The unsettling financial events of the past few weeks have undoubtedly pushed the cost/price model of American higher education much closer to the breaking point. In an earlier post, I argued that any significant limitations on price increases could cause fundamental problems for our basic business model. We now are in a much more complex situation than I discussed in the earlier posts. The state of the economy certainly will lead to greater pressure from parents and government to halt increases in the real price of higher education, so we can expect more intrusive legislative actions, and much stronger push-back from parents. Loans to parents and students, which have provided the undergirding support of our large price increases, will not be so easy to get in the future for a multitude of reasons including large drops in home values. In addition, we face a situation in which philanthropy will be quite uncertain for some period, and endowments and their returns have been greatly battered. For public institutions, there is the reality that states are seeing greatly reduced tax returns, and furious budget cutting is evident everywhere. And on the cost side, the cost of borrowing (when it can be obtained) will certainly go up significantly. This will impact higher education directly in many ways, as in our facilities programs where we usually use considerable long term debt. In addition, many higher education institutions have significant short term debt that is used to pay bills in between the huge inflows of income that occur at the beginning of each semester (trimester or quarter).
In my view, all of this pushes American higher education much closer to a globalization tipping-point, similar to the one that occurred in Great Britain and Australia a decade ago. In both cases, governments told public higher ed institutions that state funding would not be sufficient in the future to maintain their growth and quality, and that other sources of funding would have to be found - without passing the burden to domestic students. The solution was to bring international students in at high tuition, and to open campuses and programs around the world.
Higher education in the US is organized and funded differently from that in Great Britain or Australia, of course, so our forays into the global arena will reflect our different organization and funding patterns. In particular, we have a very large and influential private sector, and our public sector is funded and directed by the individual states, rather than by the national government.
As a consequence, the public sector institutions will reflect a great diversity of underlying financial support and political constraints. Most states focus on the responsibility of their institutions to provide education for the children of tax-paying citizens, and so effectively preclude active recruiting of international students. Thus, real globalization of student body in the public sector will generally require a change in mission emphasis. For example, as economic pressures grow, states might well begin to view the primary mission of their universities to be to support and improve their economies, with the education of children of citizens moving to an equal or even slightly lower priority. International students can play a valuable role in the economic mission in at least two ways: they bring considerable money into the region through tuition and living expenses as students ($14.5 B in 2006-7, NAFSA), and, perhaps even more important, they bring new talent and creativity into the region that can result in significant resource creation as alumni. Great Britain balances those missions by setting “quotas” of domestic students who must be accommodated, but gives universities the right to bring in any number of additional international students.
Private higher education and public institutions with a broader mission will probably seek both to increase international student populations on their home campuses and to create increased presence globally to serve students in their home countries. One can look at the successes and failures of the decade long globalization of institutions from Great Britain and Australia to gain some insight into how to proceed in these ventures (see. e.g. British universities: the reality beyond the rhetoric, Jan 29,2008, University of New South Wales exits Singapore, May 25, 2007). Additional insight can be gleaned can be gleaned from some of the global efforts of American universities (e.g. the Hopkins program in Singapore).
A number of general conclusions can be drawn from these data. I will only touch on a few in the remainder of this post. The most obvious is that success requires considerable planning, and significant resources. In particular, realistic expectations of both the offshore host and the home institution based on rational evaluations of conditions and needs must be created, as these are most likely to lead to good outcomes. Expectations of the welcoming country that the offshore branch will be “just like the home institution” in terms of courses and faculty are not only unrealistic, they are probably misguided. Claims by the home institutions that they can recreate their educational or research environments offshore are highly unlikely to be realized. In particular, it should not be surprising to either side to learn that most regular faculty, especially the best senior faculty, from the home institution are very unlikely to visit offshore sites for extended periods. Even short visits on a regular basis tend to require giving costly perks. This does not mean that excellent adjunct faculty will not be hired for the offshore site, but simply that they are unlikely to be the visible Nobel Laureates that might be desired by the host.
In fact, making the offshore educational program “just like” that in the US in all cases seems to me to be unwise. There are cultural differences in ways of learning and interacting, and different societies have different sets of problems that will challenge graduates. Programs that reflect the context in which they are taught are likely to be of more valuable to students and their societies than are programs that are simply copies of US programs. While the laws of economics may be the same everywhere, the laws of business are not. However, we should be careful that our offshore programs do reflect some of the key characteristics that have set American education apart, such as valuing and encouraging student questioning of concepts - and even of faculty. As US education moves into different areas of the world, this balancing of intellectual openness and the context of local society may provide one of our greatest challenges.
As we look at the globalization activities of higher education in Great Britain and Australia, we see that they have focused on building global sites focused on education, and generally have neglected the research component of higher education. Knowledge creation is becoming globally distributed, however, and ultimately the “winners” in higher education will be those institutions that most effectively link into the global creation networks. Offshore sites could play a major role in building these links. Of course, the obvious impediment is that the offshore sites have been set up in response to fiscal shortfalls on the home campus that must be alleviated by income from the offshore site - and research costs money. There is no simple universal solution to this problem, but one solution is to focus on offshore sites where there is both a good education market, and existing or potential research collaborations with local universities and/or corporations.
There are, I believe, two kinds of quality issues that enter into discussions of quality in offshore programs. The first is straightforward to understand, if not to fix. Offshore programs are by definition a long way away from the home institution and consequently, normal campus quality controls are relatively ineffective. Faculty are most often adjuncts who may or may not have had any experience with expectations of quality on the home campus. Partners are often involved in running offshore programs in one way or another and thus, difficult to evaluate and control. This, it seems to me, is a problem that can be fixed with experience and a realization that institutions must set up offices to monitor quality control at a distance.
A much more fundamental question relates to the definition of quality itself. Our quality measures of offshore courses generally are the “input” entering characteristics of students (e.g. SAT’s, GMAT’s) and how closely the courses taught track what is taught in the home institution. This definition of quality enormously constrains institutions from providing real educational service offshore. If quality were to be defined in terms of educational “outputs,” in particular to educational value added in the context of the opportunities and challenges of the host country, it could be liberating and rewarding for all. In particular, it would open up the potential student pool significantly. Why should we be ashamed of teaching students who don't have the best SAT's if we are able to provide an education that opens up new intellectual worlds for them, and creates value for the community?
Finally, there are also some very interesting lessons to be learned from these data regarding for-profit/non-profit higher education collaborations. I shall discuss these in a later post.
Nice blog. Education is important and has become even more important in this recession. People need college now more than ever ... not to get a new job but to keep the job they currently have. Competition for the few open jobs that are available is fierce and people that are undereducated are finding it impossible to get a decent job. Go into your local fast food joint and see how many middle aged people are moonlighting to make ends meet.
Posted by: David Montan | November 20, 2008 at 05:55 PM
Unfortunately, the current economic situation is forcing universities to scale back some international outreach efforts. As a retired university dean, it is my hope that universities are propped up economically in the same manner that commercial enterprises are.
Posted by: Dan Rosenfield | April 06, 2009 at 11:16 PM