Top Threats to Higher Ed in 2019

Threat No. 4 — International Student Declines

According to this year’s Open Doors Report (the Institute for International Education’s annual analysis of data and trends), the total number of international students enrolled in the U.S. is at an all-time high, but the number of new first-time international students dropped by 0.9% following a drop of 7% the previous year.

There has been significant coverage of the demographic shifts affecting higher education and the impending steep decline of traditional-aged students beginning in 2026. There has also been ample coverage of the recent drop in new international student enrollments in the United States in the past two years, but the combined impact of these two factors has not been sufficiently recognized.

There are many good reasons to cultivate international student enrollment on our campuses:

•  International students diversify our campuses culturally, intellectually, and experientially;
• They enrich the global awareness and fluency of our domestic students;
• We develop advocates of the U.S. abroad as our alumni become leaders in their home nations;
• We have the opportunity to engage some of the best young minds from around the world in our domestic academic enterprise and during their initial post-graduate employment through OPT (Optional Practical Training); and
• They provide significant revenue to support the operation of our institutions for all of our students.

International students contributed $44.7 billion to the U.S. economy last year. The majority of that revenue first enters the economy through the colleges and universities they attend. The financial health of American higher education has been significantly buoyed by that tuition income. The benefit is not in the aggregate. In many communities, like ours, the university is a leading economic driver. Our financial strength redounds to our surrounding community in myriad ways. This model is repeated across the country.

Various reports have cited potential causes for the recent decline in international enrollments. These include:

• Slowing economic growth in some feeder nations;
• Growing options in their home nations;
• Students choosing to study in Canada and Australia;
• Growing concerns about safety in the U.S.;
• Leaders of some feeder nations threatening to limit visas; and
• Potential students believing they are unwelcome here because of political rhetoric.

As the population of eighteen-year-olds drops in the coming years, a positive financial outlook will require new sources of enrollment and possibly new types of revenue. Our communities and our nation will be wise to advocate for increased international enrollments as a primary strategy in mediating the effects of our own population decline.

If our institutions undertake these efforts collaboratively with their surrounding communities, we should also strive to share all of the benefits: financial, cultural, intellectual, and experiential. It is a scenario in which everyone wins.

Top Threats to Higher Ed in 2019

Threat No. 3 — Price Sensitivity

Although wealth has grown considerably since the great recession, it has not been evenly distributed. Those with the capacity to invest have seen tremendous gains in the past decade, but many in the working class and the lower middle class have experienced income growth that has not kept pace with inflation. The stress of their increased cost of living has made them more debt averse than in previous decades when it comes to student loans.

Student debt has rightfully become a major focus of the media in recent years; however, some of the debt story is misleading. Here are some important facts that the mainstream media haven’t adequately covered:

• This week, Inside Higher Ed reported that wealthy students are responsible for “some of the most drastic borrowing increases.”
• A recent article in Business Insider reports that 40% of student debt is for graduate school. Also, as of 2016, 51% of the households with student-loan debt are those of advanced-degree holders.
• For-profit institutions are the secondary-education sector with the highest percentage of baccalaureate students taking on $50,000 or more in debt (32%) compared to 11% overall.
• A new study produced by AICUP (The Association of Independent Colleges and University of Pennsylvania) shows that the net tuition (the amount paid after financial aid is awarded) among Pennsylvania’s independent colleges has increased at a rate lower than inflation for nearly a decade.
• The Federal Reserve reported that as of 2016, 10% of household debt was student loans, and 9% was auto loans, 6% was credit-card debt, and 67% was mortgage debt.

The return on investment of a college education remains high, as long as students persist through graduation. According to a report published by the Center for American Progress this summer, the median student-loan debt of defaulters is $9,625 because two-thirds of the people who default on student loans are those that didn’t earn a degree.

The average debt upon graduation from a four-year institution is $29,650. A recent Newsweek article clarifies the details of that figure:

“That ‘average’ is heavily skewed by large balances held by a minority of students—most likely, older, independent students who are allowed to borrow more—and probably doesn’t reflect the typical college student’s experience. In fact, three-quarters of students at four-year public colleges and two-thirds of students at private schools graduate with less than $30,000 in debt; about half have borrowed less than $20,000 and four in 10 come in under $10,000. Three in 10 undergraduates have no debt at all.”

This year we reached a new high in discount rates nationally, which means that colleges and universities are charging smaller percentages of their published tuition rates than ever before. To quote a wise colleague, “The market is dictating the cost of a college degree.”

Some of that discount is covered by funded scholarships, but most of it is tuition these institutions forego. This has been made possible primarily through careful budget management and under-publicized cost reductions, but at some institutions it is resulting in unsustainable operating deficits.

The result of rising discounts is that even though total student debt has reached an all-time high, according to the aforementioned Newsweek article “In recent years, students collectively have been borrowing less, not more, for college. In fact, new borrowing­—and new is the critical word here—has fallen in each of the past seven years.”

The public narrative is that a degree has become financially unattainable, but the truth is that on average, it has become more affordable.

At their annual meeting this fall, NACAC (The National Association for College Admission Counseling) voted to suspend their Code of Ethics and Professional Practices (CEPP). This action was in response to a challenge from the Department of Justice, which had determined that the CEPP amounted to collusion on the part of colleges and universities because it limited student choice.

For decades NACAC members had agreed not to:

1. Provide incentives for Early Decision;
2. Recruit students who had committed elsewhere;
3. Pursue students after 1 May (with the exception of wait lists); or
4. Recruit students enrolled elsewhere, unless the student initiated the process.

The DOJ averred that families were not benefitting from a truly open and competitive market. Many NACAC members, especially high-school guidance counselors, believed that the CEPP helped them to place students in institutions where they would be most successful. Both sides have valid points.

Given the recent meteoric rise in discount rates, it is hard to imagine families will see significant savings, but bidding wars may become common practice.

A number of colleges had worked outside the CEPP guidelines before the recent suspension. This was especially true regarding incentives for Early Decision.

The changes of practice that are receiving the most attention on campuses this fall are  the new allowances for institutions to continue recruiting students who have already committed to another university and to initiate the recruitment of students who are enrolled elsewhere.

In an October survey of enrollment professionals conducted by EAB, a larger portion of institutions were implementing new efforts to retain recruited students than were planning to “poach” from others.

A third were allotting additional strategic financial aid, and a similar portion was planning to significantly increase the amount of their deposits to make it less attractive to switch to another institution. A ninth were considering pursing applicants who had enrolled at a competitor, and about twice that many were considering continuing to recruit students who had deposited at another institution.

Four out of five institutions surveyed, said they were stepping up summer communication with deposited students. Many indicated that they were accelerating housing and roommate assignments and course schedules.

In our era of instant delivery, these are meaningful gestures to prospective students and their families. Many of them are aware of the thousands of students who take more than four years to graduate because of a shortage of required classes, but this a typically a symptom of large public schools. Among nearly all private liberal arts colleges, that doesn’t happen. A hallmark of our institutions has been an onboarding process that included multiple interactions between students and faculty advisors before selecting a bespoke set of courses for that students.

I am glad that many of the changes that are taking place will streamline the enrollment process for our students, but I fear more and more of them will be entranced by bidding wars and perks rather than fit and return on investment.

I hope in this new “wild west” of enrollment practices that, like Susquehanna, our sister institutions stay focused on their missions and the best interests of the students we were all founded to serve.