The business model of education is fundamentally broken.
Do business executives have the right skills to take on leadership positions at institutions of higher education? The recent firing of a former private equity manager Simon Newman who served as president of Mount St. Mary’s has rekindled that debate.
To be sure, Mount St. Mary’s had a bad experience — its president reportedly said that the school should kick out struggling students early on, before their attrition would impact retention numbers reported to college raters. He compared the strategy to drowning bunnies….
But one bad apple should not spoil the barrel. While the United States’ higher education system remains the envy of the world, its business model is fundamentally broken. Relentless tuition increases are making the quality of education we provide beyond the reach of students living in this country and an increasingly unattractive option for students living abroad. Experienced managers with business and finance skills can help solve the problem. But college leaders must also be committed to the ultimate goal of the institutions they lead — educating students.
For instance, take the issue of retention. A cold business analysis would support the direct solution Mount St. Mary’s President apparently wanted to pursue – kick them out before they can hurt the schools’ rankings. Someone with an academic orientation might see the retention problem a little differently – a failure of admissions policies to identify students who can succeed and/or insufficient support services for students once admitted.
At Washington College we are tackling retention by combining some basic business common sense with an overarching objective of success for every student we admit.
Our retention numbers are good but we want them to be better. So in true business-like fashion, we at Washington College analyzed the profiles of students most likely to drop out after the first year. We found that two strong predictors of attrition were financial need and a sense of social isolation. In other words, students struggling to cover tuition costs – sometimes with excessive borrowing – were more likely to drop out, as were students who felt detached and alone – those, for instance, who were not active in a club, sport, or academic group.
So we have launched a new program called George’s Brigade to tackle these twin problems. We are aggressively – and successfully – raising scholarship money to fully cover tuition and room and board costs for academically talented students who come from families of limited financial means. And we are allowing our George’s Brigadiers to apply to our school with friends. Working with their high school counselors, they can apply and be considered as a group. In this way, we hope to enhance their transition to our school by enabling them to share it with other students who they know and come from similar back grounds.
Included in this new initiative will be leadership training, support services, mentoring, internships and other programs designed to make sure our students can fully experience all that our small college has to offer. Like other liberal arts schools that populate the country, we offer a high touch, quality education – one that teaches our students how to write and communicate, to think critically and ethically, and to adapt to the ever changing challenges of our complex, global economy. We teach them skills that will last a lifetime with future earnings potential that far exceeds vocational skills having a shelf life of only a few years.
George’s Brigade is just one component of our full frontal assault on affordability. We have frozen tuition, we are scrutinizing non-faculty hiring, and we have launched another scholarship campaign, Dam the Debt, to help pay down graduating seniors’ student loans.
Making our school more affordable and giving our graduates more financial freedom as they enter the workforce are the right things to do. But they are also the smart thing to do from a business standpoint. Colleges and universities are on an unsustainable path. Similar to the role easy access to mortgage borrowing played in feeding the housing bubble, readily available student loan programs have fed unsustainable tuition increases. And the sad irony is that even as student debt has surpassed $1.2 trillion, the percentage of high school graduates going to college has remained relatively flat for the last decade. We have increased the costs of college. We have not increased access.
It’s time to bring some business discipline to our system of higher education.
Sheila Bair is the President of Washington College. Her previous positions include Chair of the FDIC, Senior Vice President of the NYSE, and Dean’s Professor of Regulatory Policy at the University of Massachusetts.