KPMG’s annual survey, which polled 103 higher education leaders, (62 from private institutions and 41 from public) found that 37 percent said they are ‘very concerned’ about their ability to maintain current enrollment levels, up from 23 percent in last year’s survey.
“Higher education leaders are keenly aware that parents have lower credit scores as a result of the downturn and are facing tighter loan underwriting standards,” said Milford McGuirt, KPMG’s National Audit Sector Leader for Higher Education & Not-for-Profits. “Education leaders are increasingly squaring up to this reality and are thinking critically about steps they can take to make college more affordable and accessible without compromising quality.”
Alternative Methods of Delivery
Fifty nine percent of those surveyed, compared with 41 percent the previous year, said the top step their institution is taking to address issues such as cost, quality and access to education is putting more focus on innovative approaches such as online education, without compromising quality. This increase was substantial in both private and public institutions (55 percent vs. 35 percent in 2012 for private; 66 percent vs. 45 percent in 2012 for public).
“There is a clear recognition of the importance of exploring alternative methods for educational delivery, but to date very few not-for-profit colleges and universities have radically changed their business model,” said David Gagnon, KPMG Audit partner who serves as Northeast Area Leader, Higher Education & Not-for-Profits. “Institutions that can strike the appropriate balance between on-campus and online experiences will be most successful.”
Spending more to keep up with changes in technology (61 percent) and making more course offerings available online (50 percent), were selected as the top two changes institutions are making in response to recent trends in the educational marketplace. Again, the split between public and private respondents was instructive. For example, while 65 percent of respondents from private institutions identified a focus on spending more to keep up with technology changes as the top priority, just 56 percent of those from public institutions gave that answer. Conversely, 63 percent of public leaders said making more course offerings available online was a top priority, compared with only 42 percent of private respondents.
“Private institutions are concerned about their brand and there is a perception that online courses may dilute the small, liberal arts classroom experience,” said McGuirt. “Unlike private institutions, public colleges and universities may be more inclined to provide online courses because often their mandate is to make education more broadly available, and they increasingly face greater cost pressures to do so.”
Factors Impacting Enrollment
Asked to identify the major factors affecting enrollment at their institution, 58 percent identified parents/students inability to pay tuition as the top factor, compared with 49 percent last year. Respondents from public institutions were unchanged year to year, but the concern was more pronounced among private institutions, with 63 percent in 2013 versus 48 percent in 2012. Additionally, 38 percent cited changing U.S. demographics as a second major factor, though a dichotomy exists between public and private institutions - 51 percent from private institutions said changing U.S. demographics is a major factor, compared to just 26 percent the previous year, while public institutions saw a reversed trend, 20 percent versus 46 percent the prior year.
“We’re seeing a demographic change in the traditional student and that is of greater concern to leaders of private institutions,” said McGuirt. “We tend to think of the traditional student as a high school graduate who goes to a public or private college for four years and graduates. But due to rising costs and a poor labor market, many students -- especially those from immigrant or minority families -- are deferring college or looking for less expensive options such as community college. Some are foregoing higher education altogether, so concerns about enrollment levels are likely to persist among higher education leaders.”
Impact of Social Media
Higher education leaders were also asked about technological change and innovation. Sixty-two percent indicated that leveraging social media to better communicate with current and prospective students was on their technology agenda, though far more private leaders, 69 percent, compared to 51 percent of public leaders, were focused on social media.
“These results suggest that the high profile and state and local mandates of public institutions may make them less likely to leverage social media than private colleges and universities,” said Gagnon.
“Some public colleges and university systems are widely known to area residents, so there may be less pressure to use social media to gain additional exposure. But smaller, less widely-known private institutions view social media as another medium through which they can raise their stature and expand their demographic profile.”
When asked to identify the measures being adopted or considered as a result of cuts to federal and state funding, 51 percent of respondents said raising tuition. Thirty-six percent of respondents said they are offering more online courses as a result of cuts, while another 36 percent said they are delaying capital projects.
“Washington has said to these institutions, ‘you can’t just keep raising tuition,’ and yet for now, schools that can do so while maintaining enrollment are doing just that,” said Gagnon. “However, this approach will work for fewer schools over time as pressures increase to reform the traditional delivery model and better demonstrate the value of a college degree. As families continue to struggle with rising tuition costs, higher education leaders must find new methods for delivering quality education more cost-effectively.”
The KPMG Higher Education Outlook Survey
The KPMG survey was completed in May and June of 2013 and reflects the responses of 103 senior officers in higher education. Fifty-two percent described their role as CFO, 28 percent as CEO or chief academic officer and 20 percent as controller or budget officer.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
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