By Jason Bramwell
The percentage of higher education leaders who are "very concerned" about their ability to maintain current enrollment levels is on the rise, according to the second annual Higher Education Outlook Survey
conducted by Big Four firm KPMG LLP
For its report, KPMG surveyed 103 higher education leaders: sixty-two from private institutions and forty-one from public institutions. Thirty-seven percent of respondents reported being very concerned about maintaining enrollment levels, up from 23 percent in last year's inaugural survey.
"Higher education leaders are keenly aware that parents have lower credit scores as a result of the [economic] downturn and are facing tighter loan underwriting standards," Milford McGuirt, national audit sector leader for higher education and not-for-profits at KPMG, said in a written statement. "Education leaders are increasingly squaring up to this reality and are thinking critically about steps they can take to make college more affordable and accessible without compromising quality."
According to 59 percent of higher education leaders (up from 41 percent last year), the top step they are taking to address cost, quality, and access to education is to put more focus on innovative approaches, such as online education, without compromising quality. This increase was substantial in both private and public institutions (55 percent in 2013 versus 35 percent in 2012 for private; 66 percent in 2013 versus 45 percent in 2012 for public).
"There is a clear recognition of the importance of exploring alternative methods for education delivery, but to date, very few not-for-profit colleges and universities have radically changed their business model," said David Gagnon, KPMG audit partner who serves as Northeast area leader for higher education and not-for-profits.
Factors Affecting Enrollment
Asked to identify the major factors impacting enrollment at their institution, 58 percent of respondents said the inability of parents and/or students to pay tuition is the top factor, up from 49 percent last year. Respondents from public institutions were unchanged year to year, but the concern was more pronounced among private institutions, with 63 percent in 2013 versus 48 percent in 2012.
In addition, 38 percent cited changing US demographics as a second major factor, though a dichotomy exists between public and private institutions: 51 percent from private institutions said changing US demographics is a major factor, compared to just 26 percent the previous year, while public institutions saw a reversed trend – 20 percent this year versus 46 percent last year.
"We're seeing a demographic change in the traditional student, and that is of greater concern to leaders of private institutions," McGuirt said. "We tend to think of the traditional student as a high school graduate who goes to a public or private college for four years and graduates. But due to rising costs and a poor labor market, many students – especially those from immigrant or minority families – are deferring college or looking for less expensive options, such as community college. Some are foregoing higher education altogether, so concerns about enrollment levels are likely to persist among higher education leaders."
Changes in Response to Trends
Spending more to keep up with changes in technology (61 percent) and making more course offerings available online (50 percent) were selected as the top two changes institutions are making in response to recent trends in the educational marketplace.
Again, there was a split between public and private respondents. For example, while 65 percent of private institutions identified a focus on spending more to keep up with technology changes as the top priority, just 56 percent of those from public institutions gave that answer. Conversely, 63 percent of public leaders said making more course offerings available online was a top priority, compared with only 42 percent of private respondents.
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"Private institutions are concerned about their brand, and there is a perception that online courses may dilute the small, liberal arts classroom experience," McGuirt said. "Unlike private institutions, public colleges and universities may be more inclined to provide online courses because their mandate is often to make education more broadly available, and they increasingly face greater cost pressures to do so."
Higher education leaders were also asked about technological change and innovation. Sixty-two percent indicated that leveraging social media to better communicate with current and prospective students was on their technology agenda, though far more private leaders – 69 percent compared to 51 percent of public leaders – were focused on social media.
Gagnon said these results suggest that the high profile and state and local mandates of public institutions may make them less likely to leverage social media than private colleges and universities.
"Some public colleges and university systems are widely known to area residents, so there may be less pressure to use social media to gain additional exposure," he said. "But smaller, less widely known private institutions view social media as another medium through which they can raise their stature and expand their demographic profile."
When asked to identify the measures being adopted or considered as a result of cuts to federal and state funding, 51 percent of respondents said raising tuition, followed by 36 percent who said they are offering more online courses as a result of cuts, and another 36 percent who are delaying capital projects.
"Washington has said to these institutions, 'You can't just keep raising tuition,' yet for now, schools that can do so while maintaining enrollment are doing just that," Gagnon said. "However, this approach will work for fewer schools over time as pressures increase to reform the traditional delivery model and better demonstrate the value of a college degree. As families continue to struggle with rising tuition costs, higher education leaders must find new methods for delivering quality education more cost-effectively."
About the survey:
The second annual Higher Education Outlook Survey from KPMG was completed this past May and June and reflects the responses of 103 senior officers in higher education. Fifty-two percent described their role as CFO, 28 percent as CEO or chief academic officer, and 20 percent as controller or budget officer.