Monthly Archives: June 2012

June 28, 2012

Colleges Seek to Cut Costs Amidst Economic Pressure

The higher education landscape is on the edge of a big change. With increased attention on student debt coupled with decreased funding from state and federal governments, it is becoming clear that the status quo is not sustainable for many colleges and universities across the U.S. “The notion that universities can do business the very same way has to stop,” said Mr. E. Gordon Gee, President of the Ohio State University.

Before the economic downturn, colleges and universities successfully wooed applicants with l promises of financial aid, and assurances of gainful employment upon graduation. In the current poor economic climate, the priorities of applicants are changing. Among reports that as many as 1 in 4 student loan borrowers are delinquent on their debt, prospective students are becoming more leery of accepting large loan packages to fund their education, instead opting to look for the school that will offer the best value for their money.

As a result, more affordable public colleges’ admissions numbers are gaining momentum over private institutions. In 2009, SUNY New Paltz’s admissions office processed 15,500 applications; a 12% increase from 2008. With so many applicants vying for acceptance, admissions departments have unique problems to tackle. Should they accept more students, but risk diminishing the college experience through overcrowding? Or should they accept fewer students in order to improve their academic rankings? At SUNY New Paltz, the administration is using the latter strategy and maintaining focus on long-term goals instead of short-term profits.

While many public schools have an embarrassment of riches in the admissions department, they are also experiencing a steady decrease in federal and state funding. In fact, per-student state appropriations are at their lowest level in 25 years. In a report earlier this year, Moody’s Investor Services offered a bleak outlook for schools that rely heavily on government funding. Those schools will need to make some major changes to their business models in order to stay competitive. With the student debt bubble creeping towards $1 trillion, high unemployment, and steadily increasing delinquencies, raising tuition may not be a viable option in the future. Moody’s stated “Tuition levels are at a tipping point…We anticipate an ongoing bifurcation of student demand favoring the highest quality and most affordable higher education options.”

While it is impossible to predict what will happen when the student debt bubble bursts, there is no time like the present to plan for the future. In this uncertain climate, confronting costs should be the #1 priority of all higher education institutions. “This notion that higher education has an obligation to try to reduce administrative costs to preserve the academic core of institutions as a way of trying to pull down tuition increases is very important,” says Ronald G. Ehrenberg, a professor of industrial and labor relations and economics at Cornell University and director of the Cornell Higher Education Research Institute. “Tuition cannot go up forever.”

Photo Courtesy of Jonathan Cohen, Licensed under Creative Commons.

To reduce costs while keeping tuition rates reasonable, costs must be analyzed from a high level. Colleges and universities are notorious for having complex, decentralized management structures which create redundancies and inefficient operating procedures. By streamlining and standardizing operations across the board, schools can work leaner and more efficiently. At the Ohio State University, choosing a single vendor for pens saved $20 million and creating a common expense reporting system saved the school a whopping $75 million. At the University of Nevada School of Medicine, implementing  AMP – a flexible and streamlined admissions software – sped up their admissions department schedule by 3-4 months over their previous, inefficient process.

It seems that more schools are going to be jumping on the bandwagon of keeping tuition in check through cost cutting and restructuring. We at College Admissions Today would love to hear from you & your school – Have you or your co-workers implemented any cost-cutting or streamlining measures? Have they been successful? How would you cut costs if the decision was in your hands?