Last month, I had the pleasure of attending the NACUBO Annual Meeting in Orlando, FL, where nearly 2,000 representatives from higher education institutions across North America came together to share strategies for leading their institutions, policy considerations and to discuss ongoing transformations in the higher education sector. The official theme of the gathering, ‘Transform | Lead | Advocate,’ was fitting.
Three key themes emerged even before the first day’s sessions wrapped. They remained prevalent throughout the remaining conference sessions, in conversations during coffee breaks, over meals and while perusing the exhibit hall over the two-and-a-half-day event.
The Enrollment Cliff
While it’s no secret that enrollment across the higher education sector has been declining, presenters at the NACUBO Annual Meeting made it clear that the full effects of this demographic cliff have not yet been seen and likely won’t be for another 2 years. For institutions relying on tuition as a main source of income, this is troublesome. The need to be proactive and think strategically in order to develop alternative ways to draw students and the community to their campuses is essential. One institution shared that they host a farmer’s market for the local community each week, while another described how they continually reevaluate their benefits packages for students in response to what their peers are and are not offering, such as remote classes, unique on-campus housing experiences, etc. Another school has reimagined the freshman experience to include the opportunity to go abroad to a handful of international satellite campuses and move to the main campus for the second freshman semester, an experience not typically offered to underclassmen.
While not every school has the money to fund niche offerings, another potential approach is to collaborate with other institutions - both higher ed and other sectors - to offer complementary experiences rather than competing ones. A great example of this is Pace University’s Department of Biological Sciences in New York (“Pace”) collaborating with Lenox Hill Hospital to offer a physician’s assistant major. Joining with a local health system helped give the program credibility and created a new reason for prospective students to consider applying to Pace. Today, the university has clinical affiliations with most health systems in NYC and the surrounding geographic area.
New perspectives and ideas can only enhance the student experience and the future of the institution. Offering experiences that other institutions don’t have but for which there is a demand could help subsidize other programs that are important but not growing.
Effects of Inflation
In 2022, the public and private sectors experienced down financial markets like we haven’t seen since the 2008 market crash, and the higher education sector also took a hit. Although 2023 is proving to be more favorable to investors, three main areas of concern remain for higher ed.
- Employee Compensation and Retention: As higher ed wage growth lags the broader market, institutions remain committed to strategizing ways to offer benefits that are attractive and distinct from the private sector. One institution has implemented daycare and pet care programs for their employees, as well as the ability for remote work. Although the latter is not applicable to all positions on a campus, it remains an enticing perk for many.
- Capital Planning: Campus improvements are struggling to move forward. Most often set in advance after a grant or gift is awarded, by the time the budget is approved for these projects, many end up being carried out over 3-5 years instead of the intended one to two. Estimating costs has become nearly impossible over multi-year horizons. The rising prices of materials and labor frequently result in a need to cancel projects entirely or at the very least reimagine them. To offset these particular challenges, some schools are pre-purchasing materials with the hopes of keeping their plans on a set path to completion. In addition, some schools are looking to contract with more localized construction companies instead of the larger ones that have a national presence. This allows schools to pay it forward to their community, immediately pay with cash on hand and lock in pricing, while supporting their local businesses and giving those businesses greater cash flow.
- Tuition Strategy: Tuition remains the most significant source of income for higher education institutions, but according to the NACUBO Tuition Discounting Study released earlier this year, tuition discount rates have hit a new high1. To many schools, making a commitment to provide affordable education is ingrained in their mission, and it can also help attract and retain students. But balancing the costs and benefits of this model given the impending enrollment cliff is an ongoing challenge. Schools are continually reevaluating their aid and benefits packages not only to attract students but also to stay competitive amongst their peers. What can they offer that others aren’t? Schools should be thoughtful when considering what the students are looking for and what might be sought out in the future as the markets and financial landscape evolve.
Diversity, Equity and Inclusion (DEI) Considerations
There is no single playbook that can be implemented across all institutions for how to diversify a student base, and with the recent SCOTUS decision any intentional efforts may soon become increasingly difficult. However, schools should continue to be strategic when considering how they can provide more support for the diverse students they have and the ones they want to attract. Looking at the market the institution serves, the current student base and the geographic location of the school are important factors in understanding the socio-economic status of students, what matters to them and what they want from a college experience. While some institutions are located in areas that organically allow for more diverse students, some simply are not. The Supreme Court’s recent ruling may affect an institution’s ability to take race into consideration in the admissions process, however there are still many ways an institution can move their DEI efforts forward. To learn more about the SCOTUS Affirmative Action ruling and its implications for higher ed and other sectors, please view our recent article HERE.
While these observations were what resonated most with me as I navigated the more than 50 general and breakout sessions offered, they are by no means all encompassing. Colleges and universities have a number of important issues to consider over the coming months and years, which is why gatherings like these are so important – to provide a platform for discussion and potential solutions, that might not be available within the walls of one’s own institution. Commonfund plans to explore these issues and more in the 2023 NACUBO-Commonfund Study of Endowments (NCSE), scheduled to open for data collection in September. If you are interested in participating, please click here to learn more about how you can be a part of this year’s research. The more data we collect, the more we can understand and work together to solve these pressing and complex issues.
