The Milk Trout
“Some circumstantial evidence is very strong, as when you find a trout in the milk.” - Henry David Thoreau
Tough Global Times, Tempting Global Opportunities
We know that the economic downturn affecting all sectors of the U.S. economy is severe and likely to get worse before it gets better. We also have good reason to believe that constrained credit markets and shrinking endowments are having particularly damaging effects on American colleges and universities.
What is not clear yet is how that damage is likely to be spread across institutions. While some schools with large endowments have experienced major dollar and percentage losses requiring layoffs and deferral of planned facilities and program investments, other schools that have long operated with little financial cushion might actually be a bit more nimble in adjusting to tough times. So far, from what we’ve observed, the results are mixed. We will probably not know how serious the situation is until later this Spring when the prospects for Fall 2009 enrollments come into clearer focus.
To help clarify the situation, Maguire Associates is conducting a major national survey (in collaboration with The New School and FastWeb) of approximately 40,000 prospective students and parents. The survey’s first phase will seek to understand their thinking as they weigh their college application options. We will query them again in a second phase after they have made their Fall 2009 enrollment decisions. Distinctive in the scope of its questioning and scale of outreach, this two-phased survey will permit an extraordinarily high degree of segmentation yielding actionable insights about the impact of the economy on college enrollment decision-making. (Stay tuned for more information on the survey in future editions of The Maguire Network.)
What we do know now is that there is a “trout in the milk” – one that both further complicates an already complex picture yet holds real promise for institutional leaders willing to think creatively and expansively. I’m referring to the fact that the economic recession is global in scope.
As reported in The New York Times1 and Chronicle of Higher Education2, the international flow of students is expanding and in all directions – not only to and from the States but, increasingly, among an array of countries challenging the U.S.’s traditional dominance in higher education – countries that are competing for ever greater shares of the global student market.
And along with this increasing global competition, we are beginning to see the same forces that drive enrollment and retention in the U.S. at work in other countries. Take student transfers, for example. A long-standing phenomenon in the United States, transfers have now become common in Europe where the Bologna Protocol created a credit and recognition system that allows for easy transfer of university students across national boundaries. By contrast, in Japan (where Maguire Associates has recently introduced the first comprehensive Enrollment Management program in any university in the Far East), academic credits are not readily transferred among institutions thus encouraging even very dissatisfied students to persist through graduation. Not surprisingly, universities pay a long-term enrollment price for this short-term retention benefit, as disgruntled graduates poison the well of prospective students.
In this context of dissolving international boundaries and increasing competitive pressures among institutions worldwide, India is a good example of how the global scope of the higher education marketplace (and the economic downturn) can hold new opportunities for leaders of American colleges and universities who are willing to adjust their thinking.
The flow of students from India – the largest group (15%)3 of international students enrolled in American colleges and universities –is likely to decline in the wake of a collapse in the Indian stock market even more severe than in the U.S. stock market.4 As a consequence, competition for those Indian students who can still afford to study abroad will only intensify.5
Given the increasing competition for all students – foreign and domestic – U.S. schools can ill afford to take any prospective students for granted. Thus, enrollment managers in American institutions would do well to rethink their financial aid policies with respect to international students. In the past, American universities expected students such as those from India to be “full-pay customers,” but as we can now appreciate many of these students are vulnerable to the same economic forces. They may be every bit as amenable to strategic pricing strategies as domestic students.
Former Treasury Secretary Paul O’Neill in his address at the January CIC Presidents Institute characterized the turbulent economic conditions affecting American higher education as fundamentally a “systems” problem that cannot be resolved through ad hoc, short-term solutions. I agree and believe that what is called for is a fundamental shift in the way college and university leaders think about institutional success and how to achieve it.
In our new book, EM=C2: A New Formula for Enrollment Management, Larry Butler and I propose such a fundamental shift. We argue that the traditional preoccupation of enrollment managers with enhancing institutional rank in a competitive pursuit of student enrollment is ultimately a self-defeating exercise. Schools that view themselves, not as competitors engaging in a marketing battle for yield, but rather as institutions cultivating lifelong relationships with a host of communities, are those that will more likely thrive in the long run.
When one adopts this view of an institution as a “Community of Communities,” there is as little reason to consider non-U.S. students and institutions to be separate or distinct from domestic students and institutions as there is reason to consider students of any kind to be separate or distinct from alumni, donors, parents, faculty, influencers, etc. All are communities affiliated with the institution’s particular identity, mission, and values; and all of these communities need to be understood inspired, engaged, and leveraged over time.
What does this all mean for American college and university leaders reeling from the economic downturn? Simply this: Consider the world your marketplace – both as a source of students and as a source of competition for your students – and build your institutional “community of communities” accordingly.
Chairman and Founder of Maguire Associates
1. Lewin, Tamar, “Global Classrooms: Going Off to College for Less (Passport Required),” The New York Times, December 1, 2008.
2. Labi, Aisha, “As World Economies Struggle, Competition Heats Up for Students From Abroad,” The Chronicle of Higher Education, November 21, 2008.
3. Open Doors 2008 Fast Facts: International Students in the U.S., The Institute of International Education. http://www.opendoors.iienetwork.org
4. Since September 2008, as the DJIA fell over 30% in value, the Bombay Stock Exchange Sensex has declined over 50%.
5. A similar impact on South Korean students is reported in: Fackler, Martin, “Global Financial Crisis Upends Plans of Many South Koreans to Study Abroad,” The New York Times, January 10, 2009.