06/25/2013 05:46 pm ET Updated Aug 25, 2013

Navigating the Rough, Uncharted Waters Ahead

Periodically, it's always prudent to take a step backward to reflect on the state of American higher education in the first years of the 21st century. It looks very different today from the higher education system that we inherited from the leadership guiding higher education policy after the Vietnam War.

The currents affecting American colleges and universities are complex and numerous. Some carryover from the last century; most are products of a changing economy, heightened competition, technology innovation, state and federal policy dictates, and a serious recession.

Higher education leadership today faces the intersection of a number of factors:

  • Shifting demographics. The effect is obvious and dramatic. Almost every institutional strategic plan now proposes a redefinition and expansion of the college's admissions profile. It is no longer sufficient to rely exclusively on legacies and student-athletes as the fundamental building blocks in a successful enrollment strategy. Who comes, how admissions officers find them, and who pays to attract and retain them consume enormous time and energy. The student comprehensive fee remains the "bread-and-butter" of tuition dependent institutions.
  • The great recession. Most universities adopted a "duck and cover" mindset, hunkering down and retrenching. At a recent strategic planning retreat, an experienced, successful university president noted that balanced budgets are critical but ultimately his university could not cut their way to growth. Those that will come out of the recession best will have done better research, built stronger strategic plans, and differentiated within market.
  • The emergence of for-profit institutions. These institutions have put the consumer first, develop dedicated pathways to success, and offered a mix of credentials and degrees. It's brilliant marketing that has undercut older approaches and pricing strategies.
  • The rapid development of online programs. The ed tech community has created a technology tsunami of change and innovation. Fundamentally, they have established the Internet as a base from which to innovate and credential, from which to move past glossy brochures to identify and predict admission classes, and through which to develop student life experiences. Traditional higher education has been extraordinarily slow to adapt.
  • Changing consumer preferences. Families and students are looking at a cost to benefit analysis. Many of them are rejecting colleges and universities even before they consider a financial aid package. At the same time, other consumers-including full pay students-want the extracurricular programming, strong career centers, medical and psychiatric counseling, and a decent gym. Which market do you address?
  • Rejection of tuition sticker prices. This is a serious question at tuition driven institutions. Can you bring in gifts and reallocate within budget to keep up fast enough with the numbers driven from your financial aid model?
  • The failure to increase access and choice. Who is your core market? America is failing to provide access to a four-year degree. Higher education institutions offer an undifferentiated and inadequate explanation for why one is needed. Of the 82 percent of community college students who say they want a four-year degree, only 11 percent will ever get it.
  • The erosion of federal discretion. There are three trends in federal education policy that are germane. First, federal policymakers have made a decision more or less to preserve the integrity of the Pell grant program. The current debate on whether to erode low interest rates protecting subsidized loans suggests a disturbing trend affecting future federal commitment. Second, the Obama administration has put energy and most of its new money in higher education into community colleges. That's not bad necessarily but it has an impact. And finally, federal policymakers are increasingly promoting regulation under the guise of assessment and accountability. In a "carrot and stick" analysis, has assessment become the new alternative to funding when seeking oversight tools to regulate higher education?
  • The emergence of state accountability experiments. A number of states, particularly in the American South, are proposing to pick winners and losers among the students. The notion that state government will help pay for an engineering degree but decline to support a history or sociology degree goes the very heart of what it means to be liberally educated in this country. Is the state policy commitment now moving away from the student's education more narrowly to workforce preparation?
  • Increased competition. In a sense, competition is coming from all sides. Colleges and universities are slow to innovate and even slower to seek efficiencies and collaborative economies of scale. Further, one of the effects of the great recession has been a remarkable weakening in the financial strength of higher education institutions, with the entire sector downgraded by investor rating services.
  • The collapse of the financial aid model. Most colleges and universities continue to behave as mom-and-pop shops. Discount rates now typically hover in the 40 to 45 percent range, with many institutions now discounting above 50 percent. What happens when a college suddenly closes despite the fact that the lawns are green and dormitories are full because it has discounted its principal revenue source too heavily?
  • The credential versus degree debate. Since higher education has failed to link the value of liberally educated students to workforce preparation successfully, what impact will occur if employers increasingly value and reward credentials over degrees?

The promise of higher education is part of the bedrock upon which the American social contract relies. It is a "courage to lead" moment. Higher education must claim a seat at the table before the intersection of these currents impairs its ability to navigate a reasoned, principled and imaginative future.