Economist Roger Brinner: Weak enrollment will cripple higher education revenue at the same time that government budget crises may slash support; online learning strategies offer a critical solution

BOSTON, Nov. 29, 2012 /PRNewswire/ -- A five-year fiscal quagmire confronts higher education unless college and university presidents take substantial steps to improve the value proposition to students, according to Roger Brinner, Partner and Chief Economist at The Parthenon Group. Further, ongoing sustainability and, for some institutions, even long-term survival will require strategic use of online learning opportunities to increase student access, maintain instructional quality and reduce costs.

This was the message Dr. Brinner delivered at a recent convening of about 30 New England-area university presidents and senior leaders hosted by the Boston Higher Education Innovation Council and The Parthenon Group, a global strategic advisory firm with a dedicated Education Practice.

"The confluence of flat or declining enrollment, unsustainable tuition inflation, the government fiscal crisis, and mounting student debt has created a severe business headwind that will not be resolved through ever higher tuition," said Dr. Brinner said. "To say that this is a difficult situation would be an understatement; it means education leaders must find new ways to operate. Simply increasing prices is not an option."

According to Dr. Brinner, post-secondary education has historically been a predictable counter-cyclical industry because people turn to school during economic downturns – as has been the case in the Great Recession. Now, as the economy slowly rebounds, this cyclical lift will be lost during a time when student-age population growth is also unfavorable. The household income and wealth lost in the recession have also pushed prospective students to recoil from the prospect of education debt.

"Without the expected counter-cyclical tailwind, and given demographic changes in the traditional college age bracket, enrollment trends are projected to remain flat for the next five to seven years," Dr. Brinner said.

On the fiscal side, Dr. Brinner said expanded government support or relief are unlikely. State and federal education budgets will remain crippled. The US economic recovery will be tepid or worse: at best, a strong housing recovery will partially offset coming federal fiscal restraint; at worst, the "fiscal cliff" will create havoc.

Dr. Brinner warned that college and university presidents must adapt by improving the value proposition to students through improved outcomes and reduced costs. He noted that research by The Parthenon Group showed that 55 percent of potential students under 40 said college education was important to getting a good job, but 70 percent were reluctant to take on debt, despite the potential for advancement.

"It is common to criticize the cost of higher education or falsely assert that the return is not worth the investment, yet no other single force has the potential to drive profound change in the employability of Americans as higher education," said Dr. Brinner. "Institutions must improve the value proposition of that degree to students."

Online Learning Plays Central Role

The Parthenon Group's Education Practice has identified several key objectives for post-secondary online learning from its study of the roles, strategies and costs of applying emerging technologies across the spectrum of public and private education. Among them:

• Expanding student access and course-time flexibility – allowing students who cannot be onsite to continue and high-performing students to accelerate their studies;
• Reducing system and student costs – from a reduced need for physical infrastructure to an increased institutional capacity; and
• Enhancing the student experience by complementing core programs and allowing for flexible and self-paced learning.

"While online learning generates excitement and controversy in equal measure, its effective use is key to the future of education because it is the factor that will reduce costs and increase access over the long term," said Robert Lytle, Partner and Co-Head of The Parthenon Group's Education Practice, Private, who addressed the BHEIC gathering with Dr. Brinner.

"But new technology-rich education models need to be evaluated based on the results that they produce relative to the required investment. Implemented correctly, online learning will broaden, not cannibalize, student enrollment, presenting a viable channel for sustained revenue and growth," Lytle said.

Success may rest in each institution's ability to deploy technology and online channels in ways that best fit its faculty, students, programs and reputation. "MOOCs are not for every school, but offering, say, Accounting 101 in an online-only modality could make a lot of sense," said Lytle. Considering online learning as a strategic option can allow schools to reach new audiences at costs of 25 percent to 30 percent less than traditional onsite delivery, he said. 

Students are seeking online offerings in a variety of forms, Lytle said, including online/hybrid courses for campus-based students, fully online degree programs (e.g., certificates, associate degrees, bachelor and graduate degrees), and self-directed courses inspired by the MOOC model. 

"Though the current situation is dire, decisive action now, notably by embracing the promise of online learning, will benefit individual students and universities in the near term," said Dr. Brinner. "But more important is that these investments will pay priceless dividends to society as a whole for generations to come."

Dr. Roger Brinner is a distinguished economist and business advisor to corporations and governments. He counsels clients on economic issues specifically relating to their strategies, market growth, pricing and equity valuation. He has frequently testified before Congress on budget, taxation, and monetary policy issues and served previously as Senior Staff Economist in the Council of Economic Advisors. Roger has been a professor at Harvard University and the Massachusetts Institute of Technology, and for more than 20 years, led the preeminent economic research group Standard & Poor's/Data Resources. Dr. Brinner holds a B.A. from Kalamazoo College and a Ph.D. in Economics from Harvard University.

About The Parthenon Group and the Education Practice

The Parthenon Group is a leading advisory firm focused on strategy consulting with offices in Boston, London, Mumbai, San Francisco and Shanghai. Since its inception in 1991, the firm has embraced a unique approach to strategic advisory services built on long-term client relationships, a willingness to share risk, an entrepreneurial spirit, and customized insights. This unique approach has established the firm as the strategic advisor of choice for CEOs and business leaders of Global 1000 corporations, high-potential growth companies, private equity firms, educational institutions, and healthcare organizations. Parthenon served as an advisor to the education sector since its founding in 1991– the first of its kind among management consulting firms. With a mission to be the leading strategy advisor to the global education industry, the firm invests significant resources in management and team talent. Its global expertise spans the full spectrum of the education sector, including: public sector and non-profit education providers, foundations, private companies and service providers, and investors. Parthenon's record of success extends to universities, colleges, states, districts, and leading educational reform and service organizations across the globe. www.parthenon.com

CONTACT: Jennifer Robinson, +1-212-220-4444, [email protected]

SOURCE The Parthenon Group