Campus-Based Perspectives From A Long-Term Provost

April 2015
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Colleges and universities today face challenges on multiple fronts. While many have fared quite well, it can be difficult to flourish without a new business model.


The environment for all of higher education has become much more challenging. Faced with modest endowments, many private institutions have had to engage in considerable tuition discounting. Enrollment fluctuations and changing student demand have posed additional challenges. Yet faculty have specific expertise and credentials and are not interchangeable as demand varies. Many institutions are thus left with few discretionary resources and high fixed costs. This paper suggests a new business model to overcome today’s challenges.

Key Insights
Most private institutions are tuition dependent and also engage in tuition discounting to bolster enrollment. Since their average discount rate is now above 45%, significant resources are being diverted from operational priorities to fund scholarships.
Enrollments tend to fluctuate in response to discount rates and student interests. But tenured and dedicated facilities are often fixed and not interchangeable, so changing enrollments and demand can result in staffing and facility imbalances.
Private higher education provides an enriched, personal student experience, which justifies its higher cost. The more resources are diverted to scholarships, the more difficult it becomes to finance and provide a personal experience.
Tenure today is forever, and post-tenure review is limited. Higher education’s tenure system needs to return to the equilibrium that existed before 1993, when mandatory retirement was abolished. Adopting term tenure would restore the equilibrium.

This paper’s author, an economist with a specialty in higher education, was for 25 years the provost of Hofstra University. His comments are based on personal observations and a broad economic analysis of the higher education industry. He has intentionally excluded Hofstra from the descriptions used to illustrate his views. Accordingly, the paper provides a general macro assessment of private higher education rather than a micro assessment of Hofstra.