Higher Education Models for Survival

Posted on September 30, 2012June 2, 2014 by David C. Brake

In my last blog, I talked about some of the challenges higher education institutions face to be sustainable. Of course no one has all the answers, but I think it’s important to start asking questions and begin thinking about some of these things. I keep hearing the face of education is changing, but will the consequences be disastrous for American Universities? If so, how will that affect the rest of us, and will it change what learning means? Will those universities that make it through the next decade do so by engaging new and potential students in new ways? Is it true that kids will need more convincing of the advantages when departing from their money and taking on new debt becomes a harder sell? (Is it true that I ask too many questions?)

By the way, for anyone who thinks I am spreading unnecessary gloom & doom about the state of higher education financials (or watering it down), here is a more emphatic economic viewpoint here: colleges that will be screwed when the student loan bubble pops, and for an extreme student perspective, try www.uncollege.org.

Meanwhile, I am going to jot down some thoughts about some of the major changes already taking place in response to the pressures burdening higher education. Some examples to explore are: free courses, grassroots education, and online universities. Additionally, I will mention a few other things that universities are doing to adapt, overcome, and survive.

Is it Socialism, or a Techno-Cultural Revolution?

So why should a fresh high school graduate go into debt when they can take free high level courses offered by high profile universities like MIT, Oxford, and Berkley? Why should they struggle to stay awake in endless lectures when they can take the class on their own terms? One answer might be for the credentials, but here are two key facts:

The perception of a college diploma has done a complete one-eighty in the minds of some in the millennial generation from their grandparent’s day. Universities have to shift their focus and what they have to offer, or they may wither on the vine of progression.

To make things even more competitive for universities, online colleges are gaining momentum, and credibility. They come at a fraction of the price, although as of yet there is still no legislation to protect students from predatory private loan lending. They do seem to be effective for some applications, even though all the trimmings have been shaved away.

No dorms, no sports, no walking to and from class. They’ve got archived classes, live and interactive classes through webinars, 24/7 tech, and possibly tutoring support, as well as virtual advising. An education in the palm of your hand? Perhaps, if you can tune out everything else around you and pay attention.

The direction that education is going with ebooks, mobile technology, and virtual reality is providing some interesting options as education is being organically socialized through technology.

Traditional Education Plays Along

If students do opt to pay for a university, who will they choose and why? Before answering this rhetorical question, I want to mention a simple truth I just came across that I found interesting. I was previously unaware of this. Apparently, statistics show the male participation rate in the workforce is at an all time low in America, while the ladies are enjoying their highest participation rate in US history. Male dominated industrialism is fading away, and there isn’t enough money floating around the service sector. Where have these guys got to turn?

In the last few days, the world has seen unprecedented riots in both Spain and Greece in response to basically one thing: unemployment. They’ve got millions of millennials with no job prospects. If any of them have access to a university, they may choose the one that convinces them it can maximize the value of their education, while minimizing investment risk and overall costs.

What Colleges Are Offering

Collaborative Social Value
High Job Placement Rates
Educations that Follow Industry Trends
Social Media Access and Integration

Many people may want jobs, but most desire full-fledged careers and they’ll likely pick the establishments that can prove they’ll deliver. To add to the scrutiny they face from students, cash strapped state and federal accreditation agencies are coming down hard as well.

With low job placement rates, colleges could lose a big part of the whole can of worms. They can have their accreditation stripped away, the ability to offer financial aid taken away, or have their doors shuttered for good. Social Darwinism seems to be taking over the educational system, and high income success rates are an important niche available to exploit.

In response, companies like Mach Interview are springing up to assist universities with higher job placement rates. Through consultation and determined methodologies, they are helping them turn things around using things like:

Online Career Profiles & Portfolios for Students
Special Niche/Industry Specific Software
Interactive Job Placement Curriculums
Working and Networking Directly with Recruiters during school.

As far as national trends go, for women the biggest push in the last four or five years has been the medical and nursing field. For better or worse, Healthcare in general in response to the aging boomer generation has manifested all kinds of localized small universities like Devry that try to cater especially to them.

For men (also for better or worse), the workforce seems to be going virtual. Our advertising tells men to join the military, learn a specific craft, or get behind a computer screen. Getting a degree in History, Literature, or General Studies isn’t pushed as hard anymore. If they choose to enter a university to pursue fields within the math and science categories, it is assumed they want curriculum tailored for a certain career path.

Where the Learning Curve Ends

Globalism, automation, nanotechnology, and virtual intelligence are changing what it means to be educated. This is happening as the collapse of old systems causes a reorganizing of the perception of work and education. Many things can be self taught or taught through peer to peer learning, universities are becoming more like clubs with social networking streams, and grassroots education is picking up steam. People are simply coming together and teaching one another. They are buying and selling quasi black market educations amidst a jobless recovery and a cashless society.

“Why pay for a class when you can download an extensive ebook independently published for free by a laid off professor on any subject for as little as a dollar?”

Plenty of universities will undoubtedly survive and live on. They will adapt to trends, make job placement rates a priority, and market the success stories that emanate from the social interaction that only comes from learning together on a campus. This is fair, and children and parents will always admire a classroom education and credentials, but will that mean the same thing as it once did? Perhaps more importantly, should it?

Will Higher Education Have a Higher Mortality Rate?

Posted on September 23, 2012June 2, 2014 by David C. Brake

This topic came up briefly while talking to a few college students the other night at Startup Houston roundtable about whether they felt they were getting their money’s worth, so I thought I’d throw in my two cents. While historically, higher education in America led the way in terms of global leadership and turning a profit, there are some who believe that paradigm may be changing. Colleges are contending now not only with the chaotic bursting of the credit bubble, but also with a growing population of disillusioned potential students.

These young men and women have watched the months go by as literally millions of people throw up their hands and leave the workforce; many of whom already have accredited four year diplomas. Additionally, their parents are strapped for cash, most likely unemployed/underemployed themselves, and have also lost faith in the educational system in general. Let’s look at some financial aspects and social variables which may determine which Universities are likely to survive.

Appealing to a Changing Social Dynamic

The traditional “well rounded” education may be losing its perceived luster. The workforce of the 21st century is telling people they need well defined schooling, niche curriculums, and technologically dense programs. Fewer people want to study French literature, while drastically more feel that they need to sit behind a computer screen and get an edge on modernity.

Students are drawn by the potential to make money once they graduate, rather than simply being able to tell someone they have a degree. The millennial generation cares very little for paper diplomas and tassels anymore. They want to believe that they’re going into debt with better chances of well paying careers.

During the credit bubble of the last thirty years, families were more than happy to send their children, most of whom were first generation attendees, to school under the pretense that paying off loans would be a cinch with a prestigious certificate. These days, those who already have them are churning out horror stories of debt serfdom to what is sometimes perceived as a profit driven franchise that sold them a fairytale.

The universities that will make it through the next decade may well be those that can adequately demonstrate both the importance of the experience and that their graduates move on to jobs in thriving sectors of real economies.

Finances Determine Everything Moving Forward

Like the US government drowning in deficit spending, over a third of US colleges look like major banking and investment firms. Their books are riddled with overleveraged debts, and dwindling incomes/investors. Their expenditures are through the roof, while their attendance is less than spectacular and doesn’t always cover basic operational costs.

This research put together by www.thesustainableuniversity.com suggests that the landscape of higher education may look like the banking sector soon, with more and more going bankrupt and disappearing. They would suggest that liquidity is the name of the game, and only those that can get their books in order are going to weather the fiscal storm. They state the following: “Institutions have more liabilities, higher debt service and increasing expense without the revenue or the cash reserves to back them up.”

Simply raising tuition isn’t going to work. Exponentially inflating costs of living, commodities, and basic necessities will see to that. Instead, the lion’s share of success is going to go to (of those without huge endowments) those that can find ways to lower costs, while also giving students new services and options that they see as relevant today.

The old dynamic of spending more and more into success quite frankly looks insane even from a freshmen accounting major’s perspective these days.

Determining Risk Factors for Universities

Are those colleges that spend more and more without specifying their curriculum to suit new demands in extreme danger? It seems that for nearly any institution that isn’t currently considered cream of the crop, the downward pressure is immense.

With potential hyperinflation right around the corner, millions in endowment money is becoming chump change, and serious reorganizing is in order for those that don’t fall into the billions category.

US assets aren’t the only thing being downgraded. If the books are in complete agony, and tuition becomes a crutch, bond downgrades are likely to take a chunk out of survivability.

Colleges that have, out of necessity, had to turn to drastic measures like lowering standards, laying off faculty, or poignant tuition hikes will be perceived to have a short shelf life.

Digital Salvation & Outsourcing

From strategically putting money where the innovation is, the growth of ecommerce, and outsourcing data center and IT work, universities are scrambling for digital salvation. At the end of the day, even if they get their books completely in order, get their real estate values in line with reality, and cut down on a plethora of unnecessary expenditures – without adequate numbers of students, obviously failure is inevitable.

And so they say, the challenge facing higher education has never been greater; the risks have never been sharper; and the incoming tsunami of the higher education bubble has already pulled out the tide by a mile. Here are four things in my view that set apart those that are likely to succeed from those that are staring down the barrel of a financial gun:

Colleges with a concise, and well defined strategy of change and evolution, coupled with a stringent focus on providing value and a higher job placement rate.
Institutions that incrementally cut down on both support and administrative costs, while still managing to give students access to modernizing research and development.
Determined and smart investment in innovation that is perceived by students as both valuable and constructive.
Universities that legitimately conjure up free capital in non-essential assets.

It would seem that only the universities that take the time to regularly examine positive and negative perceptions of their perceived value and react accordingly will stand the best chance to leverage what they need to compete with the likes of Stanford or Harvard. I doubt this is any longer an optional exercise, as students increasingly begin to view their tuition and time as an investment rather than a requirement of the status quo.

Widely Used As Textbooks: Do We Have A Choice?

Posted on September 3, 2012June 2, 2014 by David C. Brake

Given the chance, most any college student will lecture at length about the steep cost of education, including the price of textbooks and books widely used as textbooks. The typical price of books for one college semester bought through the school store can easily reach $500, and in some cases much more. This has led to the creation of an old college tradition – watching the jaws drop and the pale faces of the people in front of you in the bookstore line as they bend over and kiss their sweet cash goodbye. It’s practically hazing, and you know your turn is coming up soon.

So Why Do Textbooks Cost So Much?

Here’s the dirty little secret. The textbook marketplace in the US does not function using the usual supply-and-demand economic model that we are all familiar with. Instead, it has been likened to the health insurance marketplace, in which the content (books) are prescribed by the professor or instructor (the doctor) to be used by the student (the patient). In most cases, the books are paid for by parents or through a loan (the insurance company). This leads to higher prices for books, because for students they are an essential service and the money must be provided to pay for them. Think it’s not a fair analogy? The 2005 report by the General Accounting Office stated that from 1986 to 2004, textbook prices rose an incredible 186 percent, compared to a 3 percent rise in prices in other areas.

So in 2006, The U.S. Education Department studied the college textbook situation and came up with five key reasons for high textbook prices:

Students must buy certain books if they want to excel in the class. What else could you do, refuse to buy it? The professor will just have one less person to teach.
As is the case with many industries now, the textbook publishing industry is dominated by just a few companies. Due to high publishing costs, others just can’t compete with Thomson, McGraw-Hill, Prentice Hall, and Houghton-Mifflin.
College bookstores charge high retail prices and are often designed to make a profit for the university.
Professors often receive copies of textbooks for free in the hopes that they will be used, and therefore may not know how much they cost. (Some professors need all the price breaks they can get too.)
Some professors who author textbooks might assign them to their classes to increase their royalties. (You know they’re out there.)

In addition to all this, textbook publishers frequently “update” older books to a new edition, adding in a small section or pictures. There is usually not much new information, but this means that students can be required to buy the latest edition for a premium price.

Quality yet Affordable Textbook Sources

As a reaction to the textbook pricing dilemma, the more recent trend is to look for alternative sources. Yes, the internet is once again the great equalizer, and more people are opting to buy their textbooks used online instead of buying them new or through their school. Books that are widely used as textbooks can be found online that are often of good quality, with a much better price than new books or those purchased through the university. Thankfully, there are quite a few internet options for finding and buying textbooks. Here are a few picks.

Amazon.com I know it is now cliché – sporting everything from swimming pools to tweezers, but it is still one of the best places to buy textbooks online because of the vast ability to search and choose from bookstores all around the world. Some of their most popular books that have been widely used as textbooks are the 8^th Edition of Mastering Biology, Biology: Concepts and Connections with myBiology, Managerial Accounting, Principles of Microeconomics, The Art of Public Speaking with Connect Lucas, and Nutrition: Concepts and Controversies. The latest word at Amazon is that they even RENT textbooks now. (Woohoo!)

Abebooks.com is another great place to find books that are widely used as textbooks. Though usually more limited to the United States, this site sometimes finds books and stores that Amazon and other searches do not. You can find new and used books here. Half.com, associated with Ebay, is a good place to find cheap used books. You can often get a great deal here because many of the sellers are individuals like you who are done with the book and would like to make anything they can off of it.

Bigwords.com and Chegg.com are also worth checking out. BigWords is an interesting site because it will optimize the shipping of your books to get you the lowest price possible. This site also allows you to sell back your books that are widely used as textbooks for a little extra cash at the end of the semester. Chegg is good for college students looking for cheap books that they will only use temporarily. Instead of buying the book, you only rent it for a semester or however long you may need it. Free shipping is provided for the return of the book.

Another trend worth noting is that many people are now moving to e-books, many of which are widely used as textbooks. There is some controversy over this though, because of the assumption that students will have plenty of internet access to make use of them. Most often this is true, but not all students have this access, and some professors are still using them anyway. They are much cheaper than physical textbooks though, and arguably (depending on who you talk to), this alternative does not take away from the educational value.

Hauling them around is no longer a feat of strength, and in some cases they are available from any internet access point. The method of viewing e-books is not perfect, however; some people would rather read a physical book than a computer screen. Tablet computers and e-book readers are a good solution to this, but often students cannot afford these devices in addition to the cost of an ordinary laptop.

Speaking of new trends, I would be remiss if I didn’t give a big tip of the hat to some of the new open education platforms where all e-books and online learning materials are completely free: Ck12.org (they call them “Flexbooks”), Saylor.org, and of course Khanacademy.org. (Wave of the future perhaps…? Don’t get me started!)

Primary & Secondary Education: What’s the Status in the Lower Grades?

In the lower grades, kindergarten through 12^th grade, the textbook marketplace has very different yet equally devastating problems. The students obviously do not buy their own textbooks – the schools do. The issue here is not price, but content and quality. It turns out that the lower grade textbooks used throughout the entire country are developed according to the standards of Texas in particular, and to a smaller extent, California and Florida.

This is because these three states are what is known as adoption states. That means that they buy such a large percentage of the total textbooks needed for the country that publishers end up tailoring their content to suit the particular requirements of the adoption state, usually Texas for grades K-12. The other states of the nation end up adopting and using the books that are approved by the adoption states. Therefore, the Texas Board of Education composed of five Democrats and ten Republicans determines the content of the textbooks that the whole country will use. This has led to some very controversial (and many would say incorrect) interpretations of both science and history, particularly concerning an attempt to omit Thomas Jefferson’s belief in separation of church and state in 2010. https://truth-out.org/news/item/10188-bill-moyers-messing-with-texas-textbooks

Back to the Books

Anyway, while textbook content issues in the lower grades may have no easy end in sight, at least the issue of price is diminishing somewhat for many college students due to choices available today. There is no longer any reason to buy the most expensive new college textbooks through your university, when most of the books that are widely used as textbooks can be found at much lower prices through an online used bookseller. If you are instructed to use the latest edition of a certain textbook, ask your professor if it would be OK to use an older edition which is typically much cheaper. There may be a legitimate reason not to do this, but letting the professor know privately that it is a financial consideration might garner some acceptance. Either way, it’s worth noting that a bit of shopping around can help save hundreds of dollars on a semester of books, and much more over the course of a college education.