University Business May 2017 - 9
By Tim Goral
ously, that it's a merger of equals. But as
Jim said, a true merger is really one in
which one of the schools will go away.
So consolidation has become, along
with strategic alliance in the last 20 years
or so, a vehicle that allows the institutions to start talking. Sometimes we will
quickly see they're really talking about
merger or, in the worst cases, they're really talking about closure.
There has been a marked increase in
the number of school closings and
mergers in the last decade. What
brought us to this point?
Samels: We didn't pay attention. We
didn't anticipate certain things that happened. We didn't pay much attention
to dashboard indicators, the key performance and agility indicators. Things got
way out of hand.
We didn't pay attention to pricing.
We let our private colleges and universities raise prices 4 percent to 6 percent per
year, in a 2 percent or 3 percent economy.
We should have kept a closer eye on tuition discount rates, and a closer eye on
family debt burden. We also didn't see
the changes in student demographics.
Martin: Another thing we began to see
was administrative bloat-the rise in the
numbers of administrators. What we
saw was an aging populace of presidents
who increasingly didn't want closure to
occur on their watch. They didn't feel
they needed mergers or even partnerships. These presidents would surround
themselves with people whose jobs
depended on the continuation of the
institution. The faculty's voices would be,
if not drowned out, certainly given less
authority. That results in a drive to keep
institutions as they are-we don't want a
partner. We certainly don't want to close,
so we'll add another office or another
person to study this.
So we find colleges sort of plugging
and chugging along, but they're headed
toward closure, and it will sometimes
come with the retirement of a longwww.universitybusiness.com
There's a need for access and affordability, but
there's not as much need for traditional, residentialbased campuses with high cost and maintenance.
standing president. That's when a new
board or a new president says, "This isn't
Is there another component here
with the increase in education outlets,
including online? Are there more colleges than we need?
Samels: Not only are there more colleges
than we need, but, interestingly enough,
there's a bunch of students who are still
Martin: I think we do have too many
small to medium residential colleges that
are high-maintenance, tuition-dependent, and are suffocating themselves.
There's a reason for the rise in forprofits and nighttime classes, 24-hour
libraries and so on. There's a need for
access and affordability, but there's
not as much need for traditional, "oldfashioned," residential-based campuses
with high cost and maintenance. That's
why they're going out of business. And
as Jim said earlier, if they are single-sex,
or religiously affiliated institutions, their
market is significantly smaller than what
it once was.
What about the flip side? Is there a
growth market in higher ed?
Samels: Yes. Not everything is a negative. Not everything is desperation. Every
so often there's a market opportunity
where timing is everything. One great
example is agriculture. Any investment
in the food system right now is going to
receive an outstanding return on investment in higher education. Colleges that
start to build greenhouses and innovation centers or "green incubators" in
agriculture will come out ahead.
Rowan University did something
really cool. Instead of merging, they
created partnerships at other schools.
For example Rowan University partnered
with Burlington County College to
create Rowan College at Burlington County. They got together with
Gloucester County College to create
Rowan College at Gloucester County.
They completely co-branded the product.
Martin: And it's not always a partnership between higher ed institutions.
Emmanuel College in Boston leased its
land to Merck pharmaceuticals, which
built a research facility on the campus
and all they wanted was use of the
Emmanuel library and gymnasium.
With mergers, partnerships and
closures continuing, what does the
future of higher education look like?
Martin: I don't think the for-profit sector is going to go away. I think it will endure. That's number one. Number two,
I think we're going to start to see an increasing number of partnering between
for-profit and a nonprofit institutions. I
think we're also going to see that online
education and competency-based education-which perplexes people now-is
going to endure.
When it comes to the traditional,
standalone schools we discussed earlier,
are they going to close and blow away
like dust? Maybe not, because if we can
meet with those people, we'll say you
don't have to do that. You can partner
with a school like Rowan, or with some
corporation or a for-profit institution
and you can live on.
Tim Goral is senior editor of UB.
May 2017 | 9
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