According to a report this week from the National Student Clearinghouse Research Center, the number of students in U.S. colleges declined by 1.7 percent this fall, continuing a four-year decline that now has enrollments almost 7 percent below their peak in 2011. Although the enrollment decrease is most prominent in for-profit and community colleges, the overall decrease in enrollments should be a cause for continuing concern among all higher education institutions.
In the business world, a drop of 7 percent in demand for a product would set off alarm bells and stimulate all sorts of actions to compensate for the decline. Cost cutting would be aggressive, with as much fixed cost as possible being eliminated and the remainder shifted from fixed to variable cost categories. In addition, merger discussions would often be initiated, as producers strive to combine product sales while eliminating redundant fixed costs, thereby lowering total costs per unit. The proposed mega-merger of Dow and DuPont is a case in point.
In the higher education world, although many schools currently run operating deficits, mergers have been quite rare. However, as reported in the Philadelphia Inquirer, two local universities have just announced plans to merge, an encouraging sign that realistic thinking is guiding the boards of both Thomas Jefferson University and Philadelphia University.
Quite telling is the comment of Philadelphia University president Stephen Spinelli, who said that many schools in this situation would try to hold on to their independence, and to make their ”little program special.” His stated plan is to make the entire merged university special.
The academy will have to adopt all manner of proven business approaches to combat spiraling costs, lower enrollments, and complaints about the quality of outcomes. It seems that at least these two universities understand the challenges, and are not afraid to tackle them realistically.