Jon McGee
Vice President, Planning & Public Affairs
College of St. Benedict & St. John's University
Those were the salad days of U.S. higher education: 1993 to 2008. Key salad ingredients are missing today. To what extent? To what significance? Jon McGee is an observer of such matters. And he discusses them lucidly.
Characterize the recent salad days of higher education.
From 1993 until the onset of the 2008 recession, the economic and demographic stars were aligned near perfectly for U.S. higher education. In January 1993 the Dow Jones average was 3,309. In December 2007, it had reached 13,264. Private home equity had grown steadily as well. During the salad days it was an excellent time to enroll students. We often view the moment - most often the present moment. So today's environment of decline probably looks even worse by comparison with those salad days.
What salad ingredients are missing today?
The number of high school graduates rose by 36 percent between 1994 and 2008. Since then, it's essentially flat. It has quit rising, but it's not falling precipitously. Between 2010 and 2015 - with regional variations - college-aged people are expected to decline by four percent overall. Meanwhile, in just 18 months about a decade's worth of wealth was wiped out.
What is forefront now in the consumer's mind?
They face uncertainty with anxiety. They deal with it by employing a new frugality. Many are also inclined to return to school or invest in education for their children, reasonably expecting new knowledge to help them deal with new circumstances. The new frugality, however, causes them to look for value - to look for a clear return on investment. That return does not have to be economic. But they are paying close attention to the investment they make, in economic, emotional and other dimensions.
Is that frugality mostly an undergraduate phenomenon?
No. The college purchase is being made more cautiously at all levels of higher education. In fact, most consumers are making all purchases more carefully.
Is that frugality mostly an 18-to-21 year old phenomenon?
No. It's a consumer phenomenon. And it's one that we in higher education must pay attention to.
Does that frugality stimulate return on investment thinking and behavior on the part of the consumer?
Yes.
For whom and how much does location matter?
Tip O'Neill used to say 'all politics is local.' You can hate Congress and like your Congressman. To a similar extent, all college is local. Fewer than one in five U.S. college students travel more than five hundred miles to attend college. Most students live less than a day's drive from school. For most campuses, what's going on in your backyard or nearby area is very important. With the exception of the most elite, schools who are strong recruiters locally have the advantage today.
How much longer can private college discount rates increase?
That will depend on how well campus administrators manage the sticker price/net price relationship. Every college administrator knows he or she cannot spend the discount. Just the net revenue. A more sophisticated view of net revenue is essential.