How to retain quality and balance the budget

Four years of post-secondary study at a college or university leading to a baccalaureate degree was accepted as the norm in the United States just a few decades ago. An informal metric, it was accepted as a simultaneous proxy of the host institution’s quality and the student’s academic proficiency.

Those not graduating within four years were the exception when there was a relatively smaller and more homogeneous student cohort. The vast majority were recent secondary school graduates enrolled in residential institutions. The majority completed the baccalaureate within the four-year norm.

As the demand for the baccalaureate increased, the US’s college-going cohort has become increasingly heterogeneous. Those who successfully complete their studies within the former four-year standard have become the minority, the bulk tending to be enrolled in elite selective institutions.

Balancing budgets

All non-profit tertiary institutions, public or private, must annually earn sufficient revenue to match their operating costs. Salaries, utilities, supplies and all of the other goods and services needed to operate an institution, relentlessly tend to increase with each new year. No institution can operate for long without a close approximation of revenue and expenses.

The elite and selective institutions are likely to enjoy endowment and philanthropic revenue subsidies.

As a class, the less selective and open-admission institutions without the benefit of significant revenue supplements have only two means of generating the requisite income. They can increase tuition and fees or enrolment.

The equation is simple: tuition times enrolment equals revenue. The less selective and open-admission institutions have tended to strike a balance between the two alternatives. While tuition fee increases have long exceeded the nation’s ever-higher consumer price index, colleges have dampened tuition fee increases by admitting more students.

In adding to the supply of baccalaureate opportunities, institutions have sought to meet the increasing demand for the credential while increasing their revenue.

Interestingly, these ever-larger intakes have often led to justifying ever-larger government subsidies with the enthusiastic support of the student loan industry and other stakeholders benefiting from more college and university students.

A different student population

Many of these new applicants have come with competing employment, familial and other non-academic responsibilities that would have prevented enrolment as full-time residential students in an earlier age. Both the students and the institutions have benefited.

The cohort of college-attending students has dramatically grown in both number and diversity. Without the benefits of prestige and philanthropy enjoyed by the elite selective residential institutions, they have sustained themselves and many have flourished by admitting more students each year.

Coping with their competing non-academic responsibilities, a large portion of these new students are part-timers with a higher probability of periodically dropping out.

The former four-year graduation quality marker has justifiably given way to the US Department of Education six-year standard.

Presumably, if an institution retains and subsequently graduates more of its intake of students for a given year, its academic programming is assumed to be of higher quality compared to peers unable to match or exceed this measure of productivity.

Part-time attendance is unlikely to be the only contributing factor driving the move to the extended completion interval.

Another sub-group of students, both full and part time, is likely to require more time to graduate, while those admitted to non-selective and open-admission schools are by definition not as rigorously screened for their academic preparation and degree completion potential.

Little more than the possession of a secondary school diploma or General Educational Development may be required to validate readiness or potential. Thus, these larger and more diverse intakes have undoubtedly included an amalgam of students with widely differing academic preparation, cognitive ability and disposition.

Declining test scores

It is interesting to note that as aggregate enrolments have increased in nearly all sectors, two measures of college readiness have registered erosion. The Scholastic Aptitude Test (SAT) scores, said to predict how well students will do in college, have declined in recent years.

The US Department of Education’s Institute of Education Science has reported that the average SAT reading score declined eight points in the 1998-99 to 2010-11 interval. The average writing score, which was only introduced in the 2005-06 assessment, declined eight points through the 2010-11 interval.

It seems fair to assume that students with these lower measures of the two essential skills face greater challenges in completing their degrees whether they are full time or part time.

Similarly, the American College Testing (ACT) assessment is said to measure high school students' general educational development and readiness to do baccalaureate work. It assesses English, mathematics, reading and science.

ACT results for 2011 point to a similar decline. Only one in four of the 2011 high school graduates who took the assessment met all four key benchmarks.

Shattered American dream?

Providing more citizens with the opportunity to pursue the American dream is, on the surface, commendable. The less selective and open-admission schools have provided more opportunity while simultaneously securing the revenue they need to meet ever-increasing costs of operations.

The relatively high unemployment and underemployment rates among recent US graduates, however, suggest that it is doubtful that continued reliance on larger intakes is sustainable. Faced with this dilemma, these schools should start pursuing budget-balancing alternatives.

With relatively few options, cutting operating costs while maintaining the quality of graduates could sustain those who can provide a value-added proposition for the tuition fees charged.

Validated value added could become a more reliable measure of institutional quality.

* William Patrick Leonard is vice dean of SolBridge International School of Business in Daejeon, Republic of Korea.