By 2030 Over 50% of Colleges Will Collapse: Part 2

Editor's Note: Significant and fast-paced change is occurring across society in general and our profession in particular. With so much confusion in the air, NEHA is looking for a way to help our profession better understand what the future is likely to look like. The clearer our sense for the future is, the more able we are to both understand and take advantage of trends working their way through virtually every aspect of our lives today. To help us see what these trends are and where they appear to be taking us, NEHA has made arrangements to publish the critical thinking of the highly regarded futurist, Thomas Frey.

The opinions expressed in this column are solely that of the author and do not in any way reflect the policies and positions of NEHA and the Journal of Environmental Health.

Thomas Frey is Google's top-rated futurist speaker and the executive director of the DaVinci Institute®. At the Institute, he has developed original research studies enabling him to speak on unusual topics, translating trends into unique opportunities. Frey continually pushes the envelope of understanding, creating fascinating images of the world to come. His talks on futurist topics have captivated people ranging from high-level government officials to executives in Fortune 500 companies. He has also authored the hook Communicating with the Future. Frey is a powerful visionary who is revolutionizing our thinking about the future.

Last month's column explored the different metrics impacting the world of higher education: rising costs and student loan backlash, digital-era trends and the demand for online courses, employment statistics, and shifting trends. This month's column will now look at several reasons why some colleges will collapse in the future.

Eight Reasons Why Over 50% of Colleges Will Fail by 2030

So what happens when the legacy power of an institution meets a rapidly changing business environment driven by emerging technology? Some will survive but many will not.

For this reason I've decided to focus in on eight core issues for colleges that will drive a wedge between business-as-usual and the unstoppable forces of change.

1. Overhead costs too high-Even if the buildings are paid for and all moneylosing athletic programs are dropped, the costs associated with maintaining a college campus are very high. Everything from utilities, to insurance, to phone systems, to security, to maintenance and repair are all expenses that online courses do not have. Some of the less visible expenses involve the bonds and financing instruments used to cover new construction, campus projects, and revenue inconsistencies. The cost of money itself will be a huge factor.

2. Substandard classes and teachers-Many of the exact same classes are taught in thousands of classroom simultaneously every semester. The law of averages tells us that 49.9% of these will be below average. Yet any college that is able to electronically pipe in a top 1% teacher will suddenly have a better class than 99% of all other colleges.

3. Increasingly visible rating systems- Online rating systems will begin to torpedo tens of thousands of classes and teachers over the coming years. Bad ratings of one teacher and one class will directly affect the overall rating of the institution.

4. Inconvenience of time and place-Yes, classrooms help focus our attention and the world runs on deadlines. But our willingness to flex schedules to meet someone else's time and place requirements is shrinking, especially when we have a more convenient option.

5. Pricing competition-Students today have many options for taking free courses without credits versus expensive classes with credits and very little in between. That, however, is about to change. Colleges focused primarily on course delivery will be facing an increasingly price-sensitive consumer base.

6. Credentialing system competition-Much like a doctor's ability to write prescriptions, a college's ability to grant credits has given them an unusual competitive advantage, something every startup entrepreneur is searching for. Traditional systems for granting credits, however, only work as long as people still have faith in the system. This "faith in the system" is about to be eroded with competing systems. Companies like Coursera, Udacity, and iTunesU are well positioned to start offering an entirely new credentialing system.

7. Relationships formed in colleges will be replaced with other relationship-building systems-Social structures are changing and the value of relationships built in college, while often quite valuable, are equally often overrated. Just as a dating relationship today is far more likely to begin online, business and social relationships in the future will also happen in far different ways.

8. Sudden realization that "the emperor has no clothes!"-Education, much like our money supply, is a system built on trust. We are trusting colleges to instill valuable knowledge in our students, and in doing so, create a more valuable workforce and society. But when those who find no tangible value begin to openly proclaim, "the emperor has no clothes!" colleges will find themselves in a hard-to-defend downward spiral.

Ironically, we are entering into a period where the demand for education will rise substantially. Yet traditional colleges are such a mismatch for what future consumers will want that dropping enrollments will cause many to fail.

At the same time many new opportunities will begin to surface, and future learning centers will make use of former college facilities. Some may even resurrect the former institution under an entirely new business model.

Declining Enrollment Scenario

With several new alternative education options arising, many colleges will begin to experience a decline in their enrollment. When revenues run short, the first instinct will be to arrange short-term financing. This, coupled with longterm bonds and other obligations, will create a growing mountain of debt.

As less expensive schools with extensive online capabilities begin to "steal" students, several colleges will engage in a pricing war to "keep their numbers up." Many will spend heavily on marketing to change their image and boost enrollment. Others will spend heavily on lobbyists in hopes of gaining more support from government.

Some will experience declining revenues, others will experience declining enrollment. Most, however, will experience both.

How many colleges that experience a 10% decline in enrollment and/or revenue per year will still be around after five years?

In the business world, declining metrics like this are referred to as a "death spiral." How long will it take before dramatic changes are made? At what point will layoffs begin, assets be sold, or mergers be considered?

For state-supported institutions, at what point will an emergency session of the state legislature be called? If three to five state-supported colleges are all experiencing enrollment/revenue declines at the same time, at what point will the state decide to "walk away" from what they perceive to be a neverending money pit?

How many colleges or universities will have the ability to reinvent themselves as this is occurring?

Final Thoughts

Imagine coming across a job opening that requires a specific certification you currently don't have. You match up well with all of the other job requirements but you're only missing this one certification.

A few clicks later you find out the certification can happen online with 20 hours of training. So you spend your weekend getting certified.

Yes, a big difference exists between having a cursory understanding of a topic and working level proficiency. But for many of us our future careers will hinge on situations like the scenario I just described.

As a society we've grown complacent, thinking smart people in colleges are doing a good job preparing our kids for the future. Yet higher ed has become a lumbering giant, slow to adapt and increasingly out of sync with the needs of business and society.

The same top-down institutional systems that have preserved colleges for centuries are now becoming their greatest enemy.

Much as failed golf courses, big box retailers, and shopping centers end up in the laps of local communities, failed colleges will also become local problems for city governments to deal with.

Pedestrian campuses that worked well during peak enrollment have a way of becoming white elephants for whatever comes next.

Interested in sharing your thoughts? Go to www.FuturistSpeaker.com.

Corresponding Author: Thomas Frey, Senior Futurist and Executive Director, DaVinci Institute®, 511 East South Boulder Road, Louisville, CO 80027. E-mail: dr2tom@ davinciinstitute.com.