More than 40 years ago, I started working at Price Waterhouse (now PricewaterhouseCoopers, or PwC). Even though I was on the consulting track, I was encouraged to sit for the Certified Public Accountant (CPA) exam and become a licensed CPA. Having this license, along with an MBA, boosted my career and I subsequently served as CFO at five different companies over the years.
Matt Schifrin and Carter Coudriet of Forbes wrote an article about the financial ratings of private colleges, Dawn of the Dead: For Hundreds of the Nation’s Private Colleges, It’s Merge or Perish. The authors refer to Forbes’ analysis of the finances of 933 private, not-for-profit colleges with 500+ enrollments, stating that the majority of these institutions are in a precarious situation with their high tuition, tuition-dependent financial model, declining overall enrollments, and competitive landscape in higher education. It’s unsurprising that the wealthiest private colleges are doing well and in Forbes’ ratings, score a GPA of 4.5 and an A+ rating. However, the number of schools receiving a GPA of 1.5 or lower and a D has swelled from 110 in 2013 to 177 in 2019. Only 34 schools earned A+’s, with a total of 498 colleges earning C’s, an increase over 434 in 2013.
In addition to the previously cited contributing factors to the financial decline, there is excess capacity in higher education. According to Kevin Coyne of Emory University and Robert Witt of the University of Alabama System, there is a 6.4% excess capacity among public colleges, but a 12.4% excess among private institutions. Interestingly, the smallest privates have an overcapacity of 28%. As president of a very scalable, online institution, I believe that Coyne and Witt have not considered the vastly scalable operations of institutions with large online populations like APUS. Those considerations would certainly expand the overcapacity numbers immensely.
On November 20, 2019, the Department of Education released its long-awaited update to the College Scorecard, revealing median debt, earnings and other data for graduates of specific programs of the represented schools. The Wall Street Journal was given an exclusive look at the data before publication, and provides some comparisons of the data among schools and a handy tool for sorting the dataset by school, degree level and degree type to show the median debt for graduates and median income level the first year after graduating.
I commend the Department for providing more consumer transparency. As I have written previously, the Scorecard will only be relevant when it posts data on all students, not just students using Federal Student loans. And even then, there are reasons why some institutions have dramatically different data. In this update, the Department has published both graduate and undergraduate data, some of which is revealing. For example, the Journal writes that dentists graduating from New York University had a median debt of $387,660 but only earned $69,600 in their first year after graduation. Dr. Robert Kelchen, a professor at Seton Hall, reports that the highest earners were dentists graduating from Ohio State with a first-year salary of $231,200 and debt of $173,309. While there may be regional differences why NYU grads earn less than OSU grads one year after graduation, the difference in debt is likely due to one being private and the other public.
I am no fan of the Department of Education’s College Scorecard, primarily because it is incomplete and may be misleading for some metrics. Much of the data is derived from students using Federal Student Aid (FSA) only and some of it is from those who are first-time, full-time students using FSA loans. At APUS, most of our students are part-time, working adults not using FSA to fund their education. I first wrote about the Scorecard in 2016 and reported about others like me who criticized its incomplete data.
Despite the flaws of the Scorecard, I understand why Georgetown University’s Center on Education and the Workforce recently attempted to create a return on investment (ROI) for all colleges using this data. First, it’s the only published source that uses IRS data to match earnings with students who have attended those specific institutions and who received FSA. With access to earnings, institutional costs and debt incurred, the researchers can calculate a rudimentary ROI.
Ryan Craig’s opinion piece in Inside Higher Ed last week queried why tuition for online programs hasn’t tumbled given the benefits of technology and scale amassed by some of the largest online institutions. He cites several sources, including the BMO 2019 Education Industry report and a 2017 survey by WCET, noting that the average per credit, in-state cost for an online bachelor’s program is 14% higher than on-ground and that 54% of institutions are charging online students more than those on-ground.
Craig states that regardless of which survey you find most credible, few institutions are charging less for online students. He ponders why this hasn’t happened, stating that some colleges and universities are operating subscale online programs which precludes the benefits of cutting tuition. Others spend as much as $5,000-plus in marketing costs to attract and convert a person to an online student.
Last year was undoubtedly a whirlwind in the world of technology—both good and bad. Taking effect a little over a year ago, the General Data Protection Regulation (GDPR) changed the way tech giants such as Google, Facebook, AWS, Apple, and others collect and use their consumers' personal data. To date, 89,271 data breaches have been reported by the GDPR Data Protection Authorities. Although GDPR appears to be an important move to increase security around personal data, there have been a growing number of tech companies, where data are key components to core functionality of their technology offerings/products, who have been negatively affected.
When I read that Andrew McAfee and Erik Brynjolfsson, co-authors of The Second Machine Age, were releasing another book, I ordered it. While the topic of how technology will change our lives is no longer as fresh a concept as it was when they released The Second Machine Age in January 2014, their latest tome focuses more on the economic impact of technology today and in the future.
Some books are difficult to summarize. Platform Revolution is one such book because its descriptive content requires more. To follow up on my initial overview, I’ll provide a more detailed summary and wrap-up in this commentary of the key platform attributes described by authors Geoffrey Parker, Marshall Van Alstyne, and Sangeet Paul Choudary.
Some books are difficult to summarize. Platform Revolution is one such book because its descriptive content requires more. To follow up on my initial overview, I’ll provide a more detailed summary in this commentary and part III of the key platform attributes described by authors Geoffrey Parker, Marshall Van Alstyne, and Sangeet Paul Choudary.
Most people have heard of Uber, Airbnb, Amazon and PayPal. The growth and success of these companies and others stem from a technology-based business model that connects people and resources in an interactive ecosystem that creates and exchanges value while disrupting traditional businesses. That model is a platform and successful companies that utilize its power are transforming business, the economy and society.