Facing the demise of the campus-centric business model

United States public and non-profit colleges and universities have tenaciously relied on a millennium-old ‘Campus Centric Business Model’. Simply put, students must travel to a central location to engage with faculty in classroom-based learning activities with libraries and related support services. The hosting campus may also provide housing, food, health and other support services.

In recent decades, an increasing range of non-instructional services designed to attract and retain students has been introduced at no small expense. The sum package, instruction, support services and experience are offered in exchange for tuition and fees.

Interrupted revenue streams

To date, the model has been remarkably resilient in responding to external challenges. It has dealt with enrolment and economic booms and busts as well as past epidemics and wars.

Remote learning platforms, correspondence courses, instructional television and, more recently, the move to online education have tended to be minor appendages at most institutions.

Only a handful have operated both in-person and significant online platforms targeting different market segments.

Full online instruction minimises or eliminates an array of revenue streams, including room and board, plus all other non-instruction activities that comprise the campus experience.

Spring 2020’s COVID-19 onset has stressed the model as never before. Campus classes were moved to online platforms as institutions closed abruptly in March. Courses and faculty conferences, career counselling and related support services were fully delivered online.

Rather than serving a few non-residents with under-scaled remote formats, online learning courses were hastily cobbled together by ill-prepared faculty and staff.

Despite the good intentions in responding to the pandemic's assaults, the response did not go well. Many mistakenly assumed a return to normal in the forthcoming fall term.

Classrooms, cafeterias, dormitories, recreation and activities facilities were vacant. Once-reliable revenue streams dried up, as financial obligations continued. Only tuition and fees paid in advance, coupled with lay-offs and other cost-saving measures, muted the financial losses. Full online instruction was a poor substitute for a rich residential experience. Students were the first to demand refunds.

As the pandemic persisted beyond the end of the 2019-20 academic year, speedy recovery of familiar revenue streams has become less likely in the near term. In August, the outlook for a return to even a semi-normal in 2020-21 had its adherents. Davidson College presented a snapshot of the split among in-person and online decisions for the autumn 2020 term.

Davidson reported that slightly over a third of institutions, 34%, were committed to entirely and primarily in-person instruction. Institutions publishing entirely and primarily online decisions were listed as being just over 25%. A little over 17% had yet to announce a position, appearing to await a more precise COVID-19 forecast. The remaining institutions published mixed responses to their ‘open or close’ dilemma. The model’s recovery was clearly uncertain.

The Davidson snapshot only presented institutional leaders’ plans for a hopeful return to former revenue streams. Campus leaders did not account for their students’ likely behaviour. Many are returning to residency and resuming the full campus experience which is deemed so detrimental to the virus's mitigation. Cautious reopening plans and bans on campus gatherings and alcohol have been rapidly subverted by socialising students.

Institutions reported virus cases shortly after reopening. In-person decisions have been walked back daily.

Unfortunately, seasoned campus leaders failed to factor in young adults’ desire to socialise beyond classrooms, labs and libraries. Their students quickly move social gatherings off-campus, with some students returning to the campus bubble carrying the virus.

A model in evolution

Falling college-age cohorts will continue to lower enrolments and revenues long after the virus is tamed. Greater reliance on online and fewer revenue streams seems inevitable.

Despite the varied responses to the virus, campus residency is likely to continue to be a necessity for many institutions. Those with large faculties, staff and physical plants to support will likely welcome a return to predictable revenue streams to service their financial obligations.

Many of their students desirous of arrays of support services and activities are likely to return to residency.

Other institutions with lower overheads and debt and with moderate success online will build on that experience to offset falling enrolment. Sadly, others will not and will continue to wither.

Anything resembling a familiar normal appears beyond the 2020-21 academic year as institutions, students and parents identify and filter their delivery and financial options.

A morphed business model, Resident and Distant Delivery, may become the new normal. Recognition of the different value propositions presented by fully resident and fully online, as well as nuanced blends in-between, will surely emerge.

William Patrick Leonard is a senior fellow at the Rio Grande Foundation in Albuquerque, New Mexico.