Ross Peacock
Assistant Vice President, Institutional Research and Planning
24 April 2014
At the request of the Planning Advisory Group, this document addresses the Topics for the Assessment of the Environment for Higher Education. In addition to the summaries and links provided in the areas below, there are other supporting documents available at a web site dedicated to this scan [see here].
Demographic Changes and Patterns
From 1990 through 2011, the number of high school graduates grew each year, peaking at 3.4 million. After a brief period of decline, the number has stabilized to around 3.2 million and will continue to do so until the next growth period between 2020 and 2027, which will be much more gradual than the last period of growth. Despite the near term stability and longer term slow growth, many of the states in Oberlin’s primary and secondary markets will experience declines. In general, the Midwest, North East, and Middle Atlantic areas could see declines between 5 percent and 15 percent and those are the geographic areas from which we have traditionally enrolled most of our students. Six states will experience losses greater than 15 percent (DC, Maine, Michigan, New Hampshire, Rhode Island, and Vermont). Two-thirds of Oberlin students with home addresses in the United States come from eight states: NY (15%), CA (13%), OH (8%), MA (8%), IL (7%), NJ (5%), MD (5%), and PA (4%). Of that group, only New York is projected to experience an increase and that will be less than 5 percent.
The racial/ethnic characteristics will change significantly, regardless of growth projections. Between 2009 and 2020, White non-Hispanic graduates will decline by 12 percent and Black non-Hispanic graduates will decline by 9 percent. Hispanic and Asian/Pacific graduates will increase 41 percent and 30 percent, respectively. Every state will see more diversification in high school graduates. By 2020, Arizona, Florida, Georgia, Maryland,and Nevada will join California, DC, Hawaii, Mississippi, New Mexico, and Texas as ‘majority-minority’ states. Refer to the full report from the Western Interstate Commission on Higher Education(WICHE).
Despite the declines projected by WICHE, the National Center for Education Statistics (NCES) projects a 14 percent increase in the total enrollment in postsecondary degree-granting institutions from 2012 through 2022. Their projection takes into account disposable income and unemployment rates in addition to simple population projections. This projected increase is nonetheless a significant decrease from the 45 percent increase that occurred between 1997 and 2011, and the traditional 18-to-24-year-old age group is projected to grow only at 9 percent. Most of the enrollment growth will occur with the population of 25-to-29-year-olds. Refer to the full report on the NCES projections.
In addition to the population shifts, considerable evidence exists that students today lack coping strategies and are generally less resilient than those from generations past. College counseling centers report that student mental health issues are a growing concern with anxiety, depression, and relationship problems leading the list.
Enrollments of non-U.S. passport holders
Foreign student enrollment in U.S. institutions has doubled from 1991 to 2013, though their percentage of the total enrollment has only increased 1 percent, from 3 percent to 4 percent during that time. The People’s Republic of China is the number one country of origin by a wide margin, providing almost 29 percent of the students studying in the United States. The remaining top five are India, South Korea, Saudi Arabia, and Canada. The top five countries with the largest university enrollment per capita are Canada, South Korea, Australia, United States, and New Zealand. Find details on the supporting documents website here [see reading list].
Financial Trends
Trends in U.S. incomes combined with tuition increases that have outpaced even medical expenses have seriously eroded the percentage of families that can afford sticker prices of schools like Oberlin. Since 1980 the CPI has increased approximately 300 percent while tuition and fees for Oberlin and peer schools have increased by over 800 percent. Median U.S. incomes have declined relative to price. The percentage of families with incomes equal to five times the median tuition our peer group of schools has decreased from 20 percent to just under 10 percent since 2002. Families with incomes equal to three times the median tuition has decreased from just over 50 percent to just under 30 percent. This information is provided in graph form.
The average debt of US graduates and the percentage of students with debt are increasing. In 2012, 75% of graduates from nonprofit four-year colleges had debt at an average of $32,300. It is important to understand however, that many of the most devastating student debt stories occur in the for-profit sector. That sector enrolls 10% of the students but receives 25% of the federal aid, most of which is student loans. 88% of 2012 graduates in the for-profit sector had debt with an average of $39,950. Nonetheless, student debt is a major concern across all sectors, is projected to continue to rise and will be a major target of federal policy.
Financing within institutions, including their own debt, is also a major issue facing all sectors of higher education. Public institutions face continuing declines in state subsidies and non-profit private institutions are increasingly challenged to fund the enterprise with the traditional three sources – tuition, gifts and endowments. Moody’s recently downgraded the entire sector, projecting that those three sources will soon be inadequate. Oberlin is particularly challenged as it is more tuition dependent than many peers. Adding to that challenge is the relative decline in Oberlin’s historically insufficient endowment from 60th to 110th since 1990 in the annual rankings compiled by the National Association of College and University Business Officers. This appears to be a product of performance, payout and new gifts. In general, the business model of higher education is being challenged and thought leaders are encouraging its change.
Market Disruption
The financial trends summarized above combined with developments and scalability of online education pose significant challenges to traditional, residential higher education institutions. While the initial excitement surrounding Massive Online Open Courses (MOOC’s) has ebbed, experts such as Clayton Christensen believe that they and other cheap (to the consumer) initiatives fit the pattern of disruption and will force significant change or closure. A more fantastic look at a possible future of higher education is posted here.
Another form of disruption can be found in the increasing demand for low-cost pathways to a traditional four-year degree. This takes the form of first attending community college and then transfer but also is demonstrated in the growing diversity of pricing models, some focusing on changing college spending patterns.
Enrollment and Marketplace Trends
A recent omnibus survey administered by Gallup in partnership with the Lumina Foundation strongly supports the notion that post-high school education is very important but almost the same percentage do not believe that higher education is affordable for everyone who needs it. Not surprising, over 80% believed that financial assistance is very important when selecting a college or university. Despite that importance, the vast majority believe it is not easy to find information on financial assistance nor on average debt for graduates of individual institutions. Most Americans still believe that a college education can lead to a good job with low income families believing that to a greater extent.
Recent research still supports the ‘earnings premium’ that a college education provides. Sandy Baum, a leading researcher on the effects of higher education, provides evidence that even with debt, the return on investment as measured by income begins in the mid-thirties for traditional aged college students. A more comprehensive report on how college shapes behaviors and other outcomes can be found here.
Federal Intrusion
Rising prices and student debt levels, along with skepticism about how much college students actually learn and are prepared for life after college have driven the federal education policy agenda recently. The Obama administration, despite criticism from higher education groups (not all of it productive), is likely to release a federal rankings system sometime in 2015. Factors such as sticker and net prices, graduation rates and short term earnings will be major contributors to this system and will certainly have unintended consequences and perverse incentives. For example, at-risk students tend to have lower graduation rates and may find themselves further shut out of enrollments which runs directly counter to the low-income initiatives encouraged by the White House. Additionally, the federal calculation of net price is seriously flawed and does not take into account the actual percentage of students receiving scholarship aid. As an absurd example, an institution with one student on full aid and everybody else paying the full sticker price has a net price of $0. Defining and demonstrating affordability is and will be a source of tension.
The US Department of Education is also collecting information, and is obviously interested in pursuing competency-based learning which is independent of seat time. This clearly poses a challenge to traditional institutions such as Oberlin.
The seven regional accrediting agencies have as one of their major roles serving as gatekeeper for the Department of Education as Title IV aid grantor. Each agency approaches accreditation differently but have in common a focus on demonstrated learning outcomes. It is certain that this focus will continue to evolve and become more of a challenge for traditional liberal arts higher education, the focus of which is the development of diverse knowledge and skills, with a longer term view of outcomes. Oberlin’s accreditor has changed their criteria for accreditation several times over the last 20 years and promises more changes in the coming years. The challenge rests not only in meeting the criteria but also the time and resources required to demonstrate that.
Technology
The effects of technological advances permeate this scan. However, one issue has not been addressed and that is the lack of savings resulting from these advances. In fact, increased use of technology on traditional campuses has actually contributed to the cost disease such institutions suffer. To simplify, technology has not been implemented to increase productivity. Additional learning gains may have been realized but traditional, residential colleges by and large do not use the technology to increase the number of students taught per instructor. Rather, the advances have required colleges and university to provide the tools students demand and will likely use in the market place and to allow more efficient use of research time for both faculty and students (not to mention the infrastructure required by these advances). None of that increases revenue per student or cuts costs per employee. The section on market disruption outlines a possible change to this paradigm.
Structure of the Workforce
That nature of higher education’s instructional staff has been changing for some time and the expansion of online education accompanied by funding challenges within institutions will likely accelerate those changes. Nationally, the percentage of tenure/tenure track faculty has shrunk from 45% in 1975 to 24% in 2011. Conversely, the percentage of contingent instructional staff has risen from 55% to 76% of the total instructional staff. Oberlin and peer schools have mostly bucked that trend and resident full time faculty is seen as desirable in the Lumina/Gallup survey cited earlier. Nonetheless as the business model continues to be threatened and traditional revenue streams are challenged to provide adequate funding, it is reasonable to assume that workforce changes across employee types will occur. This does not necessarily mean a major shift to contingent staff but spending patterns will certainly have to change, discussions of which are outside the scope of an environmental scan.
Comparisons to Peer Institutions
One of the topics proposed by the Planning Advisory Group for this scan was a discussion of benchmarks and peer sets. Both will certainly be addressed as the planning process is underway as strategic indicators are created to measure Oberlin’s progress towards goals. The purpose of this document is to summarize developments that will have an impact on the structure and delivery of higher education.
