Diversifying Revenue Needed for Institutions of Higher Education

Diversifying Revenue

Today, institutions of higher education are being encouraged and challenged to think creatively about expanding and developing new revenue sources to support the their short-term and long-term goals. Moody’s Investors Services has outlined in its published reports how every traditional revenue stream for colleges and universities is facing some sort of pressure.

Unfortunately, the pressure on all revenue streams and sources is the result of macro-level economic, technological and public opinion shifts, and these changes are largely beyond the control of institutions.

The Moody analysts have cautioned that revenue streams will never flow as robustly as they did before 2008. It’s been stated the change will require a fundamental shift in how colleges and universities operate; one that will require more strategic thinking.

In their studies, Moody’s notes that colleges and universities will have to rely on strategic leaders that are willing to address these challenges through better use of technology to cut costs, create efficiency in their operations, demonstrate value, reach out to new markets, and prioritize its programs. However, in doing so, many of these efforts may create disputes with faculty members or other institutional constituents, unless they are able to get the collective buy-in that has been the staple of higher education governance. But with goals being established and the evolution taking place as part of the process, hopefully, there will be a more widespread understanding on all sides.

Major revenue constraints can be attributed to larger changes in the economic landscape, including lower household incomes, changes and fluctuations in the economic and federal government picture, declines in the number of high school graduates, the emergence of new technologies, and a growing interest in getting the most out of a college education – particularly as it pertains to employment after graduation. A stable fiscal picture and outlook would require improved pricing power, a sustained and truly measured decrease in the unemployment rate, improvements in the housing market, and several years of consistent stock market returns.

The traditional higher education model has been disrupted by the ability of massive open online courses, particularly by the legitimization of online education and other technological innovations. In many ways, this has signaled a fundamental shift in strategy by industry leaders to embrace these technological changes that threaten to destabilize the residential college and university’s business model over the long run.

There are other related challenges facing higher education: the growing profile of student debt, which has topped $1 trillion nationally, and default rates, and pressure on politicians and accreditation agencies to ensure the value of degrees. In addition, an alarm continues to sound over a potential student loan bubble and the diminishing affordability of higher education.

One way for colleges and universities to get students, and their parents, to pay for higher tuition is by demonstrating that the outcomes – including their campus experience, postgraduate employment, graduate school enrollment, and long-term success and happiness – are well worth the tuition and future job pay. Students and their parents want to know, “What am I getting for my investment?” As a result, recruiters have a tougher job “selling” a traditional education with the cost of education continuing to escalate.

But the on campus education and living and learning experience are the “door openers.” As I like to say, “We are a product of our environment.” Making the right friends, building relationships with influential professors, administrators, parents and relatives of friends, and fraternity brothers or sorority sisters all get added into the equation of the student’s environment. In retrospect, students may forget or never use half of what they learn, but the connections and friends they make and the experiences they have while in college are priceless.

Over 1/3 of the colleges and universities in the nation are experiencing some sort of financial crisis. Many have gone from operating full operating budgets to a comfortable black to a severely red. And cash reserves have dropped, as well as endowments.

Without a doubt, the university must find new revenue sources. Attracting more out-of-state and international students is one additional source of revenue for these institutions.

We must never lose sight of the fact of the importance of investing in higher education. Educating the young is of primary importance. Devising ways to maximize time and money, such as integrating class projects and research that might result in publication is another alternative to consider.

Allowing and/or expanding commercialism on the campus may provide added sources of revenue. Examples could include allowing corporate naming rights to athletic facilities or increased advertising signage inside arenas and stadiums. This may seem drastic and some may even say, “You have to pick your poison” in being creative to increase your revenue streams.

Attempting to reduce the university’s “discount rate,” the percentage of the total tuition bill for the entire student body that the university waives to grant financial aid to its students is one possibility. But that can be risky business. Any move to reduce the discount rate potentially upsets an exceedingly delicate balance. Looking to attract families that are able and willing to pay full or near full tuition, while simultaneously making the school accessible to less wealthy students, and hitting the right mark, granting merit aid to lure high-potential students who might later benefit the school and broader community, may be one possibility to work in achieving a better balance among the many factors that feed enrollment. Additionally, stepping-up the fundraising efforts to offset any potential rising discount rate may also be helpful.

Another factor to think about is the amount of construction the institution may be having on campus, especially during campus tours, to determine the effect, it may or has caused in any dips in the recruiting process. Even though construction on campus is a sign of growth and improvement, in the short-term it is not always the most attractive thing for students to see and hear on campus, or experience during a campus tour with their parents.

Institutions of higher education must also anticipate any approaching demographic shifts. They may have to grapple with an economic and social environment in which more families bargain for the best deals among different schools. If this is the case, the institutions should consider making their best offers up-front first and try to avoid drawn-out negotiations.

Students are creating more choices for themselves and they have more access to more choices. The internet makes it easier for students to research and apply to more schools.

Some of the private institutions have held back from the tuition-hiking trend, and some have even cut tuition costs in an effort to attract more students. Other schools have taken more unconventional measures, such as freezing tuition, offering three-year degree programs, or giving students four-year graduation guarantees. They are doing this with the goal of increasing enrollment levels that will more than offset the reductions being made, thereby providing more overall revenue without sacrificing the student’s education.

But also since the economic downturn, private colleges and universities across the nation have redoubled efforts to cut their operating costs, improve their efficiency, and enhance their affordability in order to stay within reach of families from all backgrounds. You cannot lose sight of that. Making it work has to be done on both ends; cutting costs and increasing revenues.

Other strategies that could be considered to increase the enrollment and revenue streams at institutions of higher education could include the following:

  • Segmenting search to target upper profile students with different messages;
  • Increasing scholarship levels (while still maintaining net revenue needs);
  • Targeting out-of-state students or students outside of traditional markets;
  • Targeting high school honors programs;
  • Holding a scholarship recognition day;
  • Stressing off-campus opportunities such as internships and study abroad;
  • Promoting graduate school placements and outcomes; and
  • Developing high profile academic majors, pre-professional programs, or new majors and programs to support enrollment growth.

Additional considerations for increasing revenue streams might include:

  • Review the individual educational programs in-place and revenues provided by each and coverage of direct costs and determine what changes should be made, if any;
  • Acceleration of the 4 year degree programs into 3 to 3 ½ year programs to save on tuition and utilize it as a marketing tool for recruiting, but do so without short changing the student’s education;
  • Providing an automatic 2-year graduate scholarship at the university for students who enroll in a 4 year undergrad program and meet and maintain a defined GPA level and other pre-defined standards and goals of the university. Use as a tool for marketing and recruitment;
  • Having a full-time grant application aid/seeker for the university searching for state and federal funds, as well as working with faculty and staff to develop research projects for funding and using as educational programs for the students;
  • Establishing joint and cooperative programs with other universities in the US and abroad for recruiting;
  • Consider an overall re-evaluation of the recruiting process for identifying and “going after” potential students, thereby expanding the horizons and outreach;
  • Obtaining more exposure on a “national and multi-state” level;
  • Determine if any new programs should be added, programs dropped, or enhanced and/or expanded;
  • Develop tools for “presenting a plan” and a “comprehensively designed package” for financing and paying the cost for education;
  • Reaching-out to alumni and friends for enhanced ways to provide for contributions to the university through annuities, insurance, and other charitable giving techniques and products; and
  • Developing relationships with corporate sponsors for grants and contributions and placements for graduating students.

Conclusion

For the suggestions mentioned about possible new revenue source considerations to support the institution’s short-term and long-term goals, it will be important to develop predictive financial modeling tools for testing the proposed changes and outcomes to the enrollment levels and the projected effects on the revenue streams and the overall bottom line.

In doing all of this we must never lose sight of the fact that education prepares graduates to lead lives of achievement, contribution and meaning. And, as I like to say, “The Students will become a Product of their Environment.”

Successful Education Begins in the Home

Children come to us with predetermine disposition, aptitude and fortitude. How well they function within these capabilities directly relate to their home. Education, without apologies, begins at home. Children learn how to respond to any facets of life in the home.

Consequently, prejudices concerning people, foods, clothing and live styles manifest from within the home. If a child is aggressive, know that, that behavior comes from observing a family member. Substitute any other behavior positive or negative with the before mentioned word “aggressive” and acknowledge that it connects with a family member that cares for the child. Children emulate what they see.

Teachers recognize this more than any other professional group because it is in their classroom that they experience the consequences, good or bad, of what children learn at home. Hence, teachers at every new school year establish classroom rules in an attempt to ensure a universal law of acceptable social conduct.

As a tenet, parents are responsible for whether or not children succeeds academic. Without ignoring a child’s predetermine abilities, they must project clear positive expectations concerning school. As these expectations take form, parents should remember that children mimic what they see and hear. Hence, they should avoid making negative comments concerning their children’s teacher and or school. Parents cannot demand that their children perform well academically when homework assignments are not completed, and social events are prioritized over establishing appropriate bedtime routine for school age children.

There is no denying that a child will act out, usually this begins at pre-K through kindergarten levels. When left unchecked by parents, acting out, becomes a norm for a child. When established as a habit, the disruptive behavior hinders the child’s academic success. Parents should not expect teachers to teach their children proper conduct and yet the burden of learning these skills sits heavily on the shoulders of many teachers.

When a child acts out and the parent ignores the behavior, the child learns to devalue the importance of the teacher, the school and ultimately learning. Parent who do not understand the value and importance of early prevention will have an uphill battle as the child attends secondary schools. Laying a strong education foundation consist of the child, parent, and teacher working together in a respectfully academic world of cooperation. Teachers cannot do it all.

Specialized Educational Program for Children With Developmental Disabilities

School is a part of growing up every person should go through. If you are a parent with a child clinically proven to have developmental disabilities, do not lose hope. They can still experience childhood as another child without disabilities would. There are many government and local laws that support their right to education, and as a parent you need to be aware of those regulations to be guided. Apart from knowing the laws regarding education for your child, look for non-profit organizations dedicated to children and adults with disabilities in your location. Having a short talk with them can open your eyes to all the possibilities you can give your child.

As your child becomes a young adult, they need to be guided in all aspects of their lives. An organization that offers well-rounded education and a freedom of choice is an ideal option for your child. A number of non-profit organizations in the country offer pre-school and community school services for children with disabilities. They work with local government offices to help them maximize their efforts and create more opportunities for children. One example is the early intervention services implemented for children ages 0-3 and special education for children ages 3-21. Because of these efforts, children were able to enter public school programs as pre-schoolers since they meet the eligibility criteria.

There is another kind of pre-school program that combines children with and without disabilities in one classroom. The interaction happening in this setup between peer groups creates a mentoring system among the children, helping them foster both social and educational growth. The introduction of children with autism to children without developmental disabilities in their early education prepares the children with autism for the next stage of their education, kindergarten classes. Before you let your child experience this, ensure that your chosen organization gives their students one-to-one and group instruction, and with a curriculum approved by the Department of Education in your state.

Apart from pre-school services, non-profit organizations for children with disabilities also have community schools that provide educational services for those who would like to receive it or for those who are unable to attend offsite schooling. Students attending in such community schools must receive a goal-oriented and modified school curriculum promoting development and learning while meeting the academic content standards of your state.

Your chosen community school must provide educational services from kindergarten through the 12th grade. Students must have the following in their areas of study: English language arts, science, math, and social studies. Schools would usually expose their students to grade-appropriate curriculum by means of adaptive equipment, multimedia, and a multidisciplinary staff.

These schools allow your child to engage in a multitude of activities to stimulate their development. Children with disabilities will be able to have access to the playground, pool room, sensory walk, and multisensory room. Their daily schedules incorporate the abilities and skill level of your child.

Coordinating with your local government can give you more information about the options available for your child. Many parents have fought for their children’s rights to education in the hopes of giving them a better future. Their efforts have made it easier for children with developmental disabilities today.