Monday, October 14, 2013

Where are the Tipping Points?

If you don’t know much about branch campuses, you could be forgiven for thinking that the only innovation in higher education is happening through MOOCs (massive open online courses) or the creation of branch campuses in Asia and the Middle East.  It’s not nearly that simple.

MOOCs will continue to evolve in interesting directions, including the direction of awarding academic credit for course completion and offering badges or certificates for completing a set of related courses.  I find international branches much less interesting, because I think other countries will develop their own programs, over time, and invite American institutions to go home.

More importantly, however, there is much, much more going on than MOOCs and international branches.  The range of online and hybrid/blended programs is astonishing, and no one knows which approaches will prove to be most attractive.  For sure, however, we know that online enrollment continues to grow faster than other categories, and my personal sense is that, when all is said and done, the cost of enrollment in online courses is likely to be much less than the cost to attend a physical campus.  In fact, it won’t surprise me if the price of online general education courses falls to near zero, which would create a budget nightmare for a lot of institutions.

There also are complicating conditions that have all sorts of implications.  The 18-year-old population is declining, which is a negative for traditional enrollment, and that knowledge led many institutions to work harder to attract adult learners.  But, then, this fall there was a nation-wide decline in enrollment of approximately 500,000 students, and about 80% of those were adult learners.  Distinguishing between macro and micro trends isn’t easy!

Moreover, although lots of people worry about the way tuition has increased faster than almost anything else, the implication is subject to debate.  Certainly, the trend for athletic spending and spending on student “amenities” continues to grow, and many institutions continue to take on debt that I believe will become a heavy anchor if competitors begin dropping prices.

In the private non-profit world, a small but growing number of institutions are choosing to dramatically cut their so-called “sticker price,” instead of stating a high price, presumably to demonstrate quality, then discounting that price by 40% or more.  The effectiveness of deep tuition cuts vs. the risk of maintaining the higher rates is yet to be determined.

Finally, there are those pesky accreditors, legislators, and both state and federal bureaucrats.  To me, they represent wild cards that can distort, slow, or speed up change, but they are unlikely to determine the ultimate outcome.  Employers, another important stakeholder, could have significant impact, but I’m not convinced that people in business have any clearer idea of what they really want than do governors and legislators.  All of them would do well to take a refresher course on the difference between causation and correlation.

Remember, tipping points only become apparent after the fact, and in a disruptive environment, risk is high for everyone.  Pay attention!