Flex or Fail

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Paul Jansen and Debby Bielak, consultants at McKinsey & Company, published an article in the June 2008 Business Officer publication of NACUBO which summarizes the five key trends in higher education.  In conducting their research, McKinsey engaged with institutions affiliated with the Forum for the Future of Higher Education in Cambridge, Massachusetts.  The authors maintain that the five trends have the potential to be disrupters that could affect the status quo at many institutions.  The trends are:  1) growth of digital and other non-traditional students, 2) price-productivity squeeze, 3) new paradigm competitors, 4) globalization, and 5) answering to accountability.

Trend 1 has the potential to be a positive impact as the writers predict that the nation could see a 100 percent increase in college enrollments over the next 20 years.  Part of this trend is fueled by the forecasted growth in non-traditional students, currently estimated to be 48 percent of overall college enrollments.  However, today’s high school students, digital natives, are learning with different methodologies than in the past and will challenge traditional notions of learning, leading to more studying at a distance.

The price-productivity squeeze reflects data that demonstrates that while tuitions have increased 32 percent over the past 10 years, the average discount has increased to 22 percent reflecting a 10 percent net increase to cover more than that rate of increase in costs of education.  Nationally, revenue comprises only 59 percent of costs according to the authors.  Institutions “focused on the vast middle” will be forced to address this issue sooner rather than later as the elite institutions have the brand and financial resources and the lower cost institutions have the pricing power.

The University of Phoenix is cited as a new paradigm competitor whose cost per student declined from $7,200 to $4,800 when its student population grew from 67,000 to 233,000.  The authors maintain that the incremental costs of adding students for traditional universities is high when considering the costs of physical classrooms, dormitories, and dining halls among other expenses.

Globalization is an increasing challenge, but primarily for institutions searching for top faculty or students.  As the economies in China and India continue to grow, those countries continue to create educational institutions to keep their students and faculty in country.  Previously, many chose to attend or teach at U.S. institutions.

The questions asked by the Spelling’s Commission won’t go away.  Lawmakers are asking for accountability for the subsidies provided.  Fortunately, many accrediting bodies including the Higher Learning Commission of the North Central Association are encouraging their institutions to publish their outcomes as well as to become more transparent.

Business Officer asked several constituent groups to provide case studies that address these trends and they are published in the June issue as well.  As the authors state, “while the institution with resources or a reputation will be able to ride out its legacy position for some time, the majority of institutions will enjoy no such luxury.”

Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston was appointed to the National Advisory Committee on Institutional Quality and Integrity by the U.S. Secretary of Education in 2019. He also serves as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), as a Trustee of The American College of Financial Services, as a member of the board of Our Community Salutes - USA, and as a member and chair of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.

Comment(1)

  1. For a brief second, I thought this article was going to be about Adobe Flex, the programmer’s tool for building Flash content and applications. Obviously not the case but a very compelling subject indeed.

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