Innovation in Enrollment

Graduation Ceremony

As we listened to our clients and colleagues on the topic of enrollment, two major themes emerged. First, about half the schools we listened to are using athletics, academic program enhancements or pricing strategies to improve enrollment.

Second, more than half the schools are engaged in data analytics or some form of broad analysis to inform strategies aimed at the financial side of enrollment, retention and academic program assessment. Some use a cost and margin analysis solution while others used a cross section of processes from anecdotal to spreadsheet-based analysis.

ATHLETICS

The study of private colleges performed by the Council of Independent Colleges (CIC) titled “Innovation and the Independent College: Examples from the Sector” comments about the role of athletics in improving enrollment.

Intercollegiate athletics can help CIC colleges and universities improve enrollment by attracting students—especially male students—who have specific athletic interests or a general interest in sports. Athletics also can help smaller colleges to compete successfully with institutions in both the public and the for-profit sectors for students and to retain students through graduation. In addition, intercollegiate athletics can help integrate the student life and academic affairs experiences and provide a wider variety of experiences for traditional-aged students while diversifying revenue streams, including alumni contributions.

The CIC study reviews a number of schools planning to use athletics to boost enrollment. The arguments for an athletics-based enrollment strategy are compelling. One key item to keep in mind, however, is the impact not only on head count, but also on net tuition. In reviewing this strategy, we noted one school that raised and borrowed funds to build, among other things, an ice arena, tennis courts, a track and field complex, a baseball field and practice fields. The enrollment boost from those investments was exceptional. Enrollment grew from fewer than 900 students in the early 2000s to more than 1,700 students last year.

While the trend line for head count growth was truly remarkable, it proved harder (especially lately) to translate that head count growth into additional net tuition dollars.

Many of the schools we interviewed in our survey planned to add enrollment through athletics. Some added varsity sports like swimming, golf, lacrosse and wrestling, and others planned to add club sports and junior varsity teams.

ADD NET TUITION DOLLARS, NOT HEAD COUNT

Another university we talked with smartly added a net tuition-based enrollment growth target for athletes rather than relying on a head count target. They developed tables to understand the net tuition revenue earned from various types of students. Data on both net revenue estimates based on typical discounting strategies for each group plus academic desirability are included in the analysis. In working this combination of factors this year, the university produced the lowest discount and highest test score class it has attracted in quite a while.

Add net tuition dollars, not head count

ADDING PROGRAMS

The second primary area of responses dealt with the addition of academic programs. Popular programs included:

  • Data Analytics
  • Leadership
  • Media & Film
  • Cybersecurity
  • Health Care
  • Criminal Justice

In addition to undergraduate degree programs, many schools also launched or are planning launches of graduate programs. Some also are considering certificate programs

PURCHASING ACADEMIC PROGRAMS

Purdue University’s purchase of Kaplan University (a for-profit school) last year was notable as it sought to add academic programs in a unique way. With this transaction, Purdue hopes to focus on honoring its landgrant mission by tending to the significant unmet need of roughly 750,000 Indiana Hoosiers ages 25 to 64 (1 in 5) who have some college but no degree. Its stated goal is to help 300,000 of that group come back and finish their degree at Purdue.

As Purdue studied the opportunity to reach out to this large and important population, it recognized, through the work of at least two study groups, that building its own digital education infrastructure was both cost- and time-prohibitive. The study groups concluded that to be a true 21st century land-grant university, Purdue had to acquire the capabilities for online education excellence rather than build it from scratch.

This recognition led to the acquisition of Kaplan, which already had a highly successful, Higher Learning Commission-accredited school. Kaplan enjoyed a positive reputation for ethics, academics, regulatory and legal compliance and the parent company (Graham Holdings) holds a positive reputation for its work primarily in education and media.

With this purchase (for $1 and a revenue-split agreement), Purdue added significant new net revenues and actually reduced its dependence on state funding, which has been a sore spot for many public universities.

The payoff is the fact that this not only creates positive economics, but it more importantly helps Purdue in its role as a land-grant university. When explaining the aim of the Morrill Land-Grant College Act of 1862, Sen. Justin Morrill (himself a high school dropout) said, “This bill proposes to establish at least one college in every State upon a sure and perpetual foundation, accessible to all, but especially to the sons of toil…”

In addition to the work Purdue has done, National Louis University in Chicago—a private not-for-profit college— executed a similar transaction in 2018 to buy Kendall College (again for $1). Kendall (owned by Laureate Education, a publicly traded company operating a global network of for-profit colleges) housed five degree programs, including a well-known school of culinary arts.

DOES TUITION RESET WORK?

The Chronicle of Higher Education reported in 2017 that nearly 3 percent of institutions—private and public— reset tuition. U.S. News & World Report cites 20 percent of respondents in a survey of 300 private colleges said they would consider a reset in the future. It also reports in an October 2018 article that in the 2018–2019 school year, 20 private colleges have lower tuition and fees than they did five years ago (2013–2014). The majority of these schools were regional colleges and universities. More than half of them have enrollment of 1,500 students or less in the 2017–2018 school year.

The main question is, will it work? The answer to that question is a definitive “it depends.” One strong argument for a tuition reduction is the number of students and their families who rule out schools just based on sticker price.

Will a tuition reset work? The answer to that question is a definitive “it depends.”

A study done by Sarah Kottich from College of Saint Mary looked at schools that executed tuition reductions, with some interesting results. From a head count perspective, the tuition reductions on campuses appear to be working at least initially, as there is a 13.5 percent increase in enrollment between 2016 and 2017 at schools doing resets between 2015 and 2018, and an overall 4 percent increase in the period from 2016 to 2018.

In looking at it from a net tuition standpoint, only 47 percent of the schools doing tuition reductions experienced gains in net tuition revenue and only 21 percent had meaningful (more than 10 percent) gains. For those that lost net tuition revenue (53 percent) despite the tuition rate reduction, the average loss was 20 percent over the three-year period reviewed.

CAN DATA ANALYTICS PLAY A ROLE?

Manuela Ekowo, former education writer and policy analyst for New America, recently reported on the growth of data analytics in higher education. Her research noted 40 percent of colleges responding to a New America survey reported using big data on their campuses. BKD’s observations in this area point out that data analytics appear to be successful in three key areas:

  1. Knowing which students to aggressively recruit
  2. Knowing which students to proactively engage in a meaningful way to increase retention
  3. Knowing which programs to start, stop, maintain or grow

According to their website, the University Innovation Alliance (Alliance) is a group of 11 public universities with a common goal: “To help more students gain access to higher education and better educational outcomes.” The Alliance has encouraged its members to use the best tools possible (including data analytics) to improve outcomes for students. A review of Alliance member achievements shows significant strides being made on retention rates, graduation rates, on-time completion, college performance (grade point average) and debt reduction. The data-driven approach and other measures are beginning to “move the needle” on Alliance member campuses in terms of enrollment.

INNOVATION SUMMARY

  1. Add athletic enrollment but make sure net tuition rather than head count is the key metric.
  2. If you have the option to purchase an academic program, it may be less costly to buy than to build. Evaluate both options.
  3. Enter into the tuition reset discussion from the standpoint of financial strength rather than weakness, and don’t overestimate the potential results.
  4. Use data analytics for margin, markets and mission decisions.

Read more about how colleges and universities are innovating to improve enrollment by downloading our 2019 Higher Education Outlook.

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