How Colleges Could Stop Raising Tuitions

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The student loan crisis deserves all the attention it has attracted — and more — especially if we’re serious about tackling this trillion-dollar tragedy in a comprehensive way. But let’s not make the mistake of focusing all our good efforts on outcomes without addressing causes as well.

I’m referring to colleges and universities so under the gun to cover their bloated cost structures without jacking up tuition and fees even further that it’s a wonder how they maintain minimum admission standards. It’s also remarkable that as enrollment declines, demand for financial aid increases and endowment funds shrink, the higher education sector isn’t confronting the institutional redundancies that are at the heart of this problem.

For example, in my home state alone, there are a half dozen medium-size private colleges and universities. To be sure, each has unique qualities and areas of specialty, which explains why they’re able to attract 5,000 to 7,000 students each.

However, these institutions also have their own administrative frameworks — from ordering supplies and processing payrolls to managing IT platforms capable of wirelessly streaming online courses and the latest movies. And, of course, there are the duplicative organizational hierarchies that incorporate a half dozen presidents, chief financial officers and provosts each, not to mention, copious numbers of deans and legions of faculty and administrative staff.

If this isn’t an example of an industry consolidation waiting to happen, I don’t know what is — except that there are two big obstacles standing in the way: the college presidents and the boards they’ve recruited.

Facing Reality

Publicly held companies are accountable to their shareholders. To whom are the privately held educational nonprofits beholden? Perhaps it should be to those who write the checks: the students, their parents and the companies that offer tuition reimbursement to employee-learners.

For example, wouldn’t it make sense for the business schools to collaborate with commerce in this regard? After all, they are the check writers, either directly through their tuition-reimbursement programs or indirectly as a portion of the salaries they pay make it possible for employees to meet their financial obligations. But that dialogue between academia and commerce has yet to take place in a meaningful way.

What of the needs, preferences and economic capabilities of the schools’ consumer-learners? Their requirements are inexorably tied to their prospective employability and their preferences are not only culturally inspired, they’re also focused on practicality – as in the flexibility that online and hybrid learning offers to full- and part-time students. In terms of their economic capabilities, must the costly, time-consuming, soup-to-nuts degrees be the only way to go?

Why not then also consider deconstructing the graduate degrees into a series of  stackable credentials ? Students (supported by their tuition-reimbursing employers) would then have the option of pursuing targeted areas of study that may at some later time evolve into formal degrees. In fact, this flexibility can also lead to a broadening of the revenue base as more students take advantage of a more affordable form of higher education, driving down prices in the process.

But what about the investment that’ll be required to pull this off — the mix of traditional, hybrid  and online classroom settings, and the production and technological resources that will be required to accomplish all these changes? Where will the funding come from when pricing is under attack, revenue dollars are already spoken for and outside investors view higher education as a sector without a future?

If the business of higher education is education, then it should get out of the businesses of providing bunk beds, cookies, rock concerts and treadmills and put to better use the capital that would be derived from these divestitures.

The Campus, Reinvented

Dump the dorms. When my kids graduated college, they each chose to live near a school campus. That’s because most suburban-based institutions are, in effect, quasi-gated communities with easy access to park-like grounds, sports facilities, libraries and cafeterias.

Why not sell the buildings to entities such as real estate investment trusts that will reconfigure these structures into independent living space, and lease the underlying land to create an annuity that, along with the proceeds from the sale, may be invested in upgraded educational content and modernized delivery?

Franchise the food courts. As the delivery of educational content moves from the classroom to the living room, why not also help students become more independent in the process? Transforming the cafeterias into grocery stores and franchised food outlets will not only teach students to care for themselves, it’ll also enhance institutional cash-flow.

Convert the classrooms. Shared office space for small businesses, entrepreneurial incubators, corporate conference centers — these are only a few of the income-producing uses for the buildings that once housed the students who are today combining in-class with on-sofa learning.

Subscription to the sports centers. As part-time faculty, I enjoy low-cost membership to my university’s sports facility, along with my full-time colleagues, alumni and students. Young people like living on or near school campuses because of the amenities. Why not invite more of them into the one that is at the heart of the infrastructural warfare that’s waged by the schools as they compete for students?

Here’s the tricky part, though: Resisting the temptation to use this trove of cash to plug today’s operating shortfalls, which would be akin to burning the furniture to stay warm. Instead, the schools should consider these actions only after settling on a strategic plan that speaks to the disciplined use of this precious, repatriated capital.

So how does this get done in such an insular culture where self-interest often trumps much-needed innovation? All it will take are a few forward-thinking schools to get the ball rolling.

This is an Op/Ed contribution to Credit.com and does not necessarily reflect the views of the company.


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