In an age of austerity, basic may make a comeback
Even as the nation's economy began to sputter early last year, two areas proved resilient to the cutback in Americans' spending: luxury goods and college degrees.
By the end of 2008, however, luxury stores had recorded the greatest decline in sales of any retail-chain category. Will high-priced colleges suffer a similar fate?
The most optimistic college presidents believe they will be spared a drastic enrollment decline next fall. But a growing number have fear in their eyes.
"I'm not convinced this is a two- to three-year disruption," says John A. Fry, president of Franklin & Marshall College, where tuition and fees are $38,630 this year. "There is a real shift here. People are going back to the basics."
Perhaps in response to that sentiment, the Pennsylvania State Board of Education recommended last month that the commonwealth create a new kind of college: one that offers a low-cost bachelor's degree.
"Somewhere there should be a no-frills option," said the board's chairman, Joseph Torsella, who recently announced his candidacy for the U.S. Senate in 2010. "Let's see if there's a market for a Yugo or a Ford."
Of course, such options already exist at community colleges and for-profit institutions, although not to the extent envisioned by the Pennsylvania board. It would create, from scratch, an institution that would offer accelerated, year-round academic programs in an effort to reduce the debt load of Pennsylvania graduates, who now leave college owing more than $19,000, one of the highest rates of indebtedness in the country.
This recession could force dozens of private and public colleges to not only cut but cut mightily, reducing their campuses to little more than their core missions. The climbing-wall era would come to an end.
Such a bare-bones approach has worked in Europe (see article). But a no-frills college here? Until now it's been simply un-American.
Over the past decade, colleges have amassed mountains of debt constructing fancy facilities. And parents and students have been willing to pay for them. Last year borrowers took out $19-billion in private student loans, more than six times as much as a decade earlier.
Now institutions are starting to slash spending. The problem, of course, is figuring out what should go. "Is having seven cereals in the dining hall instead of one a frill?" asks MaryAnne Baenninger, president of the College of Saint Benedict, in Minnesota. Or as Michael S. McPherson, president of the Spencer Foundation and a former president of Macalester College, puts it: "One man's frill is another man's experience."
For-profit colleges have stayed lean by leaving out the residential aspect — one of the major cost drivers in college budgets over the past decade. Low-cost educators, such as for-profit and community colleges, stand to capture more of the college-going population as economic realities reset those students' expectations. So far, though, students haven't been asking for less.
"When I sit down with students," says Graham B. Spanier, president of Pennsylvania State University, "they want longer library hours into the middle of the night. They want faster broadband service, better food. And they are willing to pay for it." Tuition and fees on Penn State's flagship campus this year total $13,706 for in-state students ($24,940 for out-of-state students). And applications for this fall are up 4.7 percent compared with this time last year.
Mr. Fry, a former higher-education business consultant, says the residential experience would be the last "extra" he would get rid of if he were running No Frills U. Higher on his list: advancement, development, communications, and admissions.
"There's a huge spend to develop a lifelong relationship," he says. Admissions, in particular, could operate primarily with a well-designed Web site aimed at prospective students interested only in accredited degrees.
"You don't need 16 people on the road," says Franklin & Marshall's president. "You don't do open houses."
No Frills U. might be the perfect excuse for some presidents to do away with two academic conventions that many of them despise: tenure and athletics.
Professors at a bare-bones college would focus on teaching, not service or research, and could be given long-term contracts based on student demand rather than tradition. Athletes would organize their own clubs and play on local fields and gymnasiums rather than college-owned facilities.
Selling such an experience to students accustomed to slick brochures and well-planned campus tours wouldn't be easy.
Colleges market their frills because their consumers — students, parents, the public at large — lack an easy tool to compare quality among similar institutions. The marketing practice, called "signaling" by social scientists, is used by industries in which consumers can't readily assess quality.
"Big, bright, shiny, and expensive signals to the consumer that the product is good," says Charles Hatcher, an expert on consumer science. For example, television commercials during the Super Bowl rarely convey much information about a product, but they signal that the advertiser is successful enough to spend lots of money to reach them.
Mr. Hatcher says the same trend might be at play in higher education. Students who attend a high-tuition, frills-heavy institution signal to potential employers and others that they are the crème de la crème. "If I just wanted to learn physics, I would have gone to a community college," Mr. Hatcher says. "But by learning physics in the most expensive way possible, I'm telling you that I'm a good bet."
Indeed, in three national public-opinion polls conducted by The Chronicle in recent years, respondents consistently said that the quality of a higher education was better at a more-expensive private institution than at a public one.
But this recession is different, economists are telling us. So it's possible, Mr. Hatcher says, that students and parents may begin to look beyond price for measures of quality.
Ms. Baenninger, of Saint Benedict, says students are already "defining the next generation of the college experience," and demanding, for instance, that colleges practice more sustainability, with fewer disposable frills. Students "will force us to change," she says.
Perhaps. At Penn State, 10 of the university system's 19 branch undergraduate campuses lack dormitories. On those campuses — some of them in rural areas where commuting is not always an option — "students want residence halls, and so do members of the local community," Mr. Spanier says. As a result, this spring Penn State will conduct a study to determine whether to add housing to some of those branch campuses. So much for No Frills U.
http://chronicle.com Section: Money & Management Volume 55, Issue 25, Page A17
