The challenges facing higher education institutions are real, and the competitive environment will continue to evolve. Many schools are looking for new business models to increase prosperity in a changing market.
Some larger trends shaping the market include:
Declining Net Tuition
An examination of the average tuition price published at four-year private colleges is $32,405. However, factoring in the practice of tuition discounting reveals the following:
- The average institutional discount rate for firsttime, full-time freshmen was estimated to be 48.6 percent in 2015–16.
- The average institutional discount rate for all undergraduates reached was estimated to be 42.5 percent in 2015–16.
Families are having difficulty affording college. Pell-eligible and middle-class students are faced with large student debt burdens, while upper-income families are looking at more affordable colleges as alternatives.
A Shrinking Market for Campus-Based Programs
For colleges that rely solely on a campus-based delivery model, some markets are shrinking due to declining regional high school demographics. Concurrently, more students are migrating to online programs due to convenience and cost. More than 7.1 million students have taken at least one online class, representing 33 percent of total higher-education enrollment. Moreover, there are more than 3.4 million college students engaged in fully online programs, representing 17 percent of all college students.
Growing Market Segments
The capacity to expand enrollment will also be determined by an institution’s ability to serve diverse and growing market segments, which includes transfer students, adults seeking degree completion, graduate students, as well as those students seeking certificates and credentials. These revenue segments are distinctive and accretive to traditional campus-based delivery programs and represent a diversification of revenue opportunities.