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C21U Blog

Fri, 10/03/2014 - 10:45

It is just a matter of time until your campus will be closed. Usually it will be temporary. Sometimes it will be permanent.

Whether by snow and ice, wind, fire, flood, civil disorder or bankruptcy, you may be certain that your campus will be closed. It is just a matter of when and how long the closure will last. Even a brief closing provides a glimpse of higher education without the comfortable assumption of shared space and time – the familiar functionality of a campus.

‘Forever’ is an unstated part of every institution’s mission statement. Over the last century, hundreds have winked in and out of existence. [Westminster’s Ray Brown maintains the most comprehensive list.] A few such as Antioch College have been well known, their demise widely reported. Most are long forgotten. They close and disappear through merger, acquisition by for-profit consortiums, and from simple bankruptcy.

A Vanderbilt study by Lyken-Segosebe and Sheperd documents the permanent closure of 57 four-year not-for-profit colleges since 2004. They all shared three characteristics: 1) high dependence on tuition revenues, 2) small enrollments, and 3) over commitment to capital projects.

So far, not-for-profit college failures have typically been small private institutions. For-profit bankruptcies such as those of Anthem and Corinthian have been bigger, affecting tens of thousands of students. If observers like Clayton Christensen are right we are entering a new phase. Several have guessed that a third or more of American higher education institutions will fail by 2030.

Business pressures from alternative competitors are nibbling at the edges of the traditional higher education business model. From upstart tech-focused ventures to well-established competitors and experimental alternatives, the business environment increasingly challenges all but the most robust higher education institutions.

A-List – Some are just fine. Harvard, Yale, Princeton, Chicago and Stanford are examples of elite institutions for which technological transformation and rising financial demands are manageable. Add to this A-list others with strong financial stability and a well-established marketing brand, and you have a group of institutions that are not at risk. Some like state-defining flagships are too big to fail. Others have relatively large endowments, truly unique missions and exceptional alumni support. These will survive, perhaps continue grow, with modest tweaks here and there.

If the observers are right, absent any of these strengths, all the rest – a vast swath of American higher education – face threats to continued existence, at least in their current form. Some are too small to withstand periodic fluctuations in demand. Some have poorly differentiated missions and lack sufficient market identity. Some already have structural deficits and lack insufficient financial flexibility to do much more than live “paycheck to paycheck.” The rest include regional institutions with declining public support and locational disadvantages.

As documented in the Vanderbilt study and its precursors, small private institutions have always been precarious operations. One to three percent disappear year in and year out. Smaller regional public institutions might now be seen as joining this vulnerable group due to continuing business pressure. Based on data from IPEDS, there are more than 400 of these institutions with modest size and generic missions. They have already exhausted the market for full-tuition international students and are seeing declining demand from domestic applicants as better students are finding openings at more prestigious institutions.

Higher education institutions are among the most enduring of human organizations, but surviving past challenges does not prove the ability to survive the next one. Regional public institutions with limited endowments and lacking resilient financial maneuverability will find the years ahead to be difficult. Adaptation to the changing environment will be required.

Consider the characteristics that have led to campus failures. Regional institutions are not too big to fail, are becoming more tuition dependent and have relatively small endowments. I imagine that among their better choices will be institutional redesign to provide sustainable value to their students, offering the best of digital access and residential experience.

In trying to avoid closure or merger, regionals may take one of three paths: 1) double-down on traditional methods, 2) develop and invest in truly unique missions and establish distinct identities, and/or 3) redesign to support hybrid forms of education that rely less on traditional methods and raise the degree attainment of their region. Each of these approaches will require a different campus; different from the one they have now. Maximizing the value of existing facilities investments will be part of the solution as will right-sizing for the refined mission.

Campus Closed – If the closure of your campus seems too unlikely, consider this. During the long winter of 2014, several major institutions were closed more than once, leading instructors to begin to improvise, not merely reschedule. In an official note from the Georgia Tech Provost, “Campus was closed for a total of 4.5 days during two winter storms this semester. Many faculty members have been able to continue teaching through a combination of electronic media; however, some will need to make arrangements for in-class ‘make-up’ sessions.”

Even temporary closings force instructors and administrators to improvise as they explore and develop alternatives to business as usual. They get to consider why meeting a particular class at a particular place and time is necessary. After all, meeting classes is not the mission of the institution, nor is it the only means available to deliver on the unspoken objective of ‘forever.’


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