Forbes Names “Leadership Matters” one of the Top 10 Books in Higher Education

Academic Innovators is delighted to announce Leadership Matters: Confronting the Hard Choices Facing Higher Education, a book co-authored by two of its principals (Joey King and Brian C. Mitchell), was named as one of the Top Ten Books in Higher Education for 2022 by Forbes. The book describes how leaders in higher education can overcome the various challenges they face including shifts in the societal, economic and political landscape. 

The book offers guidance on how senior leaders within higher education must adapt to our rapidly changing society in order to remain a sustainable business and institution. Some factors for consideration outlined by King and Mitchell include: “modernizing their practices, monetizing their assets, focusing on core educational strategies, and linking explicitly to the modern world.”

King and Mitchell draw on their decades of experience in higher education to inform the ideas and findings offered in Leadership Matters. King is a past president of Lyon College and previously served as senior advisor to the president of Emory & Henry College. He has also served as executive director of the National Institute for Technology in Liberal Education, vice president of innovation at Southwestern University, and as executive director of Connexions at Rice University.

Mitchell previously served as president of Bucknell University, Washington & Jefferson College, and the Association of Independent Colleges and Universities of Pennsylvania. He has also served in numerous leadership and governance roles in higher education, including chair of the board of Merrimack College, chair of the Pennsylvania Committee for the Rhodes Scholarships, the Association of Independent Colleges and Universities of Pennsylvania, and the Patriot League Athletic Conference (Division I).

“We are honored to receive this recognition from Forbes,” said Brian C. Mitchell, author and principal of Academic Innovators. “We recognize the overwhelming challenges faced by our successors and their colleagues and we feel it’s our obligation as stewards of higher education to ensure they’re best equipped to face them. It is our sincere hope that the frameworks and ideas put forth in this book help colleges and universities not only create greater stability for their institutions but also provide them with a solid foundation upon which they can build a sustainable future for their respective organizations.”

Published by Johns Hopkins University Press, Leadership Matters is the second book published in the series following their first, How to Run a College: A Practical Guide for Trustees, Faculty, Administrators, and Policymakers. King and Mitchell will author a third book which is expected to be published in 2027.

 An appeal to Leadership to Take a Closer Look

By Rick Gaumer, Principal – Academic Innovators

The higher education community continues to adjust to the ongoing COVID-19 pandemic.  With the spring 2022 term concluding, the Omicron variant is receding in many areas across the country, yet statistics are still showing outbreaks around the country.  Institutions continue to wrestle with on campus health issues that challenged them during the last two years of the pandemic.  Larger schools, like Arizona State University, can partner with the Mayo Clinic on its main campus to provide superlative student healthcare support for their students.  Smaller colleges and universities simply cannot afford or offer such accommodations.

A recent Inside Higher Education Survey of Presidents, for example, revealed that 96% of respondents now see mental health as a primary concern on their campuses.  Further, 77% see physical health of students as a deepening crisis. For small, private colleges, in particular, the financial concerns have grown dramatically with reduced revenues from housing and board, made worse by deep tuition discounts offered by colleges to boost  enrollment.  Despite federal subsidies from the Trump and Biden administrations – now beginning to end — colleges are being pushed to the brink, particularly with a teetering tuition revenue model unable to sustain a post-pandemic recovery after the federal money runs out. Yet, these fiscal woes fail to mask a critical question.  Are colleges and universities today doing their best to provide essential physical, mental, and wellness care for their students?  Can we do better?

As someone with a very broad view of the Higher Education landscape having served over my many years as a Trustee, a CFO, a tenured faculty member, and a long-standing community business leader seeking better and better graduates to employ, I am very concerned about the area of student physical and mental healthcare on campus, especially as we come out of this pandemic.  Schools continue to be strapped for financial resources and finding qualified health professionals to serve roles as nurses and counselors is extremely difficult.  Further, the mental health needs on campus are growing exponentially.  My question for leadership in Higher Education is this:  Are there better ways to support Student Physical and Mental Health as we go forward?

What options do Schools have today for supporting Student Physical and Mental Health on campus?  Let’s be frank:

1. Schools can maintain the pre-pandemic status quo level of service. For smaller schools this might be a full or part time nurse for physical health.  It might be a full or part time counselor for student mental health needs.  For larger schools, they often maintain larger health offices with better staffing.  Keep in mind, most of these services are staffed in a traditional 40-hour workweek concept by regular employees of the school.  Such support fails in areas of Evening and Weekend service as well as in areas of professional diversity for students of varied backgrounds.
2. Schools can add full or part time resources.   Both small and larger schools find this option difficult due to budget constraints and the difficulty of paying higher salaries demanded in today’s job market.  Again, does this option create adequate coverage 24/7 going to be available and will be there be adequate professional diversity to support the student body?
3. Schools can partner with local hospitals and third-party resources for live or tele-med services. Not a bad idea, it does provide the institution greater coverage in the evening or on weekends and does broaden the base of professionals to support the student.  A downside is the increased cost of such services and the inconvenience of not being on campus.
4. Schools can utilize a third-party, 24/7 provider network. These networks can be both cost effective as well as more effective in dealing with a highly-diverse student population.  We really like those providers who provide this service to all students regardless of insurance status and can effectively support students who seek race and gender preferences for their physical and mental health needs.
5. Schools can begin to adopt emerging mental health and behavior analysis software tools being used commercially and now being adapted to Higher Education. We are seeing such tools being deployed to positively effect student behaviors before they get out of control.  For example, we are aware of tools now available on student cell phones to instantaneously gather information, deploy artificial intelligence and big data to enable all student-support departments across campus to effectively improve the student experience. The end result is greater support of students with behavioral issues, improved student academic performance, and improved student retention on campus.

In my current role in Higher Education, I am seeking to find ‘best practice’ solutions for a number of compelling problems facing our schools which seek to improve financial sustainability. Spending more money on expanded student support in the area of health care may appear to be counter-intuitive, especially coming from someone who typically manages the budgets and the purse strings.  Yet, leaders must understand the core business of their institution: the effective education and training of students; culminating in their graduation.  Inadequately supporting student physical and mental health needs must be addressed if this mission is to be met.

One last word.  How a college provides expanded health service to students should not be a financial obstacle.  Rather it should be looked at as a strategic decision aimed at providing ‘best care’ health support for all students.  It can and should be a ‘competitive differentiator’, driving up overall enrollments.  Again, the question is simple: Can our institution do a better job in supporting essential student healthcare on our campus?  Leaders with fiduciary responsibilities should take a moment and think hard before answering.

About Rick Gaumer.  Rick is a Trustee of Waldorf University [Iowa].  Further, he is a principal with Academic Innovators, a national thought-leader firm focused exclusively on higher education, with an emphasis on identifying innovative and ‘best practice’ solutions to improve long-term growth and financial sustainability for the institution.   Rick is also an experienced executive having served as CFO for both Emory & Henry College [VA] and Lyon College [AR].

Inside Higher Education just released its annual “Survey of College and University Presidents.” The results, which cover a wide variety of topics, are revealing if not surprising. There are too many individual findings to discuss in a single article; therefore, we’ll concentrate on the findings that deal most directly with the state of higher education as an industry and the health and sustainability of its institutions.

COLLEGE PRESIDENTS WORRIED ABOUT FINANCES & PUBLIC PERCEPTION

Collectively, the survey findings suggest that college presidents are worried about higher education’s fiscal health, deteriorating public perceptions of American higher education, and enrollment stabilization and growth, especially at tuition-dependent institutions.

One of the most striking aspects is that the survey did not reveal wide swings in college and university perceptions on these issues compared to previous years. The levels of concern remain high, likely indicating that these issues continue to be deeply troubling to leaders, but no single issue rose to the top. That having been said, the survey responses forecast continued uncertainty about the future of higher education.

PRESIDENTS EXPECT HIGHER EDUCATION MERGERS, CLOSINGS TO CONTINUE

Inside Higher Education (IHE) measured fiscal health in part by asking presidents about institutional mergers, closures, and acquisitions. They found, “About a third of the presidents agree that more than ten colleges or universities will close or merge in the next year, while another forty percent say at least five colleges will do so.”

A striking finding is that nearly 12 percent of college presidents “predict that their own institution could fold or combine in the next five years.”

Concern over mergers and closures relates directly to the financial health of the various sectors of higher education. On this issue, the results stabilized when compared to the wide swings of previous years. But there were differences across institutional sectors (e.g. public, private, community colleges, flagship, regional).

PRIVATE COLLEGE PRESIDENTS MORE CONFIDENT OF THEIR OWN SUSTAINABILITY

Private college presidents are the most confident in the viability of their institutions over the next decade. There was renewed hope, especially among private four-year college leaders, in the ability of their own institutions to be sufficiently nimble and adaptable to be sustainable going forward, an encouraging sign from previous pessimistic assessments.

One especially interesting finding questioned which sector was believed to have the most sustainable business model. The presidents identified wealthy elite private colleges and universities and public flagship universities as the best able to withstand uncertainty.

Interestingly, the numbers dropped off dramatically for the other sectors. As IHE noted, “Community colleges followed at 44 percent, with other public institutions (25 percent), private colleges (11 percent) and for-profit institutions (9 percent) lagging.”

Apparently, survey respondents did not share the confidence of private sector presidents, for instance, when judging the sustainability of small, private colleges as a sector.

LEADERS BELIEVE PUBLIC PERCEPTION OF HIGHER ED BASED ON MISUNDERSTANDING

In response to survey questions about the public perceptions of American higher education, “[p]residents overwhelmingly believe the public’s skepticism is based on misunderstandings about colleges’ wealth, how much they charge (and spend) and the overall purpose of higher education.”

The survey respondents believe that the public has been swayed by misperceptions about them. IHE noted: “Asked to assess which of several factors were the most responsible for declining public support, 98 percent of the presidents cited ‘concerns about college affordability and student debt’.” Other factors identified were the greater need for career preparation for students, perceptions of liberal political bias, and, to a much lesser extent, an under-representation of low-income students.

HIGHER EDUCATION HAS AN OPTICS PROBLEM BUT LEADERS HESITANT TO SPEAK OUT

These responses imply fairly strongly that American higher education has an optics problem. It continues to play defense rather than move forward on several fronts with an aggressive response to perceived misconceptions. In part, it comes down to higher education leaders’ — such as the presidents surveyed —  capacity and willingness to speak out.

IHE reported: “Asked whether they had responded to the turbulent political movement in 2017 by speaking out more on political issues, 55 percent said yes and 45 percent said no.” There was also little sense of introspection on whether there was much truth to negative public perceptions.

MEETING ENROLLMENT GOALS IS CONCERN FOR COLLEGE PRESIDENTS

Finally, there continues to be a high level of concern among college and university presidents about their ability to meet enrollment projections. IHE noted: “eighty-two percent of presidents described themselves as either ‘very’ (42 percent) or ‘somewhat concerned’ (40 percent) about meeting their institution’s ‘target number of undergraduates’.”  These numbers were down from previous years.

In this year’s survey, presidents worried about retaining students and finding enough full-pay students to subsidize institutional financial aid.

Inside Higher Education’s survey remains a valuable annual “pulse check” for higher education. The results this year suggest that, while the concerns remain the same, college presidents often perceive that the clouds are more ominous over the other types of institutions and for higher education generally.

There is an open question about how contemplative and self-reflective higher education is about itself. And there is clearly concern about how politics and public perception affect higher education policy and overall sustainability. The cumulative effect of the survey results suggests that higher education is in a period of steady transition.

American colleges and universities are reaching for every means through which they might increase net tuition revenue. Net tuition revenue is the revenue that the college takes in from tuition after factoring in (i.e. deducting) all institutional financial aid.

NET TUITION REVENUE IS FLAT OR DECREASING AT MANY COLLEGES

The harsh reality is that net tuition revenue is flat or decreasing at many institutions. Since tuition is the principal source of revenue for these institutions, this is an increasing problem. Put simply, a college cannot continue to exist without sufficient revenue to meet its expenses.

In the short term, colleges may be able to rely on one-time donations, increases in the annual fund, a higher endowment spending rate, or the use of temporarily restricted funds, but in the end, the financial health of almost all is heavily dependent on how much tuition they bring in each year.

DEMOGRAPHICS WORK AGAINST INCREASED ENROLLMENT AS REVENUE SOURCE

Since national demographics work against higher enrollment levels from the traditional applicant pool of 18-22 year-old first-time students, an institution must now rely on other means to pay the bills.

Some look beyond the traditional pool of full-time, first-time students, working to build their transfer population or full-pay international students. But the transfer pipeline is hardly seamless and the optics of rising tuition sticker prices work against transfers, who often attend less expensive community colleges.

In addition, the policies of the Trump Administration cast a long shadow over the ability of colleges and universities to plan the size of their international student population with any certainty.

How best to create a robust admission pool from which to draw remains a thorny problem, but it’s important to institutional health. Colleges and universities rely on strong enrollments to right size their institutions. This means, in part, accounting for “stop outs” and “drop outs,” who diminish the size of their student body. If retention figures are not steady, or better yet improving, the impact on an institution’s bottom line can be dramatic.

NEED FOR PREDICTABLE RETENTION CREATES ALLIANCE WITHIN COLLEGE ADMINISTRATION

The need for predictable student retention creates an alliance among enrollment, academic affairs, and student life professionals. Higher education institutions — and many of their accreditors — place special emphasis on improving retention to become more sustainable.

The problem is that it sometimes becomes more of a numbers game. Student affairs staff provide a plethora of programs and opportunities for students to connect. They work individually to support students who are homesick, unengaged, or dissatisfied with the campus environment. But what they often miss is that first link that should be made between what the school offers and what prospective students want.

It is not enough — indeed, it is unsustainable — for the student affairs budget will provide support for clubs that represent the whims of students at a unique moment in a particular class. Succeeding generations may not sustain the passion of students focused on a singular interest in later years. Further, the college or university may not be able to justify a growing roster of club and related activities.

No matter how wealthy, a college cannot support everything that each student might want to do.

STUDENT LIFE PROGRAM MUST BE ALIGNED WITH ENROLLMENT STRATEGY

What will be required in the future is a more orderly, systematic, and systemic approach to student life tied directly to enrollment strategy. At the moment, most colleges enroll students because of the quality of their academic programs, if these are defined, well-respected, and differentiated from competitors.

But students live on a campus that is defined both by the classroom experience and the thousands of teachable moments that occur each day outside of classrooms and laboratories.

They may have institutional reputations as Christian colleges, outdoor environmental programs, the home of Greek life, and liberal or conservative, for example, that appeal to a certain type of student. The best example is how students attract their student athletes into well-regarded athletic programs.

ATHLETIC PROGRAMS ARE EXAMPLE OF STUDENT “FIT” AND RETENTION

For generations, colleges have attracted athletes because athletics offers a unique, idiosyncratic experience for teammates. An athletic team is a “new home,” where students associate with others with similar passion and interests. For student-athletes, the culture of an athletics program will — in many respects — determine fit, and correspondingly, improve overall retention numbers based on this fit.

Enrollment officials should see their student affairs colleagues as a kind of front line on retention. It may be that much of the retention problem could be solved if student life worked more carefully with enrollment.

Student affairs must define not what current students want so much as how enrollment can attract students on the basis of what enrollment determines will be most attractive to prospectiveapplicants.

Is it more useful for a college to have an equestrian team in an urban setting or a gospel choir that reflects the college’s efforts to recruit in urban areas? Should a college invest in a marching band if research demonstrates a demand for this kind of activity among prospective applicants?

These efforts to link enrollment strategy to shape student life to recruitment can have innumerable benefits. Like athletics, co-curricular student life offerings provide students a home-away-from-home and outside of their classroom experiences. It makes the fit possible.

Students experiencing a good “fit” are more likely to stay enrolled, boosting retention. And retention is perhaps the best predictor of how to increase the bottom line by growing net tuition revenue that every college desperately needs.

American higher education is a complex, decentralized, and interlocking network of institutions that provide education to a disparate group of learners. Historically, many of the fundamentals build around an applicant cohort of 18- to 22-year olds. The demographics of the 21st century predict that this group will not be able to support a robust pool of potential students into the future.

For many colleges, the choice is to expand the pool, both geographically and to better reflect shifting demographics. College administrators, seeking an admitted student population that mirrors the ethnic, gender, race, and religious characteristics of the country, generally work to open fresh applicant streams from among historically disenfranchised groups.

It is new territory for many schools in which campus culture supports these efforts intellectually but wrestles with the cost, preparedness, and internal dynamics of the cultural change required to maintain recruitment standards and retention and graduation rates.

STUDENT RECRUITMENT, RETENTION COSTS GROWING

Those colleges relying upon the 18-22 year old pool of applicants have little choice. From a financial perspective, these institutions have always relied upon wealthy, full-pay families to provide much of the revenue to support financial aid for needy and deserving students.

The problem, now growing into a crisis over the past twenty years, has been that the recruitment and retention costs for each class now exceed the capacity of the institution to balance full-pay revenue with the needs of less fortunate students.

COLLEGE DISCOUNT RATES SAP SCHOOLS’ FINANCIAL STRENGTH

A dramatic rise in unfunded aid – translated into the college’s discount rate – has sapped the financial strength of many institutions. The hard truth is that a college operates with fixed costs – heavily tied to labor, land, debt, and financial aid – that permits little left in an annual budget for discretionary moves that might offset these alarming trends. At a growing number of institutions the discount rate is now over 70 percent.

What industry – or any financial enterprise – can operate on 30 percent or less of the revenue that it advertises as its sticker price for the product that it delivers?

COLLEGES’ HIGH STICKER PRICE MAKE AFFORDABILITY ARGUMENTS NEARLY IMPOSSIBLE

Another problem vexing colleges is the sticker price. Trinity College (CT) just announced a comprehensive fee (tuition, fees, room and board) of $71,660 for next year. Trinity is an outstanding college where students receive an exceptional education. But the optics look terrible for those colleges and universities that cross the Maginot Line of $70,000 per annum.

It is difficult and sometimes impossible to argue affordability when the sticker price is confused or equated with with the bill that students and their families actually pay. Does a high sticker price limit the size of a potential pool regardless of a college’s policy on generous financial aid?

There are at least three approaches to combat this trend:

The first is to increase the financial aid budget to offset increases in a college’s sticker price. This seldom works, especially over the long term. It is difficult to be less generous to successive classes without an enrollment strategy that matches financial aid to changes in enrollment practice. The most nimble colleges have a well-delineated financial aid model that links their enrollment practices to where they want to be in out years. But most institutions seldom follow through, effectively decreasing net tuition revenue over the long term and raising the discount rate higher.

A second option is to shift the financial burden to students, generally in the form of increased loans. The problem is that many students see debt as a responsible way to pay for an education, whatever the level of debt incurred. The result is that many students unskilled in handling debt become subject to it. The result is disastrous and often leads to higher default rates among students, many of whom fail to graduate, who work at jobs that do not permit them to repay debt that they did not understand when they agreed to its terms.

A third option is to rely on support from states and the federal government. The trends work against students here. Government support for student aid and debt relief has been – put kindly – spotty at best. Further, governments at all levels are losing their discretionary ability as pressing fiscal and political priorities affect their discretion. There may be a point at which discretion and government regulations intersect with hard choices ahead for those who seek state and federal aid.

What’s the alternative?

America’s colleges and universities should assume that any solution must be organic and come from within the higher education community. The discount rate at many colleges is now approaching a tipping point.

It’s not that colleges and universities face massive, wholesale closures. It’s more like death by a thousand cuts in which closures increase steadily but without a classic catastrophic event that shakes the college and university community to produce the next generation of operating changes necessary to survive.

It feels a little like being the lobster in the pot brought to a boil. When you fully recognize the danger, it’s already too late. The task ahead is to plan for an orderly review of how to prepare for an uncertain future and how best to pay for it.

Despite the resourcefulness and creativity that characterizes American higher education, the failure of many colleges to rethink how they will continue to support the educational enterprise over the long-term keeps most administrators awake at night.

But there is some good news out there. Surprisingly, much of it centers on the careers of arts and humanities graduates.

Mainstream and social media tend to portray arts and humanities graduates as underemployed and overeducated, flipping burgers or making cappuccino, a stereotype that is refuted by a recent study.

The American Academy of Arts & Sciences found that arts and humanities graduates like what they do after graduation, feel fulfilled by it, and advance steadily in their careers.

The study surveyed humanities graduates about salary, status at work, and level of job satisfaction. In a recent interview, Robert Townsend, the academy’s director for the Washington office, expressed hope that the findings might change the conversation: “I think the top-line numbers about earnings still tend to drive much of the conversation, while the counterexamples are too often anecdata. Hopefully, these numbers will provide for a better-grounded discussion.”

LIBERAL ARTS GRADS START WITH LOWER SALARIES BUT CATCH UP WITH STEM, BIZ GRADS

Using government data and Gallup polling of workers nationwide, the academy found that arts and humanities graduates begin their careers with lower average starting salaries. The average annual salary for those holding a bachelor’s degree in the humanities was $52,000, 15 percent less than the average of $60,000 for all majors was $60,000 and significantly behind the $82,000 average earned by those with undergraduate engineering degrees.

But here’s the surprise: Arts and humanities graduates report a high level of job satisfaction; indeed, nearly 87% of these workers were satisfied with their job in 2015.

Matthew Hora, a University of Wisconsin professor in the liberal arts and applied studies, noted in the Chronicle of Higher Education that the AASS study should “contradict the popular narrative about under-employed baristas and the need to redirect students away from these disciplines.”

In addition, the AAA&S study found that over time the wages of arts and humanities graduates catch up to workers with STEM and business degrees. Bobb, Kamau‘s work often emphasizes the importance of diversifying the STEM fields, and this finding supports the idea that individuals pursuing arts and humanities can achieve financial success in the long run.

The report also finds that humanities majors are flexible, not bound to a specific career, and employable in a wide range of fields. One telling note, however, is that many arts and humanities majors do not see an explicit link between their undergraduate training and the job that they hold.

OUTCOMES ARE WONDERFUL DEFENSE OF THE LIBERAL ARTS

These outcomes and findings represent a wonderful defense of the liberal arts. Neither liberal in a political sense nor narrowly about art, the liberal arts train American undergraduates to think. Students learn to speak, write, apply quantitative methods, use technology, and work in collaborative settings. These are the skills that employers seek in recent graduates.

And by and large – often depending upon how carefully the college integrates the liberal arts into the curriculum – it explains why humanities majors are desirable employees. Look at it this way:

Would you rather have as a new employee an engineer trained narrowly as an engineer or an engineer more broadly trained as an engineer in the liberal arts?

On a macro level, the viability of American higher education rests on a curriculum that trains the next creative generation of graduates upon which American society will depend.

POLICY MAKERS AND LEGISLATORS SHOULD HEED STUDY RESULTS

The study’s findings shine a light on the need for that fresh thinking. First, lawmakers, especially at the state level, must understand that a flexible, nimble, and broadly educated workforce is better than a narrowly trained one.

The quality and versatility of the American workforce will be diminished by efforts to redirect money only to the graduates in technical fields.

COLLEGE & UNIVERSITY LEADERS SHOULD REINFORCE VALUE OF LIBERAL ARTS EDUCATION

It would also be wise for colleges and universities to reinforce the value of a liberal arts education to arts and humanities majors who, as the study suggests, use what they learned in the workforce without recognizing how their training made them among the most employable across it.

An English major who can write or speak compellingly is just as valuable as a history major who can interpret data. Look at the global corporate, political, educational and social leadership to illustrate this point.

And finally, there is a pay gap between arts and humanities majors and their counterparts in the first years after graduation. Loan repayment programs should be graded for repayment in some part by the starting salaries of recent graduates.

An elementary school teacher and an engineer have different initial resources and skill sets, yet both contribute to their fields of employment. Further, there should be a cut-off below which college graduates should not be expected to repay their loans until their salary level improves.

The theory is simple. America needs a fully functioning, comprehensive workforce. It should not pick winners and losers. However, it can support an informed, educated, and creative citizenry that provides the range and balance to weather unimagined changes in the global workforce.

By Brian Mitchell

Moody’s and Standard & Poor’s recently released their updated outlooks for American higher education. The news is not good.

Moody’s revised its 2018 outlook for higher education from stable to negative “as aggregate operating revenue moderates while expense growth increases.” Moody’s vice president, Susan E. Shaffer, elaborated: “the annual change in aggregate operating revenue for four-year colleges and universities will soften to about 3.5% and not keep pace with expense growth, which we expect to be almost 4%.”

PRIVATE COLLEGES MAY OUTPERFORM PUBLICS, BUT COST-CUTTING IS NEEDED

Moody’s expects private institutions to outperform their public sector counterparts. But about 15% of universities will be forced to cut costs in response to stagnant or weak revenue growth next year. The ratings agency believes that support from tuition and related fees, research funding, and state appropriations will remain weak. Further, net tuition will be depressed over affordability concerns and slow enrollment growth.

While private universities will have revenue growth of about 3% – 3.5%, these numbers will be considerably less robust in small- and mid-sized colleges and universities. This is especially dangerous since so many of them serve low- and moderate-income students. They draw from the same regions in which the students and their families live.

Moody’s notes that the recruitment demographics are horrible and that higher education is subject additionally to changes in its relationship with the federal government.

Moody’s speculates that federal tax reforms, the levels of research support, and changes to the Pell Grant and subsidized federal loans in the future could profoundly impact affordability and access.

HIGHER EDUCATION FLEXIBILITY IS LIMITED IN FACE OF FISCAL CHALLENGES

Standard & Poor’s makes a similar finding. Presented as grim, the S&P outlook finds that higher education’s flexibility “in programming, financial operations, enrollment, resources or student draw” is limited. Like Moody’s, S&P cited the recent federal tax on colleges with large endowments, together with growing consumer skepticism and demands for lower sticker prices and more effective services.

Significantly, Standard and Poor’s also warned of lasting damage to college and university reputations in the current political climate.

S&P offered some encouragement, however, finding that higher education institutions could improve their standing if they established new partnerships, peeled back their reputation for cultural inertia, and increased their efforts to recruit non-traditional students.

Writing on these subjects for EducationDive, Jeremy House summarized that “all parties seem to agree that a myriad of issues haunt higher education.” He noted that the American Association of State Colleges and Universities (AASCU) “called 2018 one of the most uncertain years for higher education.”

FUTURE OF US HIGHER EDUCATION DEPENDS ON ABILITY TO INNOVATE

Mr. House reported that the common agenda driving the future of higher education in the S&P and AASCU positions is a call for innovation. He further suggested that colleges could grow their student body by serving more post-traditional students, enhancing strengths and partnerships, embracing data analytics, technology, and online learning.

For those of us who work at imagining ways to strengthen American higher education, these are good and necessary tactics. But by themselves they are insufficient, roughly equivalent to the proverbial Dutch boy plugging the holes in the dike. Further, it’s not so much that the dam threatens to break but more that consumers will find new, alternative ways to find and use the water effectively.

The success of American higher education will depend heavily on innovation. That’s why the warnings from Moody’s and Standard & Poor have special urgency.

Those institutions that are the most adept and nimble will likely craft the best path to sustainability. It starts with these colleges and universities developing a clear value proposition and sense of self. That’s quite different from remembering their history, although working their history and traditions into their value proposition is unmistakably necessary.

FUTURE STRATEGY MUST COMBINE PRINCIPLE AND PRACTICALITY

What’s most needed is a sharper strategy that combines principle and practicality. American higher education must anchor a seamless pathway to a lifelong education that prepares Americans for rapid change in a global economy. It must bridge the chasm between formal education and employment by preparing its graduates with a worldview that is able to imagine their contributions to society.

But strategy alone is insufficient.

The plain hard fact is that higher education operates on a mid-20th century business model that is unable to anticipate 21st century changes. Many colleges and universities run like the “Mom and Pop” corner variety stores that ultimately failed because they could not compete and adapt as the world changed. For them, it was more about a failure in process and delivery than in the quality of the product.

Indeed, the biggest obstacle facing American higher education is the cultural inertia that permeates many campuses to reinforce an antiquated, incremental business model.

Can the business side of higher education keep up with the educational innovation that now energizes its research and teaching?