Working with primarily tuition-driven independent colleges and schools throughout the country, we have witnessed first-hand the impact of the recession on the independent education sector. The net enrollment impact has been mixed, depending upon region, institutional stature and position in the marketplace, and demographic trends. Here are some common themes that we are seeing this summer:
- Tier One - Schools and colleges with a strong market position, solid audience base, and high brand value and recognition appear to be making or exceeding their enrollment goals. They may have had to increase their financial aid outlays and become a bit less selective, but they are managing to make it through this economic storm.
- Tier Two and Below - Institutions of moderate or unstable market position, with less obvious brand value, are struggling to achieve enrollment or budgetary goals. Those with solid tracking systems and financial forecasts were able to plan ahead and begin the conversation of rightsizing and non-core budget cuts. Those with less mature systems are scrambling.
- Less expensive parochial and conservative faith-based schools appear to be thriving. They seem to be skimming off some of the market position from tier one. Their value proposition? "We're half the cost and we're not public schools."
Exceedingly, however, one theme is emerging as strategic to me. As every college and school campus across the nation debate the merits of their financial operating assumptions, including class size, number and quality of faculty, financial aid outlays, price, and optimum enrollment size, few are taking the long-term view. Most schools seem to be in response mode today, creating short-term plans when the real economic problems are long-term. Most factors associated with our economic meltdown took years to fully develop and converge into a crisis. We don't see enough schools and colleges thinking logically about the nature of this change and the long-term impact on schools.
During the 1990's and early 2000's most schools and colleges operated on growth assumptions. The question was where to grow and by how much. Strategic growth was measured by enrollment and net tuition. It seems to me that these conversations are fundamentally shifting, and now more schools are trying to sort out their financial future. Growth is still occurring, but it is more systematic and strategic, and for small colleges and independent schools, it is becoming harder and harder to find pockets of program growth or create Blue Oceans.
If your school or college is having conversations about optimum enrollment, ideal net tuition discount, programmatic growth, or niche markets, we suggest that the long-term view should be at the center of the discussion. Creating a long-term, sustainable financial model that is conservative in nature and will manage the potentially wild consumer behavior fluctuations that have emerged in the recession and post-recession periods will likely have a better impact on the future of the institution.