According to predictions by individuals within the financial and professional service communities of America, over the next decade, single-location, brick and mortar colleges are going to be shutting down faster than Blockbuster stores in the mid-2000s.
The State of Higher Education in 2019, a report issued by Grant Thornton, the world’s seventh largest professional services firm, indicates that demographic changes, cost increases, declining state appropriations, greater competition and shifting consumer demand will force independent universities to consolidate into national brands that go beyond the walls of a brick-and-mortar institutions and into sweeping, accessible online education platforms.
Since publishing his book “The Innovative University” in 2011, Clayton Christensen, a Harvard Business School professor and father of the “disruptive innovation theory,” has posited that innovation in higher-ed, specifically online education, will lead to the traditional university’s demise. Christensen has since stood by that theory.
Mark Zupan, president of Alfred University in New York, disagrees with Christensen so much that he was willing to place a $1 million bet on it.
On Feb. 28 Zupan wrote an op-ed in the Democrat & Chronicle, arguing in favor of the stability and persistence of traditional higher education institutions like the school that he helms.
In disagreeing with Christensen’s claims, Zupan lays out his argument and offers a friendly wager to Christensen (which he has yet to respond to), specifically citing Christensen’s prediction that at least half of all traditional universities will close or merge by 2030. If Christensen’s prediction becomes reality, Zupan has pledged $1 million to Christensen’s Institute. If he is wrong, Zupan calls for Christensen to contribute $1 million toward Alfred University’s endowment.
In an interview with The College Post this week, Zupan broke down his argument against Christensen, and why he believes the traditional university is here to stay.
The interview has been lightly edited for length and clarity.
Q: What has caused the large declining profits and diminishing enrollment numbers at colleges and universities within the U.S.? Besides online education and innovation, what are the greatest factor(s)?
Zupan: The demographics of the students that are emerging have created, I think, the biggest change for an institution. Religious institutions, for example, have faced issues, as certain religious areas lose people or people become less religious in general. That puts some greater strain on those institutions. But the demography, the religious affiliation and just the overall level of competition with rankings nowadays. Those are probably much more important drivers than online, and I think online largely will be more of a compliment than a substitute for what we do in higher ed.
Q: Do you believe that colleges are going to face a “too much capacity, not enough demand” condition at any point?
Zupan: Yeah, potentially. One of the big growth areas over the last decade has been international students and many schools have tripled the number of international students over the last 10 to 15 years. So that could be another stress point. Say we get to a more extensive trade war with China or we make it more restrictive for individuals to come from overseas. So, then, that’s probably more of a worry point than an excess capacity.
Q: How would you advise traditional four-year colleges to operate over the next decade to cope with these market forces? What alternative education models should they be pursuing?
Zupan: I guess a number of things. Number one, to be nimble and entrepreneurial. And so engaging alumni, finding programs, how you advertise and make people aware of your points of distinction. Or adding programs, whether it’s curricular or co-curricular that help students develop as individuals and succeed professionally. You can’t have an attitude of, you know, we’re a hidden gem and we just need to tell the story better because with the cost of higher education and how it’s growing in real terms over time, we need to do a better job of connecting the dots for prospective students and their families of how this particular degree will help your daughter or son achieve success professionally. And with schools that do a better job, as opposed to when you look at enrollment, the trend is that liberal arts has been the most challenged as of late and there’s still, I think some of the, you know, people should just assume we’re a hidden gem. I am a liberal arts grad myself and believe firmly in its value, but we can’t have an attitude of just trust us.Especially given how important an investment this is for individuals.
So, the more we can show what you can do with a biology degree or an English degree and the many different career paths. It’s a little bit harder to tell that story than it is engineering and business where the paths are clearer cut, but there are some immensely powerful ways that liberal arts prepares people for success.
I think relative to professional schools, schools that are just purely liberal arts are also facing greater challenges. It has been reported, for example, that Middlebury was running a $10 million deficit and Middlebury is a wonderful institution. Or what’s going on right now at Hampshire College. Very traditional liberal arts schools, but those are seeing more stresses right now.
Let me just mention one other possibility, one of the things we have found drives enrollment is building linkages. So, a lot of students, over half, start off in community colleges and we are actively making sure that we have articulation agreements with all the different community colleges in our area so it makes it seamless for the student after two years to join. We’re doing a lot of recruiting right now because there are some K-12 schools around the country that specialize in attracting international students in their high school years. So, a family will send their son or daughter for high school out of China to the United States and those students tend to be better prepared for English language and culture than when we go to China to recruit students directly from there. And then, how do we build linkages? We’re never going to have a law school, but we have three agreements now with leading law schools. So, if you come to Alfred and you maintain a certain GPA, in certain cases, you don’t have to take the LSAT, you’re guaranteed a spot in our partner law school. So creating this win-win wins, especially for students. We’ve got a partnership with the leading medical school and dental school and pharmacy school and the Newhouse School of Public Communications and the Maxwell School of Public Service at the University of Syracuse, so the more we can connect the dots for students and create these more compelling pathways, the better.
Q: Will there ever be a tipping point for non-profit universities or other higher education institutions? Do you think they will continue to be able to get away with raising tuition prices to remain in operation, or do you think they will need to become more innovative?
Zupan: It’s hard to match the pace we’ve been on. As an industry we will have the capacity to continue and I think some of the pushback against higher-ed is just out of that, in real terms, it’s similar to what we see in health care. We produce an incredibly valuable product, but the price has been going up for a variety of reasons. And that will either create political pushback, whether, you know, what Bernie Sanders was advocating, what the state of New York has done with the excelsior program to make college more affordable. But at the same time, it creates for a more dynamic challenging landscape for privates. And so we have to be mindful of telling the value proposition story. It is there to be made. There is no better way, for example, to double your lifetime earnings than having a college degree or to triple them by having a graduate degree, but how you connect the dots or articulate a compelling story, it’s on us to do that.
Q: What new or traditional routes of financing will be most vital to universities in the next few decades? How will human capital investment be emphasized?
Zupan: How we become more facile in using online options to make learning more accessible. Southern New Hampshire University, for example, was struggling when they were doing no online. Right now they’re one of the schools that’s been thriving and a key driver has been their online component. How we activate research strengths of the knowledge we produce gets some value to industry or to government research, that can be an important driver. How we get more proficient at tech transfer. For example, Facebook was invented at Harvard but the impact on Harvard has been pretty minimal. If anything I think you could argue they chased Mark Zuckerberg out. So when people are coming up with inventions, how do you grow the resource base because you’re facilitating those inventions, and I think schools try to take too big an equity position in ventures and you never know what’s going to be successful, and usually you think of the entrepreneurial ventures coming out of engineering or sciences or business.
In our own case we have a very dynamic staff member and alum who has developed something called Art Force 5 and what it does is it uses art to build community. He first started doing this on our campus and started winning major awards and what they do is they take their product to areas that have been driven by divisiveness and use a common exercise, for example, community members building a mosaic together. They were down in Atlanta for the Super Bowl working with the NFL on how we celebrate the first black police officers right after World War II in Atlanta and how that community has come together, but still faces challenges that need to be overcome. And so, Dan Napolitano the alum who runs this, a year and a half ago, got a $400,000 grant from the State University of New York (SUNY) to start spreading this product to other universities in the state of New York. His ultimate dream though was to create a turnkey program where any K-12 institution could take what he has developed and have a faculty member to teach his or her students how to use art to bridge differences. Dan could end up being wildly successful, financially as well as in other dimensions, and if he succeeds it is wonderful for us because the Alfred University name would propagate through leading K-12 programs around the country.
Berea College right now has a 100 percent discount rate. You know, one of the things you probably write about with schools where discount rates have been growing is a telltale sign of being financially strapped, and yet they’ve just been doing a tremendous job with their fundraising since they got started right after the Civil War and they’ve been on point on articulating the mission. Each student gets a full scholarship and graduates with no debt, but you have to work while you’re going through there. They apparently got started with half African-American, half white right after the Civil War in a border state, which was no small feat to pull off in the 1860s. And right now, that’s our favorite model. We’re actually not worried if we can, through philanthropy, increase our discount rate. That would be a compelling proposition to say ‘look we’re going to offer you a full scholarship. You’re going to have to work, but you’re going to learn some great hands-on skills in the process, but you are going to graduate with no debt.’
Another model I would mention is what Purdue is doing right now where they are taking stakes in the student’s future salaries in exchange for tuition, so that is another potential funding source that is providing greater scholarship now, but with the expectation that the students will do well in this income sharing arrangements or programs. Yale apparently tried to do this three decades ago and they had to discontinue it because when people committed, for example, I will give you two percent of my future earnings, they underestimated how successful they would be. So, Yale apparently had a hard time then getting repayment, even though people had signed agreements. But there are some opportunities along those lines, so we are watching the Purdue model as well.
Q: Is it worth it for students to spend hundreds of thousands of dollars on a degree from a traditional, four-year institution, or will a less expensive online degree be just as valuable in the future?
It very much varies by the student’s circumstances. If you are a single parent, you are working a job, online options, either through a traditional nonprofit, public or private, may be the way to go. If you have the time though, I wouldn’t underestimate how much value comes from developing as a person where you get to sit in a small classroom and interact with students and develop your people skills. That’s hard to replicate still online. And how much we’re inspired because somebody leaves an indelible mark. For example, I was going to be a doctor or I was going to be a lawyer, but I ended up being an economist because I had an incredibly powerful mentor in college who, once I was in his class, I wanted to be like him and I really admired who he was and what he did. And so that’s still hard to replicate. I’ve taught a Coursera course before with 23,000 students and it was great having students from 150 countries around the globe, but my biggest takeaway from that was how much it cost me to gain further appreciation for what we do in the in-person classroom that I could not do through the Coursera option.
Q: While many online degree programs may look more financially attractive and convenient, online students statistically take longer to complete their degrees or have a higher chance of dropping out than students at a physical university, according to a study this month from the Brookings Institution.
With this study in mind, what factors would you recommend that students look into prior to enrolling in an online degree program?
Zupan: I think looking carefully at retention rates and persistence rates when you look under the hood of programs like what is offered by the Apollo Group with University Phoenix. The federal government has provided generous support for students going through that option and it is certainly another option to consider. But the graduation rates and degree completion are significantly lower than through traditional universities, either public or private. So, you would want to factor that consideration into it.
The schools that have been struggling the most have been the for-profits over the last few years. The guy [Former Missouri State University President and Education writer Michael T. Nietzel] who recently wrote the piece for Forbes.com, which cited my million-dollar bet. If you look at one of his prior writings, he will talk about how the prey, or what people project is the prey like Clay Christensen, have actually turned out to be the predators and the ones who have been failing at quick rates have been the for-profit institutions and partly it has been federal law changes, but partly, also, I think people have been realizing the degree completion rates are not all what they thought they would be. And so, if it were me I would just do my homework in what particular degree am I interested in pursuing, and what are the options so that, for example, one of the things we offer at our place is 4+1, where you get 2 degrees in 5 years. So, you could take a school of art and design BFA. We are a top ten ranked school in that department, but you could partner it in a fifth year with an MBA. So instead of a student or the parent being worried if they are ending up with a starving artist, it better prepares a graduate for being a successful artist and knowing how to market their work, how to manage their studio, etc. So looking at those complimentary options. Or we just had a visit from a Chinese university, a major university there, and I didn’t realize that if you typically start in one faculty area like engineering and if you decide engineering is not for me it’s very hard to switch to another faculty. You’re basically out of luck as opposed to a diversified portfolio.