With the start of the new year, it’s time for Eduventures to take our best shot at predicting some of the top issues and opportunities that higher education institutions will face in 2016.
Our annual predictions are based not only on our twenty years of experience serving higher education institutions and their leaders, but also on our close examination of the major external circumstances (e.g., economic and geopolitical) we believe the nation will likely face in the next 12 months, such as:
- In the last year of the Obama Administration, we expect new regulations on student loan repayment, accreditation, and the for-profit sector. We do not expect that the Higher Education Reauthorization Act will be reauthorized in 2016.
- We predict a positive outlook for the economy, enough to persuade the Federal Reserve to increase interest rates at least twice in 2016. This means higher borrowing costs for individuals and institutions.
- Terrorist threats at home and abroad will heighten security concerns, exposing U.S. universities and colleges’ dependence on international students at a time when domestic enrollment is flat.
- Higher education will take center stage in the presidential election, where it will become a populist issue (e.g., cost, debt, ROI, outcomes, accreditation, and economic mobility). The “free community college” idea will get more attention.
- Continued campus unrest over a host of social and economic issues will be coordinated and orchestrated by both campus-based and community-based organizations.
Heading into the year with these broader trends in mind, here is what we expect for higher education in 2016:
Enrollment & Institutions
Flat overall enrollments among traditional-age learners, an ongoing decline among adults, and online enrollment up only in the single digits signal another challenging year for many colleges and small, private institutions in particular. The number of high school graduates peaked back in 2009 and will be flat at best for the next decade. Adult demographics are positive, but enrollment is counter-cyclical. Short of another recession, colleges will have to work extra hard to grow adult student numbers. Online enrollment is still a bright spot, but the market is ever more crowded as colleges of all types turn to online to make up for poor performance elsewhere.
Overall, this enrollment environment favors well branded institutions that are willing to grow and niche players with a distinct message that the market values. Other institutions will need to increase financial aid allocations further yet to meet their enrollment goals and make renewed efforts in retention to make up for revenue shortfalls. We expect to see increased merger activity among non-profit colleges, if tempered by constituent resistance. Additionally, institutional credit rating downgrades will increase 25% year-over-year, particularly among private colleges with enrollments below 1,000 students. Look for double-digit growth in the number of public-private partnerships—such as with online program management firms or international student pathway companies—as colleges seek to monetize their assets and raise much needed capital.
We also expect alternatives and complements to traditional degree programs (e.g., boot camps, competency-based education), touting faster, cheaper programs and enhanced employability to accelerate. The U.S. Department of Education’s new experimental sites initiative, to kick off this year, will offer participating providers access to federal aid. Just possibly another major for-profit institution will go bankrupt, trapped by regulator scrutiny, crashing enrollment, and loss of investor confidence.
The market for online proctoring is poised to go mainstream in 2016. Eduventures market analysis suggests that about 1,000 universities and colleges currently use some form of online proctoring, about a quarter of the total. A majority of institutions now offer at least a few online degrees, not to mention hybrid programs and online courses. Concerns about student cheating, closer scrutiny of student assessment, and the cost advantages over in-person solutions point to a bigger role for online proctoring. We expect the number of institutions using any form of online proctoring to increase from 1,000 in 2015 to 2,000 in 2016, hitting about 50% of the market. Testing centers without institutional relationships will account for another 1,000-2,000 sites. Providers will consolidate or collaborate to provide comprehensive menus of online proctoring options, including fully live, record-and-review, fully automated, and in-person options. Eduventures will publish more analysis on this market in 2016.
For a number of years, many have predicted that OER was about to reach a tipping point. In reality, adoption has been slow and piecemeal. Many institutions encourage faculty to consider OER, but faculty adoption is still in the single digits. The logic of OER—cost reduction for students and institutions compared to commercial resources—is hampered by decentralized production, distribution, and selection. There’s also the not-invented-here syndrome. Many faculty like the idea of OER in theory but for other people’s courses.
In 2015, University of Maryland University College (UMUC), a large adult- and online-centric institution, became the “first major American university” to replace 100% of undergraduate textbooks with no-cost digital resources. Graduate courses will follow suit in 2016. This bold move sets the stage for OER to (finally) become mainstream. If UMUC can convince the market that OER is not only a major financial benefit but also results in a higher quality student experience, prospective students will take notice. If UMUC can show it can run a more efficient operation with OER and redeploy resources, then competitors will have to respond.
It’s a safe bet that general alumni giving participation will tick down another notch in 2016. That has been the pattern for at least a decade. The proportion of alumni who say they donated to their alma mater is now barely in double digits. A wide range of good causes are competing for the attention of alumni. This is good news for Customer Relationship Management (CRM) system companies touting software designed to reach a wider swathe of contacts, develop richer profiles, and fine-tune outreach. Based on Eduventures data, large development offices are leading the way in making a switch, with 40% having implemented a new CRM in the past five years. Only 8% of mid-sized development offices and 6% of small development offices have incorporated a new CRM system, suggesting a great opportunity for institutions and CRM vendors if a compelling case can be made for investment. Eduventures predicts that as much as 10% of all colleges will seek to acquire a new CRM system in 2016. Vendors will boost sales if they can speak to the integration of different CRM systems across campus rather than add to the clamor of disparate databases and help institutions make best use of the software.
In 2016, teacher preparation will be at the heart of state-level education policy decisions. The new Every Student Succeeds act gives states significant flexibility on routes to teacher preparation. Add to this the Gates Foundation’s funding in this area, and we expect to see a shift in licensing requirements for teachers—and principals—in 2016. The high cost of tuition, the level of preparation needed for success in the classroom, and teachers’ low pay will push states to further favor alternative teacher preparation options. While the average school or college of education awarded nearly 70% of its degrees in teacher preparation a decade ago, this figure will fall to 60% in 2016, excluding special education and adult education. In response, schools of education will do more to experiment with alternative models, blurring the lines between approaches. The next few years will be a matter of trial and error, but eventually the pendulum will swing back in support of those models that emerge as most effective.
Final Thoughts on 2016 (for Now)
It’s safe to say that—as we wrote in our predictions—2015 was a year to face reality. In fact, this may have proven to be an understatement, as all higher education institutions are now awake to the internal and external fiscal, political, and cultural realities that promise to fundamentally transform American higher education.
This year, we predict that 2016 will be a year to unite. Beyond just a prediction, this is a call to action. We hope to see an unprecedented level of dialogue between internal and external stakeholders, including faculty, administration, trustees, state and federal officials, accreditation agencies, labor unions, and students. Through these conversations, we hope they will unite on a set of common-sense solutions that lead to a more affordable, meaningful college experience.
Buckle up—the next 12 months may be a very bumpy ride for colleges and universities.