business model for higher education

Reimagining higher education in the United States

Higher education in the United States is at an inflection point. The core mission of the university—instruction, research, and service—has not changed. Nor has the need for advanced education to prepare individuals for a fulfilling life and to drive the knowledge economy. For individuals, the economic benefit of earning a college degree remains clear. College graduates are on average wealthier, healthier, and happier over a lifetime. 1 William R. Emmons, Ana H. Kent, and Lowell R. Ricketts, “Is college still worth it? The new calculus of falling returns,” Federal Reserve Bank of St. Louis Review, 2019, Volume 101, Number 4, pp. 297–329, stlouisfed.org.

Even before the COVID-19 crisis, however, the higher-education sector faced significant challenges. Consider student completion: only 60 percent of all those who started college actually earned a degree within six years in 2017 (the latest year for which data is available). The figures are even worse for Black (39.9 percent) and Hispanic (54.4 percent) students. Other troubling disparities persist. In student enrollment, for example, 69 percent of white high-school graduates enroll in college, compared with 59 percent of Black high-schoolers and 61 percent of Hispanics. Furthermore, the level of student debt is rising, while repayment rates plummet, creating a potentially unsustainable burden for many students.

The pandemic is intensifying these challenges and creating new ones. Students and their families are struggling with the impact of campus shutdowns and questioning whether it is worth it to pay for an on-campus experience when much of the instruction is being done remotely. Under these circumstances, the risk of outcome inequities—from completion to employment to lifetime earnings—could worsen. For example, evidence suggests that lower-income students are 55 percent more likely than their higher-income peers to delay graduation 2 Esteban Aucejo et al.,“The impact of COVID-19 on student experiences and expectations: Evidence from a survey,” Journal of Public Economics , August 2020, sciencedirect.com. due to the COVID-19 crisis. Underpinning all of these challenges is a business model at its breaking point, as institutions face falling revenues and rising health-and-safety costs.

In short, the coronavirus has confirmed the case for fast and fundamental change. It has also demonstrated that change is possible. When the pandemic hit, many US colleges and universities moved quickly to remote learning and other delivery models, launched affordability initiatives, and found creative ways to support their students. Now is the time to build on these lessons to reimagine the next five to ten years and beyond.

With that in mind, we pose five questions for US higher-education leaders to address as they look to the future. For each question, we describe the current conventional wisdom and then make the case for challenging it—to the benefit of students, faculty, staff, institutions, and society.

What makes our university distinctive?

The conventional wisdom: To successfully attract students and maintain competitive national rankings, colleges and universities must be well rounded.

National-ranking systems emphasize admissions selectivity, small class sizes, per-student spending, and standardized test scores. Focusing on this narrow set of variables can incentivize institutions to make strategic and operational choices that may boost their rankings without necessarily improving their core educational missions. It may also lead to greater homogenization in the higher-education landscape.

Instead, there may be more benefit to creating thoughtful differentiation, building on the institution’s existing strengths, resources, and local context. The question to ask is: “What should my institution be known for?” There are many ways to differentiate, including student mix and outcomes, faculty development, research capabilities, facilities, and community impact. Doing so may serve institutions and their students better than the conventional wisdom for three reasons.

First, identifying and prioritizing what makes an institution distinctive can be a competitive advantage that attracts committed students and faculty. Second, specializing—doing fewer things better—could improve outcomes. And third, creating a distinctive profile can be a source of resilience, enabling institutions to survive after a crisis.

Such differentiation will be critical given the trends that are challenging the higher-education sector. One trend is the coming “demographic cliff”—the number of high-school graduates in the United States will peak at around 3.6 million students in 2026 and then decline to 3.3 million students by 2030. Another is the drop, since 2016, in international-student enrollment, an important source of revenues for many colleges. The COVID-19 crisis could well accelerate this decline. A third trend is the competition for research funding. In terms of the percentage of GDP and of budget allocation, federal investment in R&D has fallen steadily since the 1960s (although it has risen in absolute terms, and in the past two decades, nonfederal investment has grown, too). Moreover, about 35 percent of federal funding went to just 22 schools in 2018. Given these constraints, leaders need to ask how research can serve their institutions and identify where they stand the best chance of attracting faculty and funding.

By defining their areas of distinction and then directing resources to support them, higher-education institutions can set themselves apart—making them stronger and enabling them to deliver high-quality programs and outcomes.

How can we build a diverse and inclusive institution?

The conventional wisdom: Current efforts are likely to fulfill diversity and inclusion (D&I) goals in a reasonable time frame.

Higher-education institutions have been at the forefront of recognizing, and taking steps to foster, D&I. Many feature chief diversity officers, D&I curriculum requirements, and training sessions on implicit bias, as part of the growing diversity infrastructure. Even so, there are sizeable gaps. College enrollment and completion rates for Black and Hispanic students are much lower than for their white or Asian counterparts. Another area to address is the student experience itself. According to a 2019 study, Black, Hispanic, and first-generation students report a lower sense of belonging at four-year schools (but not at two-year schools). 3 Shannon T. Brady et al., “College students’ sense of belonging: A national perspective,” Educational Researcher , 2020, Volume 49, Number 2, pp. 134–37, sagepub.com.

Faculty composition is even less representative. In 2017, only 6 percent of full-time faculty in degree-granting postsecondary institutions were Black and 6 percent were Hispanic, compared with 14 percent and 18 percent of the US population, respectively. Women make up only 33 percent of full-time professors.

Doing more of the same, then, is not enough, and time is of the essence because of changing student demographics. Between the 2012–13 and the 2031–32 academic years, the proportion of high-school graduates who identify as Asian and Hispanic will grow to 31 percent, from 24 percent, of all students.

There is evidence from the business sector that prioritizing D&I as a core value is sound management. McKinsey research has consistently found that  businesses with top-quartile diversity on executive teams were likelier to have superior results; in the latest results from the 2019 study, companies with top-quartile ethnic and gender diversity were 36 percent and 25 percent, respectively, more likely to have above-average profitability. While the analogy between executive teams and higher education administrations is not precise, it is likely that campuses, like the C-suite, would benefit from a more diverse leadership composition.

Current higher-education D&I efforts are necessary yet insufficient, particularly given how the COVID-19 crisis is disproportionately impacting the lives, livelihoods, and education of Black and Hispanic Americans. Leaders must, therefore, act with a sense of urgency, seeking opportunities to strengthen D&I across their institutions—from redesigning student recruitment to updating faculty-performance measurement to account for the significant roles that under-represented faculty often play in mentoring to the social and academic experiences to postgraduate success. To do so may require new strategic initiatives and accountability measures, such as sharing the breakdown of tenure appointments by ethnicity and creating programs to encourage opportunities for intergroup dialogue and promote cross-race understanding. 4 This constitutes McKinsey’s view on best practices and optimized environments. Legal restrictions, however, could affect universities’ ability to adopt them; they should consult their legal counsel to understand any implications created by the recent “Executive Order on Combating Race and Sex Stereotyping,” September 22, 2020, whitehouse.gov.

What services are necessary to create a high-quality student experience? And what aren’t?

The conventional wisdom: In addition to learning, higher-education institutions must be responsive to a wide range of student wants and needs.

The core mission of colleges and universities is instruction, research, and service. In recent decades, though, many have engaged in the so-called student-amenities arms race, with expansive offerings in areas such as entertainment, gourmet dining, and wellness. Higher-education institutions want to deliver an enjoyable experience, and of course some student services are essential, especially those related to physical and mental health. But it is notable that since at least 2010, the costs for student services have risen much faster than costs for instruction and research (Exhibit 1). While this spending does include some core services, this trend may no longer be sustainable for many institutions.

Spending on student services has been growing four times as fast as spending on instruction.

Chart summary.

Although more than half of total spending at four-year universities was invested in research and instruction, growth over ten years since 2007 showed 0.3% less was spent on research and only 0.5% more on instruction. Meanwhile, 8.5% of the total was invested in student services 4 , the largest area of growth in spending per student (2.1%) over ten years.

1 Adjusted for inflation.

2 Includes expenses for the day-to-day operational support of the institution. Includes expenses for general administrative services, central executive-level activities concerned with management and long-range planning, legal and fiscal operations, space management, employee personnel and records, logistical services such as purchasing and printing, and public relations and development.

3 Includes expenses for activities and services that support the institution's primary missions of instruction, research, and public service.

4 Includes expenses for admissions, registrar activities, and activities whose primary purpose is to contribute to students' emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instructional program. Examples include student activities, cultural events, student newspapers, intramural athletics, student organizations, supplemental instruction outside the normal administration, and student records.

Source: College Scorecard; Federal Reserve Bank of Minneapolis (CPI); National Center for Education Statistics Trend Generator

McKinsey & Company

One of the most difficult things to do on a college campus is to stop doing something. That said, some institutions have shown how to make such tradeoffs. Spelman College, for example, announced in 2012 that it would drop competitive intercollegiate sports in favor of expanding campus-wide health and fitness programs. This exact tradeoff is being faced again, and some institutions are making the difficult choice to trim athletics; most notably, in July 2020, Stanford announced it will permanently cut 11 athletics programs.

While students surely appreciate things like luxury gyms and other services, there is a need to distinguish between what students like and what is necessary to serve the core education mission. Given the budget stresses of the COVID-19 crisis, higher-education institutions may want to consider providing fewer, better ancillary services, while keeping the broader well being of their students in mind.

What delivery channels and models should we use to fulfill our core educational mission?

The conventional wisdom: The best college experiences and educational outcomes are delivered in person, on a residential campus.

The quad, the ivy, the lecture hall, the dorm, the tailgate parties: these are some of the well-known totems of the quintessential college experience. These images are ingrained; they are also part of the reason why many (and maybe most) traditional four-year, higher-education institutions were slow to adopt new methods and technologies, such as remote instruction and competency-based learning that have the potential to advance student success while also lowering costs.

Global private investment in learning-technology companies has been growing fast, from $2 billion in 2012 to $19 billion in 2019. Areas such as online-learning management systems and innovations such as virtual-lab applications and immersive story learning are beginning to spread. And the COVID-19 crisis hustled even reluctant students and institutions into action. In 2018, only about 35 percent of undergraduates took a distance-education course. This year, that figure is close to 100 percent, as the pandemic forced the adoption of remote learning.

In 2018, only about 35 percent of undergraduates took a distance-education course. This year, that figure is close to 100 percent.

Institutional acceptance of the online delivery model also may be increasing. According to a poll of 2,000 US faculty members by Inside Higher Ed and Gallup in October 2019 5 Doug Lederman, “Professors’ slow, steady acceptance of online learning: A survey,” Inside Higher Education, October 30, 2019, insidehighered.com. —that is, well before the COVID-19 crisis—39 percent fully supported the increased use of education technologies, up from 29 percent in 2017. And a national survey of more than 4,000 faculty members earlier this year 6 “Time for class: COVID-19 edition,” Tyton Partners, July 2020, everylearnereverywhere.org. found that 45 percent had a better opinion of remote learning since the pandemic began; fewer than one in five (17 percent) had a more negative perception.

Remote and online learning are here to stay. The need is to determine what combination of remote and in-person learning delivers the highest educational quality and equity. As institutions refine this hybrid model, they have a once-in-a-generation chance to reconfigure their use of physical and virtual space. They may be able to reduce the number of large lecture halls, for example, and convert them into flexible working pods or performance spaces. Or they could reimagine the academic calendar, offering instruction into the summer months.

What is our business model?

The conventional wisdom: The current higher-education business model, which relies heavily on ongoing tuition increases, can be sustained.

For decades, the financial model of US colleges and universities rested on two revenue streams. Student tuition and fees were the most important; the rest came from a mix of different sources, such as athletics, research grants, endowments, and government appropriations, that varied greatly. Both revenue streams are now under stress. These unprecedented times require a reimagined business model that protects the core educational mission and financial viability of the institution, while limiting economic burdens on students.

As mentioned, athletics, research grants, and other revenue sources are sputtering in the pandemic. But the bigger stress is on tuition and fees, which comprise at least half of revenues for about 55 percent of four-year private nonprofit institutions in the United States; meanwhile they account for more than a third of revenues for about 30 percent of public institutions. Even before the COVID-19 crisis, administrators realized that they had limited scope to increase tuition; now it has become even more difficult to do so.

Two issues threaten the traditional tuition-reliant financial model. First, there is affordability. To offer financial aid, institutions manage a complicated pricing system in which higher-income and international students effectively subsidize needier ones. This lack of price transparency feeds into the perception of the increasing costs—and unaffordability—of college. In fact, from 2007–17, net costs rose only 4 percent , reversing the trend of previous decades. Yet the perception of unaffordability means that some young people might be discouraged from trying to attend: they see the high sticker prices and assume that they are priced out.

Second, there are also questions around the value of higher education when debt levels and repayment rates are considered. Median student debt levels have climbed by 45 percent since 2006, while repayment rates have dropped by 24 percent since 2009 (Exhibit 2). The situation appears to be worsening; in 2016, only 6 percent of students  were at colleges where students left with moderate debt and managed high repayment rates, compared with 54 percent in 2009. The situation is even worse for students who incur debt but don’t graduate and, therefore, don’t benefit from the income-raising advantage of a degree.

The COVID-19 crisis could accelerate these trends. In our April 2020 student survey , 45 percent of prospective students cited cost as extremely important in selecting a college, 44 percent of students who switched schools between January and April did so to save money, and 30 percent reported that the COVID-19 crisis was likely to have a strong or extremely strong impact on their ability to afford college.

Another important factor is to ensure students realize an economic return on their investment in higher education; without that assurance, young people will not be willing to enroll in the first place, or finish. Colleges are under pressure to ensure that students don’t just graduate with a degree, but with a pathway to sustainable employment that secures a reasonable standard of living.

Given these financial constraints, it is not surprising to see consolidation. Since 2000, there have been about 100 higher-education mergers in the United States, 7 John Hanc, “For some colleges, the best move is to merge,” October 10, 2019, New York Times , nytimes.com. and more are likely. The Pennsylvania State University system, 8 Jan Murphy, “Pa. state system of higher education exploring costs of combining some universities,” July 16, 2020, Patriot-News , pennlive.com. for example, is considering restructuring the different institutions in the system. Properties, buildings, and talent from less-affluent campuses may well become available. An interesting example comes from Connecticut, where three schools are buying the assets of the University of Bridgeport 9 Goldie Blumenstyk, “The edge: As colleges’ finances get shakier, what lessons does this ‘sorta’ merger offer?”, July 8, 2020, Chronicle of Higher Education , chronicle.com. ; the latter’s academic programs will continue for the time being, while other operations, such as the library and security, are shared.

The opportunity—indeed, the necessity—is to reimagine higher education financials so that students do not find themselves mired in debt. There is little room to increase tuition, and there are also challenges to other revenue sources, such as athletics and research funding; education leaders must therefore ask how they can reevaluate their spending and/or reallocate existing resources.

Colleges and universities must reimagine their business models and consider new ways to operate—either on a standalone basis or through partnerships that accomplish the same goals, at lower cost.

How do we challenge the conventional wisdom?

Higher-education leaders face a complex situation, negotiating how to manage the COVID-19 crisis in a context of economic, demographic, and technological challenges. At the same time, universities have a reputation for making decisions slowly. “It’s easier to change the course of history,” the saying goes, “than it is to change the history course.” The deliberate, and deliberative, nature of university governance has many benefits, but it can also be a hindrance to decisive action. That said, many university leaders have reacted creatively and swiftly to meet the challenge of protecting their communities’ health while delivering on their educational mission.

Three mechanisms can help universities to sustain this momentum: planning, stakeholder engagement, and board governance:

• Plan ahead. Responding to a crisis like the COVID-19 pandemic requires leaders to take decisive short-term actions. But they also need to dedicate time to develop longer-term strategic thinking. One way to do so is to create plan-ahead teams  that include people identified as future leaders. The team should be tasked with developing scenarios, recommending actions, and identifying trigger points for escalation to the university’s board and administrative leadership.
• Stakeholder engagement. Universities should engage early and often with important stakeholder groups—including faculty, staff, students, and parents—when making critical strategic decisions. Leaders must be transparent about decision-making processes, establish clear timelines, and meet them. By embedding engagement into decision making, rather than as an afterthought, the shared governance culture of higher education can be respected, while still allowing universities to act quickly.
• Board governance. In moments of crisis, boards can play a critical role. But that role must not slip into micro-management. Board members should evaluate their operating model—the board’s size, structure, and decision rights—to ensure they provide the necessary governance without interfering with administrators.

This is not the first time, nor will it be the last, that universities will need to adapt. “The inertia of a massive university is formidable,” noted Harvard President Charles W. Eliot in his inaugural address. “A good past is positively dangerous, if it makes us content with the present, and so unprepared for the future.”

President Eliot made those remarks in 1869. The time to prepare for a new future is now.

André Dua is a senior partner in McKinsey’s Miami office; Jonathan Law  is a senior partner in the New York office; Ted Rounsaville is a senior expert in the Washington, DC, office; and Nadia Viswanath is a consultant in the San Francisco office.

The authors wish to thank Arthur Bianchi and Kathleen Zhu for their contributions to this article, as well as the hundreds of university leaders who shared their experiences and perspectives with us.

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Building Higher Education's Future Business Model

Peter Stokes, Andrew Laws

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The higher education industry is at an inflection point. Public and private institutions alike are tracking, if not yet being impacted by a tectonic shift in who they serve (and how they do it).

Overall enrollment has incrementally declined, forcing some colleges and universities to consider consolidation and closures. At the same time, higher education’s target market is no longer limited to new high school graduates. The pool of potential applicants is diversifying across race and ethnicity, age and socioeconomic factors. This changing audience is challenging institutions with new expectations that traditional academic offerings may not be equipped to meet.

As the higher education environment continues to transform, maintaining the status quo is the riskiest move leaders can make.

As higher education’s audience evolves, questions about institutions’ cost structures become more pressing. Tuition at public and private institutions rose more than 100 percent over the last two decades. With government appropriations shrinking, many colleges and universities are more reliant on tuition dollars than ever before — reinforcing the affordability barrier that prevents schools from attracting and retaining bright minds.

Demand for higher education is diminishing and the offerings institutions supply are losing shelf life, rendering current financial and operational structures unsustainable. To thrive for decades to come, higher education leaders, even those at institutions succeeding today, should prepare to fundamentally adapt their business models .

Connecting the Dots for Student Success

Learn how to achieve student success and financial sustainability by using strategic planning and integration across your higher education campus.

Laying the Groundwork for a Viable Future

Tactics such as tuition discounting are short-term fixes for higher education’s long-term challenges. Higher education leadership teams need a bold vision for innovating their...

Tactics such as tuition discounting are short-term fixes for higher education’s long-term challenges. Higher education leadership teams need a bold vision for innovating their operations and offerings to ensure their institutions’ longevity.

Four areas higher education leaders could explore when building future-proof business models include:

• Academic portfolio optimization: Academic offerings account for approximately half of institutions’ total expenses, but few leadership teams have visibility into the efficacy of their programs. Similar to an investment portfolio, higher education executives should treat their academic offerings as a portfolio with balanced priorities (e.g., mission, prestige and profit), that has a regular cadence for review and reimagination. With a unified, data-driven approach to academic portfolio optimization, leadership teams can objectively measure each program’s performance, financial viability and alignment with the institution’s current and future strategy. Conducting this exercise on a constant cadence can reveal programs ripe for consolidation and areas worthy of additional investment.
• Revenue-driving partnerships: Another private sector trend with potential for the future of higher education is the pursuit of partnerships. The right alliance can infuse your institution with the expertise and resources necessary for successful reinvention. For example, U.S. universities have historically used joint ventures to expand their global footprints. More recently, it has become common for institutions to establish partnerships for online programs. Forging similar partnerships in other operating and academic areas could be a fast-track to cost reduction and scalability. Mergers and acquisitions should also be up for consideration. Beyond minimizing expenses, M&A can unlock growth opportunities. Purdue University’s 2017 acquisition of Kaplan University, for instance, set the stage for the launch of Purdue Global, an online program with more than 100 offerings largely geared toward adult learners.
• Education delivery innovation: Leaders’ most difficult step in building a new higher education business model is unlearning what you already know about your audience. Teams should commit to understanding the needs, challenges and goals of a new student body. With that detail, you can identify which capabilities you need—and those that are no longer relevant—to succeed. If your institution plans to increase the number of rural or working adult students, the main venue for learning may shift from the lecture hall to virtual platforms or more distributed microcampuses. For these emerging populations, two or four-year degrees may not be as feasible (or effective) as certificates, “stackable” credentials or interdisciplinary programs that can be enrolled in year-round.
• Evolved pricing structures: As education delivery and student demographics transform, institutional pricing should adapt accordingly. While undergraduate tuition discounting has steadily increased for the last decade, awarding more aid alone isn't a long-term solution to enrollment and budget challenges. Just as the healthcare industry is moving from fee-for-service to value-based payment models, higher education could benefit from more closely tying costs to student outcomes. For example, some institutions are implementing differential tuition where costs vary depending on an academic program's internal costs or graduates' earning potential. Online learning and stackable credentials also present opportunities to pilot new structures, such as subscription payments or program-specific pricing.

As the higher education environment continues to transform, maintaining the status quo is the riskiest move leaders can make. Positioning your institution for long-term financial and operational success starts with more than near-term tactics; it demands a new, strategic business model.

By developing a plan for tomorrow’s changes today, higher education leaders can protect their institutions’ relevance and competitive edge.

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Higher education industry is implementing new business models

To gain a better understanding, on a global and regional level, of what's important to higher education students and what their challenges are with respect to learning, academic goals, and career goals, as well as staff perspectives on how to best communicate with, instruct, and prepare students, Salesforce partnered with Ipsos and The Chronicle of Higher Education to collect over 2,200 higher education student and administrators using an online quantitative survey. 

Here is the executive summary of the 2021 Connected Student Report : 

• Supporting students and staff wellbeing is critical - Concerns about student mental health and wellbeing had already led many institutions to offer more services, including ones that students could access online. The anxieties and calamities faced by students and faculty, and staff increased those worries, with 76% of students and 73% of staff reporting that maintaining their well-being remains a challenge. 
• Flexible learning and working options are here to stay - One major takeaway from the report is the need for learning options that fit within students' busy schedules. One in four students said that having more flexible courses and part-time offerings would help them succeed. 43% of students prefer hybrid courses.
• Student career pathways are top of mind - Financial challenges and anxiety about the future are common amongst students. Close to half of students (49%) say that future career prospects are most important when deciding to enroll in a college/university.
• Universities explore new business models - The COVID-19 era has led many institutions to make considerable adjustments to how they operate -- changes that represent opportunities for growth and increased efficiency. 45% of staff said their institutions are implementing new business models.
• Learners and institution success require innovation - Many institutions are experiencing a gap in trust. Nearly 6 in 10 students say the trust gap between students and institution leaders is due to a lack of consistent communications; about half of the staff agree. 45% of staff said their institutions are prioritizing investments in integration technology

2021 Connected Student Report, Salesforce.org 

Here is a deeper look into each of the key takeaways from the 2021 Connected Student Report : 

Supporting student and staff wellbeing is critical 

• 34% of students said they need more help managing their course load.
• 76% of staff said maintaining their work/life balance is a top challenge.
• 40% of students said their institution can best support their wellbeing by offering more flexible learning options. 

Flexible Learning & Working Options Are Here to Stay

• 54% of staff prefer hybrid courses.
• Students expect 50% of their courses moving forward to be online.
• 46% of staff anticipate more remote work in the near future.

Student career pathways are top of mind

• 31% of students identified low career prospects as why they have a poor college/university experience.
• 29% of students said they need more career resources from their college/university in order to be successful.
• 50% of staff say their institutions are strengthening corporate partnerships in order to help students prepare for digital careers.

Universities Explore New Business Models

• 48% of staff said their institutions are investing in new business models focused on more part-time learning options.
• 33% of staff said their institutions are investing in new business models focused on executive education.
• 29% of staff said their institutions are investing in new business models focused on credentialing/ micro-credentialing.

Learner & Institution Success Requires Innovation

• 27% of staff say their institutions are hiring for a head of digital experience.
• 53% of staff members say they will rely on social media to better engage with students in the coming fall semester.
• 40% of staff said their institutions are prioritizing investments in real-time data analytics.

2021 Connected Student Report, Salesforce: Technology challenges and investment areas in higher education 

The 2021 Connected Student Report also highlighted solution line key findings: 

Recruitment and Admissions

• Students say they would choose one university over another if it offered more help finding paid internship/ job opportunities (40%) or more flexible course options (36%).
• 51% of recruitment and admissions staff anticipate an increase in social media engagement to target incoming students.
• Coming out of the pandemic, only 7% of staff anticipate their institutions will continue to buy lists to attract prospective students, yet close to a quarter (24%) expect digital advertising to be a key tactic moving forward.

Student Experience 

• Only 27% of students say they can easily sign up for an advising appointment at their college or university.
• 26% of students say they have to sign in to two or more different platforms to find answers to their questions and access the resources they need to be successful every day.
• 92% of staff say tailored student enrollment plans have successfully ensured accepted students enroll at their university or college.

Advancement 

• Advancement staff anticipate video conferencing (39%), social media (38%) and email (38%) to be the most effective channels in securing major gifts coming out of the pandemic.
• 55% of advancement staff anticipate more virtual events to engage alumni and constituents coming out of the pandemic compared to pre-pandemic times.
• Of those students that don't feel connected to alumni, 34% said it's because their college or university does not provide an online community to interact with alumni.

Marketing and Communications

• 59% of students attribute a leadership-student trust gap at their college or university to a lack of consistent communications; about half of the staff agree.
• When asked how their university could improve their communications,42% of students said more personalization.
• When asked how their university could improve their communications,39% of students said more reminders or alerts.

2021 Connected Student Report, Salesforce: Communication is key to establishing stakeholder trust 

9 in 10 students want institutions to communicate with them as often or more via email, personalized communications, and alerts. Around four in 10 say they'd like communications to be more personalized, while 25% say they'd like a more personalized college experience overall.

2021 Connected Student Report, Salesforce: Three ways universities can improve student communications 

Institution Operations 

• 62% of staff say their institution is reevaluating their faculty/staff support & service model as a result of the pandemic.
• Of those staff members that indicated they don't have enough support from their institution, 31% said it's because their college/university uses multiple technology systems. It's hard to get the data they need to do their jobs effectively.
• When asked how their institution could better help staff, close to half said more online resources for technology support (44%) and an online portal to connect with other staff members (42%).

The pursuit of new business models in higher education is an important finding. According to the Chronicle: 

"COVID-19 may not have created any new reasons for colleges to change how they do business, but the pandemic rapidly accelerated the process. Just in the U.S., the loss of dining hall income, residential and student fees and, in many cases, tuition has likely cost institutions around $183 billion . Post-pandemic, institutions will need to do more than assure the safety of students and staff. They'll have to keep an eye on the bottom line as well. Findings show that many institutions are reworking their business plans to reflect this reality. Nearly half of staff surveyed globally say their institution is more likely (at 45%) than not (35%) to be implementing a new business model. 

Some institutions, such as Southern New Hampshire University, are creating new models that make on-campus learning more affordable, while Cambridge announced in May that it will roll out 50 online courses over the next five years, with an eye toward increasing learning opportunities. As institutions look ahead, many have made shoring up their value proposition for future workers more of a priority."

2021 Connected Student Report, Salesforce: New business model trends in higher education

The report highlighted these key findings: 

• Nearly half of all institutions are implementing new business models due to the pandemic. 
• 7 in 10 staff say their institutions are investing in new growth opportunities, chiefly more online learning options. 
• About half of the total staff surveyed say those business model revisions involve the creation of more part-time learning options or shorter-term courses and programs -- changes that reflect more of a concern for non-traditional learners and other working students. 
• Nearly 40% of staff surveyed say they are seeing more partnerships between corporations and higher education. 
• About half say that their institutions are engaging employers to help recruit students by managing corporate relationships on a single platform or by tailoring marketing campaigns to corporate partners -- with France and the U.S. courting private companies at the highest rates. We know companies are key to solving the digital skills gap . 

2021 Connected Student Report, Salesforce: Staff predict more investments in technologies and engagement opportunities 

• Institutions have continued to upgrade their technology during the pandemic. Slightly less than half of those on staff say that more people on campus are involved in making tech decisions, with more than half of those in the Netherlands and U.S. reporting the highest rates of collaborative tech decision making.
• The digital competency of staff has become a priority for most institutions as well. More than 6 in 10 staff members say that the pandemic led their institution to re-evaluate their staff support and service models and invest in training that would allow faculty and staff to do their jobs virtually.
• More than half of staff (52%) anticipate their institution will invest in classroom technology, while a slightly lesser number (46%) expect to see more money going toward research tech. A considerable number (44%) anticipate investments in faculty and staff learning and engagement opportunities.

2021 Connected Student Report, Salesforce: Higher Education is investing new technologies, leadership roles and staff services models 

New business model innovation is a top priority for higher education institutions. Whether it be new sources of revenue or new areas of investment, institutions are evaluating how to create value from anywhere and what internal shifts they need to make to catalyze these changes. Learning from anywhere, success from everywhere. 

To learn more about the 2021 Connected Student Report, you can visit here . 

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Q&A: Building a Sustainable Higher Ed Business Model

Amelia Pang is a journalist and an editor at EdTech: Focus on Higher Education. Her work has appeared in the New Republic, Mother Jones, and  The New York Times Sunday Review, among other publications.

 Amy McIntosh is the managing editor of  EdTech: Focus on Higher Education .

The higher education landscape is evolving, and colleges and universities are learning how to evolve with it. As these institutions continue to embark on digital transformation initiatives , their budget needs are changing, and the traditional higher education financial model might not be enough to support them. Investing in new programs , diversifying revenue streams and applying effective  asset management  have never been more important.

In a  Twitter poll posted last November , 40 percent of  EdTech: Focus on Higher Education ’s readers said funding and budgeting will be their most important focus area for 2022. With declining enrollments, rising costs and shrinking budgets, it is difficult, if not impossible, for the traditional higher education business model to sustain institutions in 2022.

In a Q&A with  EdTech , Maryville University President Mark Lombardi discusses how to recognize and disrupt traditional higher education business models.

RELATED:  Universities are actively planning for long-term success.

EDTECH: From a high-level perspective, how does the higher ed financial landscape look?

Lombardi:  Overall, as an industry, the financial landscape is pretty bad. You have a whole host of universities that are really operating on deficits. They’ve taken “not for profit” to heart far too much. As a result, they’re struggling as enrollments decline.

There are so many challenges to the traditional higher ed business model that it has to be really revolutionized and radically altered. I’d say that higher ed as an industry is in bad financial shape. It demands disruption and change. That’’ one of the things that we’re doing here at Maryville, disrupting that model.

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EDTECH: What are some problems with the traditional higher ed model?

Lombardi:  It’s very labor-intensive, first of all. Second, it’s a scarcity model. It’s based on the notion of restricting access and opportunity to people. The budgets in most universities don’t make any sense. People make a list of all the things that they want, and then they adjust tuition and fees to accommodate that. That’s why the cost of higher education has skyrocketed over the past several decades. It’s really unaffordable for many people.

It’s a business model that’s not predicated on sound principles of fiscal management. It’s not predicated on cost-effective work. It’s not predicated on automation and digitization that can lower costs. It’s a 20th-century business model in a 21st-century world and it doesn’t work anymore.

FIND OUT:  How higher ed institutions manage long-term digital transformation projects.

EDTECH: What can be done to revolutionize the model?

Lombardi:  Well, first and foremost, we’re in a digital age. COVID-19 has eliminated the debate about what age we’re in. You have to implement strategies that are fundamentally based on data and data analytics. It’s the absolute necessity of all things. You could argue it’s the absolute necessity of the entire economy, in every vertical in the economy.

One of the things we’re doing is employing sophisticated AI techniques to provide service and content to students so that they don’t have to look for it. They’re not hunting for it; it’s pushed out to them. That way, you can significantly reduce your dependency on traditional ways of delivering things and push information, content and services to students in a way that serves their interests most effectively. Like any other service industry, education has to pivot in that direction, and that’s what we’ve been doing very well for the past several years.

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EDTECH: How can data analytics improve higher ed’s financial health?

Lombardi:   Beth Rudden  is a brilliant data scientist from  IBM , and she says data is an artifact of the human experience. Students are producing tremendous amounts of data about how they learn, how they want services and how they live, because a university is a comprehensive ecosystem. How do you collect that data? And how do you use that data, not to get money from people the way that predatory companies do, but rather to serve the interests of the students, to provide them the best education, the best learning diagnostics, so that they can anticipate problems?

That data is all out there. What we’ve done is create a data lake where we can take that data and extract it to provide outstanding service across the board. It’s about seeing the way we want to be treated in digital society and then structuring your data around that service dimension.

MORE ON DATA ANALYTICS:  Building a solid data house at Georgia State University.

You change the whole learning dimension. So instead of, ‘I’m a student, you’re a teacher, and you’re providing me with content,’ which is kind of antiquated, we are in this journey together. It’s a facilitative journey of learning, where I understand how my brain works and I’m able to then take ownership over that process with the support of life coaches, and faculty and others.

You change the whole dynamic, and it’s empowering. It opens up access and opportunity, particularly for students of color and underrepresented groups who have not had the kind of access and opportunity that they should have.

And then, the economics of that is you greatly reduce the cost of all the things that you had, that were designed to fill gaps that, frankly, no longer exist. For me, data analytics is the Rosetta stone of changing that business model in higher ed and really flipping the script and putting the student in charge of their own learning. And I think that’s exciting.

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How Universities Are Exploring New Business Models

Kathryn Peterson

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Many higher ed institutions are investing in new business models with an emphasis on attracting and engaging lifelong learners. With the demand for shorter, more flexible programs on the rise and overall enrollment numbers declining, institutions are looking for ways to get back to growth.

Research from the second edition of the Connected Student Report shows that many of these new models are likely here to stay as many institutions are expanding their offerings, hiring new leadership roles, and doubling down on strategic plans for the long term. In fact, 45% of staff surveyed say their institution is implementing new business models.

In this blog, we’ll share key findings from the second edition of the Connected Student Report and offer suggestions for how your institution can begin exploring new business models.

Innovation is more important than tradition

The challenge for colleges and universities as they plan for a post-pandemic future is to set themselves apart as whole institutions rather than stake their future on a handful of new academic programs, a revised recruitment strategy, or a bolstered set of online offerings. When times get tough, colleges tend to hunker down, wring more out of their strategic plans, and focus more on executing what they’re already doing.

That strategy might have worked before the pandemic, but the new fiscal and demographic realities call for greater differentiation with the development of distinctive pathways and services for learners throughout their lifetime. Institutions need to step away from the herd in meaningful ways. That doesn’t mean they have to throw away all the markings of the legacy model (i.e., residential education), but it does require a real distinction in the marketplace. Without it, institutions are squandering opportunities to thrive — and for some, to survive — in the decade ahead.

For example, Arizona State University tops the U.S. News & World Report rankings of the “most innovative universities” by continually rethinking every business function, every process students encounter, every academic program on campus over the last decade-plus and then using technology such as data analytics, predictive modeling, and adaptive learning to deliver a more student-centered experience.

Institutions rework business models

Some institutions, such as Southern New Hampshire University, are creating new models that make on-campus learning more affordable, while Cambridge announced in May that it will roll out 50 online courses over the next five years, with an eye toward increasing learning opportunities. Especially for learners who value convenience or flexibility, online courses increase accessibility as well. As institutions look ahead, many have made shoring up their value proposition for future workers more of a priority.

“There will be a global focus on reskilling and upskilling,” says Graham Virgo, at Cambridge. “In the U.K. and elsewhere, institutions will need to ensure they are contributing to that in a way that is consistent with their own missions.”

Nearly half of all institutions are implementing new business models due to the pandemic. Seven in 10 staff say their institutions are investing in new growth opportunities, chiefly more online learning options. About half of the total staff surveyed say those business model revisions involve the creation of more part-time learning options or shorter-term courses and programs — changes that reflect more of a concern for non-traditional learners and other working students.

Demand for shorter, flexible, non-degree programs

“There is quite strong agreement across the sector that the demand for shorter, more flexible, non-degree programs is rising,” says Michael Gaebel, from the European University Association. “That represents the most frequent form of online programs in European higher education. There is a push to explore shared definitions and quality assurance as we grow these models.”

According to the Connected Student Report, many institutions have also worked to connect more with corporations. Nearly 40% of staff surveyed say they are seeing more partnerships between corporations and higher education. About half say that their institutions are engaging employers to help recruit students by managing corporate relationships on a single platform or by tailoring marketing campaigns to corporate partners — with France and the U.S. courting private companies at the highest rates.

New models require digital experts and upgraded technology

More than one-quarter of staff says their institution has opened a position to oversee the digital experience for students and staff. Institutions in France are hiring heads of digital experience, chief innovation officers, and instructional designers at higher rates than those in other nations; U.K. institutions do so at the lowest rate.

Slightly less than half of those on staff say that more people on campus are involved in making tech decisions, with more than half of those in the Netherlands and U.S. reporting the highest rates of collaborative tech decision making.

The digital competency of staff has become a priority for most institutions as well. More than six in 10 staff members say that the pandemic led their institution to re-evaluate their staff support and service models, as well as invest in training that would allow faculty and staff to do their jobs virtually.

More than half of staff (52%) anticipate their institution will invest in classroom technology, while a slightly lesser number (46%) expect to see more money going toward research tech. A considerable number (44%) anticipate investments in faculty and staff learning and engagement opportunities.

Whether it be new sources of revenue or new areas of investment, institutions are evaluating how to create value from anywhere and what internal shifts they need to make to catalyze these changes.

Connected Student Report

Belonging starts with connection. Learn more about trends in higher education in the second edition of our Connected Student report.

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Kathryn leads the research and content strategy for Education Cloud at Salesforce.org. She has more than 15 years of experience managing strategic content for organizations, including The Chronicle of Higher Education, Stanford Social Innovation Review, Newsweek, and Adobe. As a former adjunct professor, she’s passionate about increasing equity and social justice for academically vulnerable populations.

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Evolving Higher Education Business Models

March 15, 2016

As resources for higher education are decreasing and the pressure to keep tuition low is increasing, colleges and universities are looking for ways to spend more efficiently and effectively. A session at ACE2016  explored this topic with the help of its panel:

• Alana Dunagan, researcher, Clayton Christensen Institute for Disruptive Innovation
• Bob Shea, senior fellow, Finance and Campus Management, National Association of College and University Business Officers
• Matthew Soldner, senior researcher, American Institutes for Research
• Dennis P. Jones, president emeritus, National Center for Higher Education Management Systems
• Patricia Steele, principal consultant, Higher Ed Insight

The panel discussion was moderated by Louis Soares, vice president for ACE’s Center for Policy Research and Strategy  and co-author of “ Evolving Higher Education Business Models: Leading with Data to Deliver Results ,” which was funded by TIAA Institute.

The paper explores how higher education is moving from a data-poor to a data-rich environment and examines leadership strategies that presidents and their teams can use to couple financial and learning outcomes data with business model analysis to drive performance and enhance the academic enterprise.

Three themes emerged from the discussion: 1) the need for innovation; 2) the push for more granular data that can be used to create more efficient spending; and 3) the importance of getting buy-in from management to take risks and make decisions that could upset people.

“Ability is not the mother of invention, necessity is. As the resource flow slows down into higher education, we know we need to change,” said Dunagan. “It’s been a blessing to have many blessings in higher education in the last 30-40 years, but since there has been a shift in resources, we need to figure out how to change and modernize.”

But more data is needed to connect spending to student outcomes.

“How do you know where to put that dollar if you can’t measure it?” said Soldner. “Many people don’t know what things cost and what works. Benchmarking is not enough. The question is, how do we create better data?”

However, many institutions are risk-adverse and tend to stick to business models that are widely accepted.

“There is resistance to change on our campuses and an inability to make difficult decisions,” said Shea. “Across the industry, there are institutions that know what things cost. The real issue is do you have the culture to use the data to make difficult decisions on a management level? Some have the knowledge, but don’t use it.”

Shea also emphasized that no amount of data will substitute for good decision making and leadership. “There are times when you only have 70 percent of the information you need to make a decision,” he said.

When institutions consider innovating their business models, it is important to take stock of where they are, said Jones.

“Be brutally honest and really figure out where you are. There are a lot of places in higher education that want to be something that they are not. And they lose to ability to see their value proposition because they are not honest with themselves,” Jones said.

Soares said he hopes this paper gives people the room to think about how to build new relationships and think about how to innovate on their campuses.

“It doesn’t matter what position you hold, but hopefully it makes you think how to build those allies and create those new conversations,” said Soares.

If you have any questions or comments about this blog post, please contact us .

Keep Reading

Course Sharing: Business Models and the Learning Ecosystem in Action

Read the third piece in a series focused on exploring the concept of a postsecondary learning ecosystem—one that includes not only traditional higher education institutions but also alternative providers that connect learners to the labor market.

The Past Can’t Be Prologue

Dennis P. Jones, president emeritus of the National Center for Higher Education Management Systems, writes that higher education must take the lead in ensuring that college remains (and is made more) affordable. Assuming this challenge—and responsibility—will require extraordinary leadership skills by college administrators, and require nothing less than a change in institutional cultures.

Higher Education for the Nation’s Future

ACE President Ted Mitchell introduces the Council’s new Strategic Framework, which will underpin the organization for the next three years and help chart a successful course for the future of higher education.

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Exploring Business Models for MOOCs in Higher Education

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• Volume 40 , pages 37–49, ( 2015 )

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Massive Open Online Courses (MOOCs) potentially challenge the traditional dominance of brick and mortar institutions as providers of quality higher education. The benefits for students include reduced education costs and global access to exclusive institution courses and instructors. However, the benefits for institutions are less clear as there is a financial overhead required to develop and deliver content that is suitable for mass student consumption. In this article we examine the opportunities that MOOCs provide and identify several different business model challenges for offering MOOCs.

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Higher Education Business Models Under Stress

Achieving graceful transitions in the academy.

By Melody Rose and Larry D. Large

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The business model of many U.S. higher education institutions is under serious stress from changing demographics, heightened consumer demands, flagging public confidence, and new competitors for educational credentials. Many institutions are struggling to sustain the suite of amenities and support services that students need or expect given the unfavorable enrollment trends, declining public subsidies, and flat net tuition revenues. Moreover, the 30-year pattern of using increasing rates of tuition discounting to achieve enrollment goals and broaden access for lower-income students is at its limit.

In Higher Education Business Models Under Stress authors Melody Rose and Larry D. Large assert that under these conditions the business model may no longer be sustainable. Higher education leaders must instead reimagine the business model in ways that will lower costs, restore financial viability, and at the same time expand access for first-generation and low-income students (and ensure their educational success). Such changes might span a range of possible business transformations, from mergers to targeted partnerships with other colleges as well as municipalities, local businesses, and national corporations or service providers. Institutions, whether public or private, must work together, they argue, to take greater advantage of the benefits of scale by sharing administrative services, curricula, faculty, and technology.

Board members, as fiduciaries and thought partners, must monitor the institution’s key financial ratios and performance metrics, which are essential for making the strategic decisions required to chart the best direction for the future. One alternative for some of the most financially challenged institutions could be closure. And yet, if the board makes a closure decision too late, it could make an already desperate situation even worse. A more graceful closure process requires embracing the values of a functional commitment to protect the institutional mission and mitigate against risk but also an attitudinal commitment to understand how the decision will impact students, faculty, and staff and a focus on continuing transparency, communication, and support for those most affected.

Graceful closures have four distinct phases, which are detailed in chapter 3 using examples, questions for board members, checklists for administrators, and a discussion of potential pitfalls. The closure of Marylhurst University in 2018 (overseen by Melody Rose) is described in chapter 4 as an example of a graceful closure along with documentation of some of the key moments in the four phases of that multiyear process.

Despite all the challenges, the future holds real opportunities for institutions if their boards have the courage and vision to pivot to meet the moment. A modified business model, especially one that embraces economies of scale, can reduce expenses and lower tuitions. Even college and university closures, if handled with grace, can ultimately bring positive benefits. A graceful closure allows for the reimagination of a former campus in service to its mission through different means. By conducting a graceful transition, institutions and their governing boards can help improve the affordability of a postsecondary education as well as make the future for those involved brighter, more equitable, and more secure.

• Foreword by Henry Stoever
• Introduction
• Chapter 1: Disruption and Danger Zones: A National View through Six Lenses
• Chapter 2: Stress Testing the Business Model: Indicators and Alternative Models for Effective Strategic Decisions
• Chapter 3: Closing with Grace: Definitions and Processes
• Chapter 4: Closing with Grace: The Marylhurst Experience
• Chapter 5: Achieving Graceful Transitions

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• A bulk discount is available for orders of 10 or more copies
• Publication Year: 2021
• ISBN: 978-1-951635-12-1

Learn more:

• Higher Education Business Models Under Stress  podcast

Melody Rose , PhD, is the chancellor of the Nevada System of Higher Education and is a passionate advocate for improving equitable educational access and outcomes, identifying cutting-edge innovations, and leading data-driven, student-focused change. She has been a campus president, and previously served as the chancellor of the Oregon University System after having served in numerous leadership roles at Portland State University (PSU) including special assistant to the president, vice provost and dean, and as an academic department chair.

Larry D. Large , PhD, the founder and principal of L.D. Large Consulting, LLC. , is a retired university president and a professional campus administrator with more than four decades of experience. He is president emeritus of Oglethorpe University in Atlanta and also served two years as the interim president of Sierra Nevada College and was the interim president of Willamette University in 2010. Large previously served as the vice president of the University of Oregon, the vice-chancellor of the Oregon University System, the executive vice president of Reed College, and the vice president at Willamette University for 10 years. His consulting practice specializes in strategic and financial planning for public and private colleges and universities.

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Higher education listen up: These are the 5 trends Deloitte says are most important for 2024

Parts of higher education are facing existential crises. 

While that may sound like hyperbole, there is a growing number of students who are questioning the basic value of a college degree. And this is translating into action. Enrollments are down , and colleges have been forced to permanently shut their doors .

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This is just part of the challenges and opportunities that Deloitte has sought to analyze in their annual Higher Education Trends Report . The 2024 edition, released today and shared exclusively to Fortune addresses five areas of importance for higher education:

• Outcomes and articulating value proposition; 
• Crises in leadership; 
• College athletics; 
• Artificial intelligence (AI); and
• Public-private partnerships.

The overarching theme for all these trends? “The eroding trust in higher education,” says Megan Cluver, principal within Deloitte’s higher education practice.

Shifting from completion to outcomes

Confidence in higher education is falling—down from 57% in 2015 to just 36% in 2023, according to Gallup . And what’s even more telling is research released this year from Strada and The Burning Glass Institute that found that just a little over half (52%) of graduates are underemployed a year after graduation; a decade post-graduation, that number is still  45%.

When coupled with increased tuition , it’s difficult to see the worth of a attending college.

Cole Clark, managing director of Deloitte’s higher education sector, says this rapidly eroding confidence in higher education to prepare students for the true workforce is posing challenges all around.

“Focusing on outcomes is one way to begin to change the narrative on the ROI of a post-secondary degree,” Clark tells Fortune. “For the longest time, the higher education sector was focused on completion, which were suboptimal—in some cases, they still are still suboptimal—but there’s a significant shift from completion now to outcomes, employability.”

The trends report, which he co-authored with Cluver and others, suggests that higher education institutes should prioritize aligning offerings with the demands of the labor market, which will not only help more students land jobs but also provide better returns on investments.

Additionally, universities can expand lifelong learning opportunities through continuing education programs or online degree offerings, the report adds. Moreover, to gain back trust, schools can simply be more transparent with program costs and degree outcomes. For example, the University of North Carolina System studied and published ROI data of all of its programs.

Tackling AI together

AI, and in particular, generative AI continues to be the top of mind of students, faculty, and administrators alike. 

Larger, R1 research institutions are very heavily focused on AI, Cluver explains, to not only improve their own university but also the world and society at large. For smaller universities that may not have the resources to dedicate to AI, she expects there to be more partnerships across higher education as well as with third-party providers to tackle AI together . 

“I think it’s going to open up a whole new world of educational opportunities that we thought were going to totally disrupt higher education, and now I think we’re gonna see other ways of experimentation,” Clark says.

They both noted Khan Academy and its AI assistant, Khanmigo as a promising example of how AI can be truly integrated effectively into learning and work toward leveling the playing field.

The Deloitte report highlights three key areas of impact in which AI can truly make the world of higher education better, if integrated appropriately: curriculum evolution, enhancing core operations, and streamlining routine tasks. It also encourages schools to train its faculty and staff so they too can apply it to courses and evaluate appropriate and ethical uses. 

“Higher education is uniquely suited to serve at this moment by helping to envision a future in which society trusts humans and machines to work together while leveraging the promise of generative AI to make education more accessible and affordable for all,” the report states.

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Explore the Levels of Change Management

How You Can Enact Change Theory in Higher Education

Evelyn Williams

Updated: April 29, 2024

Published: March 1, 2024

Change theory, a field in education that has evolved significantly over the past century, offers invaluable insights into the intricate process of implementing change at an individual and organizational level. 

Effectively applying these theories is a critical task for university executives—especially considering the digital advancements, innovative instructional practices, and changing market landscape these institutions face. Change theory is applied to improve all areas concerning teaching, such as: 

• Developing personalized lesson plans that better address individual barriers and resistance to change
• Building change capacity so departments can efficiently adopt new teaching modalities
• Overhauling curricula so learning better prepares students for real-world application
• Adopting hybrid learning models to make up for the declining in-person enrollment

However, despite the academic focus and strategic imperatives, leaders still need to work on applying change theory in alignment with their organizational goals. Worse, only 13% of higher education institutions invest in critical change initiatives like digital transformation.

Today, we’ll look at change theory, how it’s applied across higher education , and how Prosci applies decades of change management expertise to enact change at these institutions. 

No matter where your higher ed institution is on the change journey, Prosci can help you succeed.  That's Change Done Right. 

What Is Change Theory in Education? 

Change theory is a framework that leaders across higher education use to drive efficient change on an organizational level. It attempts to explain the factors that help and hinder people from adopting new processes and systems while outlining why change can sometimes fail.

In higher education, change theory is particularly helpful as institutions work through pressing challenges:

• Meeting the learning needs of students in a digital era
• Updating critical components of digital infrastructure
• Match the shifting paradigms of academia and students
• Addressing resistance to change in the name of upholding tradition or protecting reputations

Change theories applied in educational institutions emerged from work in several fields—such as psychology, sociology, organizational behavior and management science—and have evolved to focus on specific organizational issues.

Researchers and funding agencies have recognized the need to understand how change occurs in unique environments like universities, colleges and teaching hospitals. A systematic review of evidence-based teaching practice can provide a solid foundation for understanding the change process.

Now, let’s examine why having a change theory in education is so important. 

Addressing common objections and challenges

Higher education is quickly changing. Universities and colleges deal with operational issues impacting the financial bottom line and student long-term outcomes. As fewer students enroll in or complete degree programs, the old ways are increasingly being questioned. 

Curriculum overhaul and remote learning options are viable solutions. However, these institutions still struggle to implement these changes due to resistance and other impediments to growth, like: 

• Reluctance to alter established practices
• Fear of the unknown
• Concerns about the effectiveness of new initiatives 
• Long implementation cycles
• Investment to train staff and faculty
• Measurement of change ROI

EdTech company D2L states that 70% of higher education change initiatives fail to meet goals because of employee resistance and inadequate management support. 

Change theory is a proactive solution to resistance because it predicts all participant reactions to a new approach, including negative ones. To ensure the effective application of change theory, faculty heads, and organizational leaders must:

• Communicate "why and how" – Convey the purpose behind the change and the steps towards implementation.
• Equip teams – Provide training and resources to make staff receptive to change and help them navigate the process confidently.
• Foster collaboration – Create a participative environment where feedback is valued, encouraged and acted upon.
• Role-model the changes – Ensure that leaders provide a key example of institutional support for the change by adopting and applying new processes. 

This strategy helps everyone understand and prepare for change and encourages everyone to work together toward a common goal.

Change Theory in Action—Examples in Education

Now that you better understand change theory, let’s look at some prominent examples of change theory in action. Here are a few major university initiatives that applied change theory to improve student learning outcomes and other organizational challenges.

The FIRST Project

One notable example is the Faculty Institutes for Reforming Science Teaching (FIRST) Project . The FIRST Project aimed to improve undergraduate science education by engaging faculty members in a series of workshops designed to enhance their teaching methods and better address the needs of students. The project was grounded in the assumption that change must begin with the faculty at the forefront of education for change to be effective. 

By focusing on developing faculty teaching practices , the FIRST Project facilitated a shift towards more student-centered learning approaches, which improve student engagement and learning outcomes. 

This initiative is a prime example of change theory in action, where the change process starts by empowering key change agents —in this case, the faculty—and leads to a broader impact on the educational system.

Departmental Action Teams

Departmental Action Teams (DATs) are cross-functional teams composed of faculty, students and staff that work collaboratively to address specific issues within a department. DATs aim to create sustainable changes by building the change management capacity of key change agents within the organization. 

For instance, the University of Colorado at Boulder uses DATs to help improve student educational outcomes across various departments. By involving faculty and department heads, these DATs develop and implement changes that are more likely to be accepted and supported within the context of humanities, engineering or science departments, leading to lasting improvements in educational practices across the board.

DATs are a great example of change theory applied in higher education. It’s a generalized approach that empowers specific departments within the larger institution in a contextual manner. 

Partnership for Undergraduate Life Sciences Education (PULSE)

The Partnership for Undergraduate Life Science Education (PULSE) initiative is a collaborative effort between higher education institutions responding to calls for significant improvements in undergraduate life science education. The PULSE initiative represents a concerted effort to transform life science education at colleges and universities across the United States.

PULSE refers to its overall initiative as a “ theory of change ,” a strategic model applied at the program level in higher education settings. Theory of change differs in that it outlines the how and why behind a change while change theory focuses on its implementation.

In the case of PULSE, the theory of change consists of the following components, which are implemented using change theory: 

• Core capacities developed in each department
• Transformation strategies that new capacities would help implement
• Departmental changes that each transformation strategy would facilitate

The collaboration of institutions under PULSE is focused on aligning life science education with the rapidly evolving field itself, ensuring that the curriculum is relevant and comprehensive. It prepares students for future challenges in research and various scientific fields.

PULSE Theory of Change 

Moreover, PULSE's focus on implementing the recommendations of a national report highlights its strategic approach to change. This approach ensures that the changes made are:

• Evidence-based
• Targeted to specific outcomes
• Aligned with broader goals in life science education 

The initiative's success in driving change across numerous institutions demonstrates the power of collaborative efforts and strategic planning in enacting meaningful and sustainable improvements in education.

A Template for Change in Higher Ed—The Prosci ADKAR Model

The Prosci ADKAR® Model is an example of a change theory in action. It provides a structured framework for implementing change, focusing on the people involved, how they experience the change process, and the preconditions necessary for successful long-term change. Prosci ADKAR Model focuses on five key stages: Awareness, Desire, Knowledge, Ability and Reinforcement.

Prosci ADKAR Model

ADKAR offers a flexible, adaptable approach change leaders can use to support people through unique changes within their unique institutions. For example, a college might apply the Prosci ADKAR Model to navigate resistance to change surrounding the rollout of a new eLearning program. This would include:

• Raising awareness among faculty about the need for eLearning to enable students and themselves to succeed in a digital future
• Fostering a desire for change by engaging with resistance and establishing a dialogue around solutions
• Providing the necessary training and resources to help faculty understand how to use the new program
• Enabling faculty and staff to demonstrate their ability to use the eLearning program in their courses
• Ensuring that there are mechanisms within the department to reinforce and sustain the new practices

Considering D2L’s assertion that nearly three-quarters of universities and colleges struggle with resistance during major transitions, the Prosci ADKAR Model is an excellent application of change theory for higher education, especially as part of an organizational approach to managing change like the Prosci Methodology. 

Now, let’s look at how Prosci has helped some of the largest institutions in the country drive change. 

How Prosci Enacts Change in Higher Education

As a recognized leader in change management solutions , Prosci has a track record of facilitating impactful change in higher education. Its research-based methodology, models and tools are built on decades of experience mastering the people side of change. The Prosci Methodology and training programs help organizations successfully adopt change and reap the intended benefits. The case studies below showcase the application of Prosci change theory across education:

University of Virginia (UVA)

As an institution with over 200 years of tradition and process, the University of Virginia (UVA) struggled with change fatigue and projects needing to meet outcomes. As a result, UVA embarked on an Organizational Excellence program and partnered with Prosci to enhance its capacity for change. 

Prosci training programs were utilized to train over 50 UVA staff members, equipping them with the skills to manage change effectively. Key outcomes from the partnership with Prosci included:

• A centralized project portfolio framework to ensure alignment across initiatives
• A significant increase in project ROI due to enhanced change capabilities
• The establishment of a common language for change, fostering better communication and collaboration

Organizational Excellence Program

University of California, San Diego (UCSD)

UCSD, aiming to embed change management practices throughout the organization, initiated a strategic plan to bring about campus-wide changes. The Prosci Methodology was chosen for its adaptability and effectiveness in large organizations. UCSD’s collaboration with Prosci led to:

• Large-group training sessions for awareness and role-specific change management
• The creation of various learning opportunities tailored to the needs of the institution
• Over 90% of the 500+ staff attendees found the tools and knowledge applicable to their roles
• A shared language for change among executives, managers and teams, leading to more people-centric planning and execution

The change initiatives facilitated by Prosci at UCSD were so successful that the University of California administration explored applying the process across the entire network. 

Prosci Change Theory in Action for Higher Education

Use Prosci-proven strategies to drive change efficiently in a university, college or other academic environment. Our empirically tested 3-Phase Process and the Prosci ADKAR Model help executives and change managers turn theory into action, with attention to the specifics of your educational context. Whether you need to improve student outcomes or implement a new ERP, Prosci helps meet your institutional goals.

To see change theory in education come to life, visit our change management in higher education page, where you will learn how the Prosci Methodology and change theory help leading institutions nationwide. 

Evelyn Williams is a skilled enterprise change leader with over 18 years of project management experience. Responsible for driving complex, multi-year transformations across the financial services, education and aerospace industries, she combines best practices in organizational development, project management and change management to create an impactful change readiness toolkit. Evelyn is a seasoned facilitator and coach who has led training for diverse teams globally. In addition to being a certified Project Management Professional, she holds a master’s degree in organizational development, an MBA, and a certificate in Brain-Based Coaching.

See all posts from Evelyn Williams

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Measuring Digital Innovation: A Framework

By: David L Rogers

In the digital era every organization must continuously adapt to keep up with changing customer expectations, new digital competition and business models made possible by emerging technologies. For…

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In the digital era every organization must continuously adapt to keep up with changing customer expectations, new digital competition and business models made possible by emerging technologies. For an established business, this means innovating within your core business; but it also means innovating beyond your core-testing new offerings in pursuit of new customers and revenue models. The author presents his four-part framework for making digital innovation a reality: problem validation, solution validation, product validation and business validation. In the end, he shows that digital innovation that grows your business can only happen with effective innovation measurement throughout the process.

May 1, 2024

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More From Forbes

Want to innovate as an entrepreneur learn from top higher education institutions.

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Arush Chandna is the co-founder of Quad Education .

America has been abuzz with unprecedented entrepreneurial activity since the pandemic. According to Babson College's Global Entrepreneurship Monitor (GEM) 2022-2023 USA report, the total entrepreneurial activity rates were at an all-time high , with an increase of 18% for women and 20% for men. In 2020 alone, Americans filed paperwork to start 4.3 million businesses .

This boom poses a key question—how are entrepreneurs identifying so many business ideas? Clearly, not all ideas or models are novel or innovative. But all businesses do need some innovation in the way they operate to propel the business toward success. Why is that? Let’s first understand what innovation is.

According to McKinsey , in business terms,"innovation is the ability to conceive, develop, deliver, and scale new products, services, processes, and business models for customers." Harvard Business Review further explains, “Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product."

By prioritizing and investing in innovation, be it for products or processes, companies can expect financial returns. According to the McKinsey article linked above, businesses that excel at innovating can generate 2.4 times higher economic profit than other companies.

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So, how can aspiring entrepreneurs or leaders master the essentials of innovation—both in how they think and how they can implement it in business? As the founder of an ed tech business, I believe leaders can learn how to emulate a culture of innovation in business from colleges and universities.

Embrace and encourage interdisciplinary innovation.

Different units of a business might work in silos, but an innovative leader will always know which departments can benefit from collaboration to drive maximum innovation and profitability. Stanford University provides an impressive example of how this can work.

The university has programs and an environment that encourages students from across disciplines and focus areas to collaborate and devise solutions to complex societal issues. Their Bio-X program , for example, "brings together researchers from the fields of biology, engineering, and medicine to tackle pressing issues in healthcare and biotechnology." At the Massachusetts Institute of Technology , "A general prerequisite of most MIT entrepreneurial contests or accelerators, for instance, is that participants form mixed teams of scientists and engineers with management students."

Businesses, too, can significantly benefit from such cross-pollination if their leaders take the initiative to amalgamate parts of the business that might be unrelated but have massive scope for innovation. For example, does your marketing team have a roadblock that perhaps your engineering or technology team could fix? The answer might lie in cross-functional collaboration.

Instill innovation in the company culture.

Your employees, partners or stakeholders will only be committed to the idea of innovation if you show them that you are, too. By definition, innovation requires a new approach to doing things. Employees who might already have been trained in a particular process may resist innovation unless they see that it’s a way of life at the organization. Is the company open to taking risks, accepting failure, implementing experiential learning initiatives and so on?

Innovation might conjure up an image of a fast-moving startup with less focus on rules and a rampant practice of experimentation, but innovation is also synonymous with failed experiments, starting all over again and recognizing the loopholes in the process. Employees will feel tempted to innovate when they feel they can make mistakes without serious repercussions, make amends, try again and be incentivized for processes that yield favorable results for the organization.

Once again, educational institutions provide blueprints that can benefit businesses. Michigan Ross Business School is known for its signature Multidisciplinary Action Projects (MAP) program, which offers Ross Experiences in Action-Based Learning, or REAL, for both its undergraduate and graduate business degrees. Students are at the forefront of real-world situations with high stakes. Within the program, students develop an original business with the intent of achieving economic viability. They also "manage eight focused investment funds, totaling more than $10 million in assets, in all aspects of their operations."

As an entrepreneur or business leader, you must give your employees the opportunity to learn by doing while having a high but realistic threshold for errors, offering feedback and solutions when ideas fail and rewards when they succeed.

Be prepared for future challenges.

Innovation stems from recognizing unmet needs and finding solutions that fulfill them. If business leaders can foresee the needs of their current and prospective customers preemptively, they can kickstart the innovation process—which relies heavily on research and development—sooner than their competitors. This also leaves them more room for trying out multiple solutions, collecting feedback from beta users and fine-tuning the product, service or process.

Wharton Business School offers a notable example. Once it saw a pattern among recruiters hiring for ESG-related skills, Wharton launched a major called Business, Energy, Environment and Sustainability, with nearly 30 courses. Today, ESG is considered one of the top factors impacting business strategy. The University further announced its Environmental, Social and Governance Factors for Business (ESGB) and Diversity, Equity and Inclusion (DEI) programs as a concentration at the undergraduate level and a major at the MBA level last fall.

This ability to recognize trends and challenges proactively can spur innovative thinking, test products and models, and prepare you to launch an avant-garde solution around the time when others might only be beginning to see the same trend.

Consider these final thoughts.

When it comes to learning the essentials of innovation, many rely on examples of current companies that innovate to solve a business problem. While there’s nothing wrong with that approach, I have been able to cull lessons from the exceptional culture of innovation at higher institutions as a result of my proximity to this industry.

Whether it’s through an intersection of disciplines that allows for a productive collision of ideas, exemplifying the innovation culture through actions and environment or acting preemptively on society’s most complex challenges, I believe these institutions provide a powerful model for learning and implementing innovative thinking and practices.

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Is a Business Degree Worth It?

Understanding the Numbers When reviewing job growth and salary information, it’s important to remember that actual numbers can vary due to many different factors — like years of experience in the role, industry of employment, geographic location, worker skill and economic conditions. Cited projections do not guarantee actual salary or job growth.

Many people earn a business degree with hopes of landing an in-demand job or following a dream of entrepreneurship. But in today’s evolving workforce, is a business degree really worth it?

The value of a business degree depends on your professional goals, the investment you can make in your education and the type of job you want. If you hope to work in sales , business administration, operations or other related fields, a degree in business could be a good place to start. 

So, is a business degree right for you? To decide, you’ll need to explore the types of degrees available and how they align with your career goals.

What is a Business Degree?

A business degree is a higher education credential that provides foundational knowledge and skills  in key areas of business, such as accounting, finance, human resources, marketing and project management.

According to Teague, business degrees also teach students in-demand soft skills , including:

• Analytical thinking
• Communication
• Problem-solving
• Strategic planning 

Types of Business Degrees

Depending on your goals and previous education, there are different types of business degrees  you could pursue. The most common degree programs include:

• Associate of Science (AS) in Business Administration
• Bachelor of Science (BS) in Business Administration
• Master of Science (MS) in various business fields
• Master of Business Administration (MBA)

Within each degree program, there are often opportunities to concentrate your studies on a particular area of business, such as marketing, finance, human resources or operations.

The best business degree depends on the professional path you want to take.

“The demand and benefit of each degree can vary based on market trends and individual career goals ,” said Teague.

Find Your Program

How hard is a business degree.

Earning any undergraduate or graduate degree takes time and effort. A typical bachelor’s-level business degree takes about four years to complete . Depending on the school you attend, there may be options to earn a bachelor’s degree online or in person. 

Business degree coursework can vary, but most include a combination of general education courses  and business classes, such as:

• Accounting and finance 
• Business law
• Management and leadership
• Statistics and economics

These courses are meant to challenge you and teach you new skills, but it doesn't mean a degree program will be too difficult to complete, said Teague.

“Earning a business degree involves dedication and effort, but it's designed to be accessible for motivated students,” she said.

Do Business Degrees Pay Off?

“A business degree can significantly accelerate career growth by equipping graduates with the skills and knowledge demanded in leadership and management roles,” she said. “Over time, the investment in a business degree tends to pay off through increased earnings and promotion opportunities.”*

Data from the U.S. Bureau of Labor Statistics (BLS) and other organizations backs this up, demonstrating benefits such as increased earning potential and advanced learning opportunities.*

In-Demand Credential

According to BLS data, jobs requiring a bachelor's degree are on the rise across many industries, with 3.3 million openings projected annually from 2022 to 2032.*

This growth includes 14,700 new jobs for general and operations managers, 11,700 new jobs for market research analysts and marketing specialists and 9,600 new jobs for management analysts each year, according to BLS projections.*

Higher Earning Potential

Completing a business degree could also boost your earning potential. BLS data shows that bachelor’s degree holders earned a median weekly income of $1,493 in 2023, compared to just $899 per week for workers with a high school diploma.*

Graduating with a master’s degree in business could help you earn even more.* Master’s degree holders brought home a median weekly income of $1,737 in 2023, according to BLS.*

Lower Unemployment Rates

More stable employment is another potential benefit of earning a business degree. BLS data from 2023 shows that master’s degree and bachelor’s degree holders had unemployment rates of 2% and 2.2%, respectively.* Workers with a high school diploma, on the other hand, had unemployment rates of 3.9%.*

Advanced Education Opportunities

Earning an undergraduate business degree can also open up opportunities for advanced education that could further your career, such as an in-demand MBA degree .

According to the Graduate Management Admission Council (GMAC) 2023 Corporate Recruiters Survey, 90% of recruiters planned to hire MBA graduates in 2023 ( GMAC PDF Source ).* The estimated median starting salary offered to new employees with an MBA was $125,000 that same year, GMAC said.*

Personal and Professional Growth

Luis Nieto Benitez '23 earned his bachelor’s degree in business administration online from SNHU while working multiple jobs, including a full-time role for a small construction company. He said the knowledge gained through his business classes aligned perfectly with his real-world work experiences.

“Every single one of my courses lined up with everything I need to do for that company,” Benitez said. “It was the most incredible thing I’ve ever experienced.”

Looking ahead, Benitez said he hopes to use his business education to advance his current role and one day open a nonprofit.

“The program really helped me understand that this world is not just about myself,” he said. “I’m really looking forward to seeing what I can do and what kind of impact I can have on the world thanks to the education I received.”

Is a Business Degree Actually Useful?

Earning a degree in business can help you build critical communication, leadership and problem-solving skills that are valued in jobs across many industries. Whether you want to pursue a career in marketing , human resources, finance or another field of business, a business degree can help.

According to Teague, some of the careers you could pursue with a bachelor’s level business degree include:

• Financial Analyst : Financial analysts help businesses and individuals make investments and other financial decisions. Financial analysts earned a median salary of $99,010 in 2023, according to BLS.* Jobs for financial analysts are projected to grow 8% by 2032.*
• Human Resources Specialist: As a human resources specialist, you could help recruit, screen and interview candidates and manage employee compensation and benefits. According to BLS, human resources specialists earned a median salary of $67,650 in 2023.* Jobs in the field are expected to grow 6% by 2032.*
• Management Analyst: As a management analyst you could help organizations find ways to boost efficiency, reduce costs and increase profits. According to BLS data, management analysts earned a median salary of $99,410 in 2023.* Jobs in this field are projected to grow 10% by 2032.*
• Marketing Manager: Marketing managers help businesses promote their products and services to a target audience to maximize sales. Marketing managers earned a median salary of $157,620 in 2023 and jobs in the field are projected to grow 6% by 2032, according to BLS.*
• Operations Manager : As an operations manager, you could overuse the daily operations of a business, including creating policies, managing personnel and overseeing other departments. According to BLS data, operations managers earned an average salary of $129,330 in 2023.*

What is the Highest-Paying Job with a Business Degree?

Your earning potential as a business degree holder depends on many factors, including your past professional experience, the type of degree you have and the field you’re working in.

But Teague said there are many high-earning jobs available to business degree holders, including:

• Financial manager*
• Investment banker*
• Management consultant*
• Marketing director*

Pursuing entrepreneurship is another way to use a business degree to boost your earning potential, Teague said.*

“Entrepreneurs benefit significantly from the foundational knowledge a business degree provides,” she said. “Understanding business planning, financial management and market analysis can be critical for successfully launching and sustaining a startup .”

Is a Business Degree Right for Me?

If you’re considering a business degree, it’s important to reflect on your career goals and the skills you’ll need to achieve them.

It’s also a good idea to spend time researching the various business degree programs available and the benefits they would each provide toward your ideal career, said Teague.

“Investigate the curriculum, faculty expertise, alumni network  and partnership with industries to ensure the program meets your expectations and career aspirations,” she said.

A degree can change your life. Find the SNHU business program  that can best help you meet your goals.

*Cited job growth projections may not reflect local and/or short-term economic or job conditions and do not guarantee actual job growth. Actual salaries and/or earning potential may be the result of a combination of factors including, but not limited to: years of experience, industry of employment, geographic location, and worker skill.

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Title: Determinants of students' enrolment intention of higher education in foreign universities: an empirical study using stimulus-organism-response (SOR) model

Authors : K. Ravishankar; A.K. Subramani; N. Akbar Jan; Rajasekhar David

Addresses : School of Management, Vel Tech Rangarajan Dr Sagunthala R&D Institute of Science and Technology, Avadi, Chennai, Tamil Nadu, India ' Saveetha School of Management, Saveetha Institute of Medical and Technical Sciences, Vellappanchavadi, Chennai, Tamil Nadu, India ' Department of Human Resource Management and Soft Skills, ICFAI Business School (IBS) Hyderabad, The ICFAI Foundation for Higher Education (Deemed-to-be University), Hyderabad, Telangana, India ' HR & OB Department, Indian Institute of Management (IIM) (Ranchi), Ranchi, Jharkhand, India

Abstract : This research aims to examine the key determinants influencing the students' enrolment intention of higher education in foreign universities using the Stimulus-Organism-Response (SOR) Model. The information was gathered by delivering a questionnaire via online Google Forms using a snowball sampling technique. The questionnaire links were shared with higher secondary school students (10+2) from Tamil Nadu state. 412 valid responses were collected and analysed using Partial Least Square Structural Equation Modelling (PLS-SEM). The results of the study indicate that Institution Quality and Institution Facilities significantly positively affect the Institution's Image, Cognitive Attitude and Affective Attitude of the students. Further, the Institution's Image has a strong positive influence on the Cognitive Attitude and Affective Attitude of the students. The outcome of the study also indicates that Cognitive Attitude and Affective Attitudes have a significant positive effect on the enrolment intention of the students.

Keywords : institution quality; institution facilities; institution image; cognitive attitude; affective attitude; intention to enrol.

DOI : 10.1504/IJMIE.2024.138238

International Journal of Management in Education, 2024 Vol.18 No.3, pp.173 - 197

Received: 19 Aug 2023 Accepted: 02 Nov 2023 Published online: 30 Apr 2024 *

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