money. They have opened conference centres and hotels. They rent out their athletic facilities to professional and amateur sport clubs. Their dining staff cater for weddings and other events.

Some universities are cashing in on the lifelong – and beyond – fidelity of their alumni. They are developing retirement communities on surplus land, often for alumni who want to live on campus. Forty-eight of them have licensed their logos for caskets and urns in which alumni can be buried. The universities of North Carolina and Notre Dame, plus a few others, even have cemeteries on their campuses where people can pay to be interred.

The relative quiet of the summer is increasingly being filled with money-making programmes like Niagara’s. Many universities charge for summer camps and summer schools for younger students seeking an advantage in admission.

This also lets administrators make connections between their revenue-generating spin-offs and their principal mission of education.

Niagara’s Airbnb collaboration, for example, is being overseen by students from its hospitality programme. Harvard University has built a profitable corporate training arm. Several universities have added fast-paced, high-priced programmes teaching coding. The University of Illinois at Urbana-Champaign sells produce from a farm that it was given as a gift, but which it also uses for teaching sustainable agriculture.

Some are thinking bigger, and an industry of middlemen is cropping up to help.

One start-up, College Consortium, connects universities whose students need particular courses with universities that have room in online and occasionally in-person programmes. So far 118 institutions have signed up, 112 of them small private ones.

“We have all this idle capacity in online programmes and, on the other side, we have students getting stuck who can’t get the courses they need when they need them,” said Josh Pierce, the company’s chief executive. “So we’re making use of the demand that colleges can’t serve.”

This not only drives up graduation rates, Mr Pierce said. “Both sides, demand and supply, make money.”

It’s the logical next step of universities’ drive to profit from their often unused space, he said. “The problems colleges need to solve have become way more complex. So there’s a receptivity to this kind of thing that’s been coming for a long time.”

That could lead to even more unusual revenue-generating ideas, observers said. Illinois’ farm, for instance, has started selling ketchup that its kitchens produce from tomatoes grown there. Rutgers, the State University of New Jersey, which also has a hospitality programme, bought and runs a golf course. The University of Wisconsin-Oshkosh generates energy from food waste and sells it to the local electricity grid, and rents out space on its campus for mobile phone towers. Several universities with political science departments have entered the business of polling.

Back at Niagara, those student suites are selling fast, said Ms Borgognoni. At the time of writing, 35 room nights had been booked through to 28 July, when the dorms will be handed back to students.

That will bring in less than $5,000, a tiny boost for an institution whose annual budget is about $147 million. But it’s a start, she said.

“It’s been easier to look for ways to save money than to make money,” Ms Borgognoni said. But efficiencies go only so far, and finding new sources of revenue – something that was long anathema in higher education – has become essential.

“You definitely have to approach this with 'what do I have to get this done',” she said, “versus finding obstacles to it”.

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Print headline: Small colleges get creative to survive

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