Posted by: crudbasher | November 15, 2012

6 Recommendations For Colleges To Survive The Next 10 Years

I’ve been seeing some noise lately about some universities freezing their tuition prices. At first that doesn’t make any sense because supposedly demand is at an all time high but will it continue that way? It is a rigid law of economics that if you increase the price of something, less people will be able to afford it. Typically, in a free market the price will increase to reach an equilibrium with the supply of the product in such a fashion that all of the product will be sold for the optimum price. To a large extent that is what has been happening in Higher Education in the US, however, there have been several factors that have distorted things.

  1. First and foremost I believe that the ever increasing amount of low interest, government backed student loan money has been the primary factor in driving up the costs. If the supply is limited (not many new colleges being built) and the amount of money is increasing, the costs will increase to absorb the new money.
  2. At the state level, many states have subsidized their universities to artificially lower the cost of tuition. Subsidies however don’t work like that in economics. The amount of subsidy is actually added onto the nominal cost of the product, thereby absorbing the extra money. Now that the subsidy is being reduced by budget realities, the cost should come back down. The big problem of course is that many universities have large fixed costs. In other words, they have spent all the money already.
  3. Automation has started to eliminate the typical entry level jobs many college grads used to get. For example, in the legal profession lawyers used to have many paralegals to do research in big stacks of legal books. Now a computer search can do it much faster and efficiently. This matters because if a college student can’t get a job, they won’t take out the loans for the education.
  4. Credit is harder to get. Many students now are turning to their parents for cosigning loans for college. This is kind of crazy because at least a student with 40-100k in debt has their whole working life ahead of them to pay it off. Their parents are a lot closer to retirement and yet are taking on a lot of debt. This won’t continue much longer. (see in the NYTimes: Child’s Education, but Parents’ Crushing Loans)
  5. Students have more alternatives. It used to be commonly accepted that if you got a college degree, your future was secure. The last 4 years have shaken that belief in a lot of people. Many still believe of course, but if only 20% of high school seniors decide not to go to college or to postpone it, a lot of colleges would be in trouble. This choice is getting easier to make because high school students have better access to alternative methods of learning, many of which are free. Of course most aren’t credentialed yet, but that is changing too.

If something can’t go on forever, it won’t. It is ironic that a major college buzzword over the last 5 years has been sustainable, but rather than talking about solar power and recycling, we should have been applying it to the higher education business model.

So here’s my advice to colleges looking to survive the next 10 years.

  1. Cut costs wherever you can (including sacred cows). Cost still sells products.
  2. Find out what is unique about your college. That is what you have to sell to students even if it is just your brand.
  3. The university system is becoming globalized. In 10 years you will have students from anywhere in the world. Start thinking about how to do it.
  4. The 18-24 year old market won’t be big enough. In an ever changing world, the rest of the population is your new market. Cultivate relationships with life-long learners.
  5. Online learning is here to stay. Right now online is an imitation of the traditional classroom but with realtime voice translation and asynchronous customized lessons, online learning will soon present advantages over the classroom. If you don’t have an online program, start a pilot program.
  6. Your past won’t save you. Just because you have been around for 200 years doesn’t mean you will survive the next 10. The playing field has changed and is now global. Act as though you could lose everything tomorrow (because you might). Let healthy fear drive you to innovation and risk taking.

(cc) heather



  1. Great calls here Andrew,

    I’d like to see an “Innovation Center” where I work to help with establishing experiments (smaller in scale) that can be tried out. Some will fail, some may succeed. But we need to reinvent ourselves, I think, in order to stay relevant and to establish more sustainable business models (as you mentioned).


    • Hey Daniel,

      Totally agree with you. I remember the motto of SpaceX is “Fail often and cheaply” (or something like that). More experimentation would be a good thing. Innovation Centers is a good idea but isn’t the typical university structure too top down to promote innovation?

      Thanks for commenting!!

  2. […] been wondering aloud about whether or not high schools will still be around in 50 years.  Andrew Barras is wondering if colleges will be around in 10 years.  After some economic analysis of the current situation, he provides six recommendations.  I like […]

  3. […] 6 Recommendations For Colleges To Survive The Next 10 Years […]

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