I attended a few weeks ago the ASU GSV Summit in San Diego and heard an interesting keynote from Dan Rosensweig, CEO of Chegg and his presentation focused on the higher education bubble.
Dan eloquently explains all of the data and analysis which I agree seems to point to a higher education bubble and to the fact that we are probably close to the ‘bursting point’.
The higher education bubble appears to be due to an in-balance in the value equation for Higher Education. The high and increasing price for college is simply too high for the current value proposition being offered. Falling demand from students combined with over-supply from education institutions points to a bubble.
Where I have a different line of thinking, is not if there is a bubble in Higher Education, or whether it is about to burst, but maybe more importantly what options exist for colleges to ‘manage’ this bubble?
There are three broad strategies that I think could be adopted:
- Do Nothing – let market economics work their magic and deal with the over-supply by some/many institutions eventually closing their doors. If you believe that the ‘bubble’ is not evenly distributed and will affect other institutions more than your own, then this could make sense. This might make sense particularly for Ivy League+ schools.
- Restructure – another option is a combination of reducing prices for college education combined with cost cutting to make institutions more competitive. In short increasing demand by providing a cheaper and possibly a lower quality product to students.
- Improve Value Proposition – this final options involves looking at the underlying value equation being offered to prospective students and finding new ways to justify that premium price.
If I were a Dean or Chancellor, I would focus on the third option and in particular I would invest in two areas that I think can improve the value equation relatively quickly and significantly.
Firstly, I would invest significantly more in career services including alumni student mentoring. A Gallup/Purdue University study last year pointed to the importance of receiving a mentor while a student in achieving improved life-time outcomes. Moreover, I believe the more a college can do to demonstrate how they provide superior career services the stronger the premium they can justify. Parents in particular will appreciate this as it is easier for them to quantify the return on investment from a college education.
Secondly, I believe investing more in alumni relations and in particular in alumni career services. Your alumni are your institution’s most important asset and building relationships with them is the equivalent of the business world investing more in their corporate marketing. Alumni are your brand ambassadors. The greater the alumni network, the greater the premium to your institution that can be justified. This also complements improved career services as your alumni will be an integral part of your students’ career community.
Although I believe there is a bubble in higher education, I also believe this can be managed properly through increasing the value equation offered to students via career and alumni relations services.
Do you agree that there is a bubble in Higher Education?
And if yes, which strategy do you believe is the best way to manage this bubble?
Finally, do you agree that investing in career services and alumni relations is the best way to re-balance the value equation for students?
I would welcome your thoughts.
Worth also reading The Case for Mentoring.