Sunday, July 08, 2012

Seven HBCU Strategies for Survival and Success

Impending Collapse
Like other members of the HBCU community, I have been concerned for many years about the long-term survival of HBCUs. My obsession with this question has been expressed in four notes on this blog titled, "Why Are HBCUs Still Needed?" (Part I, Part II, Part III, and Part IV) and related notes ("From HBCUs to BCUs", "HBCUs as a National Laboratory", etc).  But in recent months my thinking has returned to its engineering roots. Being needed is not sufficient to ensure the survival of any institutions under any circumstances. So my question has become, "What should HBCUs do to survive the impending flood of IT innovations in higher education that will overwhelm so many non-HBCUs?"
  • Most HBCUs have always operated under strained budgets. Their money has always been tight. Federal support via programs coordinated by the White House Initiative on HBCUs brought substantial relief in recent decades, but the long-term downward trend has been greatly accelerated by the Great Recession.
     
  • Of course it's not just HBCUs that are in deep water. All nonprofit institutions of higher learning, except the most elite and best endowed, are also in dangerous financial territory. So the dozens of HBCUs that will fail within the next fifteen to twenty years will not fail because they are HBCUs or because they failed to remain "true" to their mission as HBCUs; they will fail for the same reasons that hundreds of non-HBCUs will also fail.
     
  • They will fail because they cling to obsolete institutional models. Perhaps the saddest failures will befall HBCUs that make the most strenuous efforts "do the right thing" in terms of these obsolete models. Unfortunately, HBCUs and the vast majority of non-HBCUs have now become involuntary contestants in a radically new game that requires a radically new playbook.
     
  • I find a painful irony in the outrageous treatment that Dr. Teresa A. Sullivan received from the University of Virginia's Board of Visitors between her sudden termination and her triumphant reinstatement as UVa's president last month. The Board's lack of understanding of how to reposition a great institution was appalling. But the irony is that the UVa Board moved clumsily and disrespectfully because they were panicked by their vision of a scary future, a vision that seems likely to prove to be correct. In this scary future, UVa might lose its place as one of the premier universities in the country, but less prominent colleges and universities may suffer far greater losses that will cause them to close their doors forever.
     
  • Powerful disruptive forces of high tech innovation, akin to those that wrecked havoc on newspapers and bookstores in the last two decades, will be descending on colleges and universities in the next two decades like the torrents that led to the Biblical flood. I am therefore concerned that faculty in some HBCUs and in some non-HBCUs will learn the wrong lessons from the events at UVa. They will confuse the UVa Board's apocalyptic vision with its appalling behavior, and reject both ... at their peril.
Sections A, B, and C of this note sketch successive models of American colleges and universities. The models are roughly outlined in succinct bullets and some data is provided to demonstrate their plausibility. Taken together, the models represent sequential segments on a broad trajectory that has reached a dead end. Section D presents my current thinking as to how HBCUs can not only survive, but thrive after the flood ... :-)

Note: Readers looking for a concisely written, well-documented characterization of the top tier American universities during the second phase, "The Golden Age" after World War II, might enjoy Eugene M. Tobin's superb essay, "The Modern Evolution of America's Flagship Universities" that appears in Appendix A of Crossing the Finish Line by William G. Bowen, Matthew M. Chingos, and Michael S. McPherson (Princeton University Press, 2009).

A. The Good Old Days ... Before World War II
  • College provided "opportunity" for the select few, i.e., for the more affluent and the most able ==> small enrollments, small faculty, and small administrative staffs
     
  • Few black students and few black faculty at non-HBCUs
     
  • Low salaries for faculty (by today's standards)
     
  • Scholarships for a small percentage of financially needy, able students 
     
  • Minimal facilities, no fancy science labs; the campus library was the biggest investment
     
  • No formal pedagogical training for faculty and no systematic measures of the effectiveness of their instruction. Instructors learned (or didn't learn) how to teach by teaching the same courses over and over again.

    Their deficiencies as teachers were offset by their students' high intelligence, prior high school preparation, good study habits, and long study hours. In other words, students taught themselves what their professors failed to teach; but students who dropped out and/or flunked out were regarded as "unworthy" because they failed to make the most of the "opportunity" that had been provided.
     
  • Low operating costs (by today's standards)
     
  • Tuition did not fully cover the operating costs. Shortfalls were covered by other funds
    -- Public institutions received additional funds from state & local governments
    -- Private institutions received additional funds from alumni and from other wealthy donors via direct grants or via income from endowments funded by alumni and other wealthy donors
     
  • Shortfalls in tuition placed limits on enrollments. Colleges and universities and universities could not enroll more students than could be covered by the additional funds they could "beg" from governments, alumni, and wealthy donors to cover their shortfalls.

The Good Old Days for HBCUs ==> Same as for non-HBCUs, except that:
  • HBCUs enrolled over 95 percent of all black college students
  • HBCUs had (and still have) a diverse faculty ... many non-black instructors

B. The Golden Age ... 1950s to 1980s ==> Prolonged Expansion
  • College now provided "opportunity" for the masses ==> much larger enrollments than before and retained more faculty at higher salaries than before

    -- Table 1. (below)
    Column (1) in the table shows that enrollments in two year and four year degree programs more than doubled between 1960 and 1970, increasing from 3,639,847 in 1960 to 8,004,660 in 1970. Enrollments in these undergrad programs then rose to 13,818,637 by 1989/1990 academic year,  which is almost four ties as large as its level in 1959/1960.
     
  • Larger, more complex facilities, e.g., new science labs, computer facilities, and larger libraries
     
  • Still no formal pedagogical training for faculty and no systematic measures of the effectiveness of their instruction. Instructors still learned (or didn't learn) how to teach their larger classes by teaching the same courses over and over again. Their deficiencies as teachers were offset by the students' own intelligence, study habits, and study hours. So once again, students taught themselves what their professors failed to teach ...

    ... but not as well as they did before. On the one hand, the teachers were not as good as they used to be. Many classes were now taught by less experienced younger professors and graduate assistants because the most illustrious subject matter experts were devoting more time to research and less to teaching, especially at the nation's leading research universities. On the other hand, the larger enrollments included a higher percentage of students who weren't as well prepared as in the "Good Old Days" nor did they study as hard as in earlier times

    ... Nevertheless, students who dropped out and/or flunked out were still regarded "unworthy" because their colleges and universities were not responsible/accountable for their failure to make the most of the "opportunity" that was provided
     
  • Larger enrollments and more complex facilities ==> rising operating costs and larger administrative staffs
     
  • Tuition covered a smaller percentage of operating costs, so larger funds from other sources covered the larger shortfalls
    -- Public institutions received more funds than ever from state & local governments
    -- Private institutions received more funds than ever from alumni and other wealthy donors via direct grants or via income from endowments funded by alumni and other wealthy donors
    -- The Cold War and the related panic over the Soviet Sputnik satellite heightened public fears of nuclear defeat by a technologically superior Soviet Union. Therefore colleges and universities received substantial increases in support from federal and state governments, but  combined state investments in their public institutions was larger than federal contributions to all institutions. Students at public and private institutions greatly benefited from massive, federally insured loan programs.

    -- Table 1 (below)
    Column (2) in the table shows that tuition increased by 35.1 percent between 1980 and 1990. (I couldn't find tuition data for 1960 and 1970.) While this was a substantial increase, it was evidently not enough to cover the shortfalls for those years, judging by the far larger percentage increases in support from the states. Column (3) shows that state support rose by 106.2%.

    Indeed, comparing columns (1) and (3) throughout the "Golden Age" shows that increases in state support increased by substantially larger percentages that enrollment increases, the drivers of the shortfalls. Column (1) shows that enrollment increased by 119.9% between 1960 and 1970, whereas support from state governments rose by 337.4% during that decade. Column (1) shows that enrollments increased by 44.5% between 1970 and 1980, whereas column (3) shows that state support rose by 211.5%. And column (1) shows that enrollments rose by 19.4% between 1980 and 1990, whereas state support rose by 106.2%.

    Column (4) shows the generosity of the federal government in its direct support to colleges and universities, wherein aid in 1970 was $3,447,697,000; it then rose by 222.4% in 1980 to $11,115,882,000. It rose by another 22.8% from 1980 to 1990 to $13,650,915,000.

    Finally, the average size of the loans that students and their parents obtained to pay for four year bachelors degrees in 1993 was only $9,797 -- a figure that would rise dramatically during the next three decades, as displayed in Chart 1 (below the table). By 2010 students who graduated with bachelors degrees were saddled with loans that averaged $31,979
     
  • The extraordinary generosity of external supporters during this period -- federal, state, local, and private sector --  enabled most colleges and universities to greatly expand their enrollments. In effect, the massive increases in external support covered the larger shortfalls in tuition receipts that came with the larger enrollments. 

Unfortunately, this was a not-so-Golden Age for HBCUs ==> prolonged decline
  • Desegregation laws in 1960s opened non-HBCUs to black students, black faculty, and black administrators ==> HBCUs lost their monopoly on the Black America's Talented Tenth
     
  • Percentage of black college students enrolled at HBCUs declined from over 95 percent in the 1940s to less than 40 percent by the end of the 1980s
     
  • Closing of many HBCUs led President Jimmy Carter to establish the White House Initiative on HBCUs in 1980 to ensure that the remaining HBCUs received substantial federal support

Table 1. Enrollment, Tuition, Government Support, and Student Loans
-->

Year
(1)
Enrolled
(2)
Tuition
(3)
State
$000s
(4)
Federal
$000
(5)
Student
Loans
$000
1960
3,639,847

$1,399,904








1970
8,004,660

$6,123,084
$3,447,697


4,364,813

$4,723,180



119.9%

337.4%








1980
11,569,899
$7,842
$19,075,829
$11,115,882


3,565,239

$12,952,745
$7,668,185


44.5%

211.5%
222.4%






1993
1990
13,818,637
$10,595
$39,337,633
$13,650,915
$9,797

2,248,738
$2,753
$20,261,804
$2,535,033


19.4%
35.1%
106.2%
22.8%







2000
14,849,691
$13,353
$56,682,253
$15,008,715
$19,546

1,031,054
$2,758
$17,344,620
$1,357,800
$9,749

7.5%
26.0%
44.1%
9.9%
99.5%






2010
20,427,711
$17,649
$73,742,207
$50,166,341
$31,979

5,578,020
$4,296
$17,059,954
$35,157,626
$12,433

37.6%
32.2%
30.1%
234.2%
63.6%






2012


$72,497,045
$64,309,984
$37,127



-$1,245,162
$14,143,643
$5,148



-1.7%
28.2%
16.1%

Sources

(1) Enrollment in higher education degree programs = Digest of Education Sttistics 2011, Table 197
= http://nces.ed.gov/programs/digest/d11/tables/dt11_197.asp?referrer=report
(2) Tuition = Digest of Educaton Statistics, 2011, Table 349 … all institutions =
http://nces.ed.gov/programs/digest/d11/tables/dt11_349.asp?referrer=report
(3) States appropriations for higher education up to 2000 = Grapevine Historical data =
http://grapevine.illinoisstate.edu/historical/index.htm
… for 2010 and 2012 = Grapevine National Tables =
http://grapevine.illinoisstate.edu/tables/FY12/Revised_March13/Table%201%20Revised.pdf
(4) Federal appropriations for postsecondary education = Digest of Education Statistics, 2011, Table 386
http://nces.ed.gov/programs/digest/d11/tables/dt11_386.asp
(5) Debt at graduation for bachelors degree students = NPSAS & MarkKantrowitz (Fastweb.com)
http://www.finaid.org/loans/DebtAtGraduation.xlsx



Chart 1. Student Loans Upon Graduation from Bachelors Programs
 

C.  Nonprofit Collapse vs. For-Profit Challengers ... 1990 to 2030
This section makes two points: first, if present trends continue, nonprofit colleges and universities will be offering degrees at tuition prices that will only be affordable by the most affluent students; and second, some "reformed" for-profit colleges and universities are likely to seize this opportunity to greatly strengthen their challenge to the traditional dominance of nonprofit institutions.

1a) As the Non-profit Bubble Bursts ...
Here's a very old joke that used to be told by very old MBAs:
  • "We take a loss on each transaction, but we make up the difference in volume"
And here are a couple of lines that used to be part of every dean's orientation speech to freshmen at nonprofit colleges and universities:
  • "Your tuition only covers X percent of the cost of your education" [where X is any positive number well below 100] 
  • "Look to your left; now look to your right. One of the students you just saw won't be here next year."
At first glance, the dean's reference to tuition only covering X percent of the cost of the students' education sounds uncomfortably like the MBA joke -- except that in the "Good Old Days"  most colleges and universities could count on their alums to cover their shortfalls. And the "Golden Age" that followed was made possible by federal and state governments becoming higher education's generous rich uncles who wrote the fat checks that covered their expanding shortfalls.

Of course, the downside risk to relying on government support in a democratic republic is a loss of support among the electorate. In this case, the continuous increases in government funding that financed the "Golden Age" during the Cold War were based on the electorate's fears of a communist nuclear victory via superior technology. Therefore as the Cold War waned, then abruptly ended with the sudden collapse of the Soviet Union in 1991, the U.S. electorate's fears subsided, as did its appetite for providing large subsidies for higher education.

Perhaps the most visible sign of the end of the "Golden Age" of public support for "Big STEM" R&D that entailed substantial support for universities was the Congressional decision in 1993 to cancel the completion of the Superconducting Super Collider. ("The Supercollider's Demise Disrupts Many Lives and Rattles a Profession" NY Times, 11/14/1993). This would have been the largest and most expensive scientific project in history. Had funding been continued, the recent discovery of the Higgs boson -- the so-called "God particle" -- by an international team led by European physicists at the Large Hadron Collider at CERN, Switzerland, might have have been made years earlier at the Super Collider by an international team lead by American physicists in Texas. ("Physicists Find Elusive Particle Seen as Key to Universe" NY Times 7/4/12)

-- Table 1 and Chart 1 (above)
  • Columns (3) shows that state appropriations for higher education plummeted from previous three digit percentage increases in the "Golden Age" to two digit percentage increases (based on constant 2011 dollars). Whereas states had increased their support between 1980 and 1990 by 106.2%, the increase between 1990 and 2000 was only 44.1%, and this increase declined to 30.1% in  2010. The final collapse in 2012 is marked by the states actually appropriating less funds in 2010 than they did in 2000, i.e., dropping from $73,742,207 down to $72,497,045 for a -1.7% reduction.
     
  • Column (4) shows that the federal government's increases plummeted earlier than the states. Whereas federal  appropriations increased between 1970 and 1980 by 222.4%, they only increased from 1980 to 1990  by 22.8%. The federal increase from 1990 to 2000 was only 9.9%, much smaller than the states' increase of 44.1% during that same decade. However, the increase by 234.2% between 2000 and 2010 was a dramatic turnaround. Most of this increase was in financial assistance to students, i.e., grants and loans, that rose from roughly $9 billion in 2000 to roughly $33 billion in 2010. (See the Digest of Education Statistics, 2011, Table 386). This was an substantial increase, but a substantial portion of the increase went to students who dropped out, i.e., didn't graduate in four, six, or eight years, and with substantial college loans to be repaid. And for those who did graduate, it was evidently too little, too late, as can be seen by the comparably dramatic rise in student indebtedness upon graduation in column (5).
     
  • Column (2) shows that as  governments provided smaller increases in their support, colleges and universities raised their tuition again and again and again.Whereas column (1) informs us that enrollments only increased between 1990 and 200 by 7.4%, colleges and universities raised their tuition by 26.0%, i.e., by more than three times as much. Whereas column (1) shows that enrollments increased between 2000 and 2010 by 37.6%, colleges and universities raised their tuition by almost as much, by 32.2%

    Note: The large 37.6% surge in enrollments during the last decade was driven by the Great Recession. In severe economic downturns the unemployed go back to school to acquire new skills that will qualify them to find new jobs, whereas the still employed go back to school to acquire new skills to help them keep the jobs they already have.

    Note: non-elite colleges and universities raised tuition to cover their shortfalls. By contrast, elite colleges and universities raised their tuition, partly to cover their  shortfalls, but also to maintain their reputations as providers of the highest quality degrees. If their degrees cost more, they must be better, right? ... :-)

     
  • Column (5) and Chart 1 show the inevitable consequences of raising tuition again and again ==> higher student personal debt upon graduation. The average student debt upon graduation from four year degree programs almost doubled (99.9%) between 1990 and 2000. The commencement sticker price increased by another 63.6% between 2000 and 2010; and it kicked up another 16.1% between 2010 and 2012 to a whopping $37,127. (Note: these figures combine the loans taken by students with those taken by their parents.)

    Some analysts have argued that college debts should be regarded as  profitable investments because college graduates enjoy substantially larger lifetime incomes than non-graduates, high enough to make college loans one of the best investments that graduates will ever make. Of course, this argument would more compelling if student debts were lower and graduation rates were higher, especially for minority students. Drop-outs don't obtain the kind of "gainful employment" enjoyed by graduates.
(Note: For a comprehensive, pessimistic assessment of the financial conditions of all public and private nonprofit institutions in the country, see the recent report from Bain & Company, "The Financially Sustainable University" 7/6/12)


1b) College as a Provider of Opportunity for the One Percent
The debt curves in Chart 1 are sloping upwards -- meaning that if present trends continue, a college education will become less and less affordable for more and more people. A college education will become just another measure of the growing inequality in our society that is closely related to the growing inequalities in wealth and income. However, as our society moved from an industrial to a post-industrial society, then to a knowledge based society that is part of a global knowledge-based economy, a college education has become an essential prerequisite for jobs that provide adequate income.

Of course, the loss of opportunity for a college education will hit minorities hardest because they are the least affluent segments of the population, even more so today as consequence of the Great Recession:
  • Last year the Pew Research Center issued its analysis of the impact of the Great Recession on the wealth of blacks and Hispanic households, "Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics." Among other disturbing findings, the report notes that, "The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households." The report also notes that, "From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households."
 1c) Few Productivity Gains in Higher Education
American colleges and universities expanded their enrollments in order to meet the the nation's growing need for a college-educated workforce. But they failed to substantially improve their productivity. Productivity is the measure of the resources required to produce a unit of a product or a service. When productivity rises, the goods and services being produced costs less and/or are of higher quality.
  • For example, when consumers buy computers, cars, TV sets, and telephone services today, they pay less in constant dollars than they paid thirty years ago and they obtain products and services that are of substantially higher quality. Unfortunately, there is no reason to believe that the substantially higher sticker prices on today's college education buy a better education than than thirty years ago.
     
  • Indeed, the recent landmark report from Richard Arum and Josipa Roksa, Academically Adrift (University of Chicago Press, 2011), suggests that there is good reason to believe that the education provided to many of today's college students is substantially inferior to the eduction that was provided in the "Golden Age." Among other things, their report presents convincing data that more students are receiving higher grades today for less study.
The electorate's loss of appetite for providing large subsidies to institutions of higher learning has been reinforced by its growing dissatisfaction with academia's traditional answer to the question implied by our mythical dean's second comment to the freshman. If one third of the freshman dropped out and/or flunked out, whose fault was that really? Academia's self-serving response in the "Good Old Days" and in the "Golden Age" blamed the student. But today's electorate wants to know why colleges and universities have failed to develop innovations in teaching that are more affordable and more effective for more students given that it is becoming increasingly clear that academia's traditional methods are neither affordable nor effective for larger and larger segments of our society.

The most important cause of the failure of our colleges and universities to become more productive is not hard to identify. Whereas just about every other sector of our economy has become more productive in the last fifty years via intensive applications of information technology, our colleges and universities -- the institutions that focus on the most information-intensive and most critical processes in a knowledge-based society, i.e., teaching and learning -- have been among the least progressive in their development and widespread adoption of powerful IT innovations.


2. For-profit Challengers
For-profit institutions have challenged the hegemony of nonprofit colleges and universities by adopting the same strategies used by Toyota, Walmart, Amazon.com, and other high-volume/low-cost upstarts in other economic sectors. (Note: At the present time, for-profit institutions only enroll about 10 percent of the students in college degree programs.)

They began by providing reliable, lower cost services for a previously under-served niche market; then they expanded their target market, widened the range of services offered, and raised their fees as they overcame the previously dominant service providers. Indeed, it seems to me that we are now coming to the end of the first phase of what might be called "the Fed-Exification of higher ed" -- wherein the nation's non-elite, nonprofit colleges and universities have cast themselves as the beloved, but grossly inefficient local post offices.
  • Initial focus on non-traditional students
    Whereas nonprofit institutions of higher learning focused on traditional full-time students by offering courses on weekdays, the for-profits focused on non-traditional students whose family and/or work obligations only allowed them to take courses on a part-time basis on evenings and weekends or via some form of distance learning.
     
  • Limited range of degrees and certificates ... little or no research
    For-profit institutions offer a limited range of certificate programs and bachelors & associates degree programs that have a pronounced career emphasis. Only a few engage in enough research to be placed in a "research" category by the Carnegie Foundation, which is not surprising because very few universities actually make money on their research programs.
     
  • Profitable courses and programs
    Tuition at for-profit institutions covers the full cost of the courses taken by each student plus enough surplus to pay taxes to governments and dividends to shareholders. There are no shortfalls ... so "more students = more profit"
     
  • No shortfalls, so no limits to growth ... especially online
    Since "more students = more profits" the for-profits are driven to become as large as possible. For example, the University of Phoenix, the largest for-profit, enrolled 380,800 degree seeking students in the 2010/2011 academic year, (SEC 10-K Statement, Apollo Group -- corporate parent of the University of Phoenix, August 2011).

    The university's 2011 Academic Annual Report informs us that (at least) 18.4 percent of its students were black, which would imply that (at least) 70,000 were black, a figure that is larger than the combined black enrollment of the largest five HBCUs. (Note: The "at least" qualifiers are included because the Annual Report notes that the race/ethnicity of 31.3 percent of the students was unknown.)
     
  • Efficient administration via intensive use of information technology
    For-profits use IT far more intensively than their nonprofit competitors. IT skills are a prerequisites for hiring administrative staff and instructors. The for-profits continuously monitor their operations data in search of greater efficiencies because doing more with less generates more profit.
     
  • Flexible workforce receives lower wages and less benefits
    Instructors at most for-profit institutions are contract employees who receive lower pay and fewer benefits than faculty at nonprofit institutions. They don't have tenure so they can be hired and fired as demand for the courses they can teach surges or subsides.
     
  • Faculty trained to teach standardized courses
    Courses offered by for-profit institutions are designed by interdisciplinary teams of subject matter experts and experts in instructional technology. When instructors are hired by for-profit institutions, they are taught how to teach the courses using the lesson plans, home work assignments, quizzes, exams, references, and other pedagogical procedures specified by the design teams. 
     
  • Intensive marketing
    "If you build it, they will come" ... No, they won't. You have to tell them about your product or service over and over and over again, which is why the most successful for-profits devout 20 to 30 percent of their gross revenue to intensive advertising and recruitment campaigns, especially on the Web. If you search for any topic that is remotely related to the degrees and certificates they offer, their ads will pop-up at the top, sides, and bottom of the pages containing whatever results your search engine returns.
     
  • Customer Orientation
    For-profits see their students as customers. At this time, this is a short-term perspective that leads the for-profits to solicit frequent assessments from their users as to the students' satisfaction with the courses they're taking. It also leads them to monitor their students' progress, providing offers to help if a student's progress isn't what might be expected. But the for-profits have only recently begun to share their data with the rest of the academic community to demonstrate that their students are, indeed, learning the subjects as well as at nonprofit institutions and to participate in research efforts in collaboration with their nonprofit peers to develop more effective pedagogical techniques.
     
  • Bias towards online
    Despite the growing body of evidence that indicates that students learn more in blended courses than in courses that are purely face-to-face or courses that are purely online, for-profits are biased towards online because online courses can enroll larger classes from a global pool of potential students than blended courses; and online courses have no facilities rental/management costs as do face-to-face or blended courses.
     
  • Minimize risk by forming de facto partnerships with the federal government
    Realizing that the biggest risk to their profitability was  non-payment of tuition loans, the for-profits preferred that their students pay their tuition with federally insured loans. This strategy enabled them to receive tuition payments up front and left the feds or the banks that provided the insured loans to worry about repayment.

    The for-profits have set up efficient loan-processing units that are run with the same glib, high pressure tactics as employed by the loan desks in auto dealerships. Their loan officers "encouraged" the largest percentage of their students to pay their tuition via federally insured loans as the current federal laws and regulations would allow ... and successfully lobbied Congress to raise those limits again and again.
2a) Abuses
The for-profits' short-term perspective and their fundamental equation, more students = more profit, led to some predictable abuses as they challenged the dominance of the traditional nonprofit institutions. These abuses are disturbingly similar to the sub-prime mortgage abuses in the housing market that led to the housing bubble that led to the Great Recession, abuses that were also powered by short-term profit-maximizing perspectives. The for-profit's abuses listed below and many others have been documented by hearings conducted by Senator Harkin (e.g., "For-Profit College Investigation"), by GAO reports (e.g.,  For Profit Schools, Experiences of Under Cover Students Enrolled in Online Classes at Selected Colleges, October 2011) and by the analyses offered by the Department of Education in support of various regulatory reforms it has proposed to curb these abuses (e.g., "Obama Administration Announces New Steps to Protect Students from Ineffective Career College Programs" -- gainful employment, June 2011).
  • Recruitment abuses
    Some for-profits aggressively recruited students into courses and programs for which the students did not have the prerequisite knowledge and skills. So the students flunked out or dropped out, didn't get the higher paying jobs they were hoping for, and were stuck with loans they couldn't repay.

    It must be noted that a surprisingly high percentage of students enrolled in for-profit programs are black, especially their online programs wherein black enrollments are estimated to lie somewhere in the 25% to 40% range. This range is two to three times as high as might be expected given that black Americans represent only 13% of the total U.S. population.  While there is no evidence that the for-profits deliberately recruited a higher-than-expected percentage of black students, as did the purveyors of sub-prime mortgages, the results are the same. A disproportionate number of black Americans have been victimized by for-profit abuses.
     
  • Excessive tuition
    The for-profits are not competing with the nonprofits on price. Why should they? Most nonprofits charge high tuition because they run inefficient operations; the for-profits charge comparable tuition because higher tuition also equals higher profits.
     
  • Degrees and certificates that provide bridges to nowhere
    But what about the students who passed the courses and earned the degrees and certificates? Many of them could not find gainful employment in the fields they had studied so hard and paid so much to enter; hence they were stuck with loans they couldn't repay.
2b) Affordable/High Quality Education -- The Bigger Challenge
The inevitable regulatory reforms designed to eliminate these abuses would probably have spelled the end of the for-profit challenge were it not for the Great Recession and the Tea Party.
  • As noted previously, the non-elite segment of the nonprofit sector is collapsing because of its failure to cope with the ending of the "Golden Age." The ending of ever-increasing support from governments at all levels, support that used to cover the ever increasing shortfalls between their tuition and their costs of operation left them no choice but to institute substantial increases in tuition
     
  • The nation's decades-long growth of inequality was exacerbated by The Great Recession. The richest one tenth of one percent saw dramatic increases in their shares of the nation's wealth and income; whereas the bottom fifty percent saw their shares decline, nor is there reason to believe that prospects for the bottom half will improve in the foreseeable future. As a result, the substantial increases in tuition by the non-elite colleges and universities have made their programs less and less affordable for larger and larger segments of the population.
     
  • College is once again becoming an opportunity that is restricted to the most affluent and the most talented, as in the "Good Old Days" -- but with a tragic difference. In those days, breadwinners without a college education could earn substantial paychecks as laborers in factories and other manual trades; but not today.  In today's knowledge-based global economy, a college education is the entry ticket for most of the jobs that pay the kind of wages that most families need.
     
  • Reorganizing the non-elite colleges and universities in the nonprofit sector will be a monumental task that will very expensive. Mind you, I'm not talking about obtaining funds to cover shortfalls in current operations; I'm talking about substantial investments to support the development and widespread dissemination of cost-effective innovations in our system of higher education that will deliver quality education at affordable prices without shortfalls -- because the affordable tuition will cover the cost of delivering the education.

    Perhaps the most critical component of the dissemination efforts will be retraining current faculty to use the innovative procedures. An innovation can't be cost-effective if faculty don't know how to use it. Therefore the cost of extensive professional development programs must be factored into the total costs of introducing the innovations.
     
  • Where will these substantial funds come from? If the Tea Party didn't exist, I would expect that the funds would come from governments; but the Tea Party does exist and retains enough political clout to ensure that tax-dependent governments will not allocate the required funds. So the funds will have to come from the profit-oriented, private sector. But will the private sector rise to this challenge? There is reason to believe that it will.
2c) Three Kinds of Private Sector Players
Going forward, it will be important to distinguish three kinds of private sector players in the higher education degree and certificate sector: abusive for-profit institutions, reformed for-profit institutions, and online service providers.
  • Abusive For-Profits ... Quick Bucks
    The Department of Education has stumbled repeatedly in its efforts to promote effective reforms, e.g., the court's recent rejection of its "gainful employment" proposal. (See "Judge Strikes Down 'Gainful'" in Inside Higher Education, 7/2/12) However, it seems likely that it will eventually produce enough acceptable restrictions to make it considerably less profitable for practitioners of well-documented abuses to stay in business. 
     
  • Reformed For-Profits ... In it for the Long Run
    Wiser heads in the investment community have already recognized that employing abusive practices to gain quick millions from higher education programs will leave billions on the table in the long run. The same global forces that are pressuring American workers to obtain college degrees and certificates are also pressuring employees all over the planet. Reformed for-profits are now facing an extraordinary window of opportunity. On the one hand, the global market for higher education is massive, and on the other hand in the next phase of their challenge to traditional institutions, the for-profits face permanently weakened competitors.

    Therefore greed, not goodness, will motivate the "reformed" for-profits to abandon short-term abusive tactics that undermine their brands in the long run. They will invest substantially greater funds than individual colleges and universities in the non-elite, nonprofit sector for continuous improvements to their management systems, eLearning technologies, and academic analytics. They will strive to maximize their profits from the massive global higher education market by developing degree and certificate programs that are more affordable and demonstrably better than the programs offered by their underfunded nonprofit competitors.

    Resisting the temptation to predict which for-profits will actually become born-again pillars of the higher education community, I feel comfortable suggesting that plausible candidates would include, among others, the corporations that have already made the substantial investments required to obtain and retain accreditation for their programs from the same regional bodies that accredit the nation's leading nonprofit colleges and universities. A partial list includes: University of Phoenix (North Central), Kaplan University (North Central), DeVry University (North Central), National American University (North Central),  Strayer University (Middle States), American InterContinental University (North Central), Capella University (North Central), and Walden University (North Central).

    Gaining and retaining accreditation from the six regional associations is becoming more difficult for for-profit institutions, as indicated by Bridgeport Education's pending loss of accreditation from North Central for its Ashford University and by the recent denial of Ashford University's request for accreditation by the Western Association of Schools and Colleges. (See "Western Association Rejects Ashford U's Initial Bid for New Accreditation" Chronicle, July 9 2012)

    [Note: Given the prevalence of the North Central Association of Colleges and Schools on this list, it's worth noting that North Central also accredits many prominent nonprofit institutions, e.g.,  University of Michigan, Case Western Reserve University, University of Notre Dame, and Northwestern University]
     
  • Online Service Providers
    Unlike the for-profit colleges and universities, the service providers don't offer degree and certificate programs themselves. Instead, they form strategic partnerships with nonprofit colleges and universities wherein they invest the substantial funds require to develop and market online or blended programs; the partner college or university invests nothing. When students enroll in the courses, the provider receives a negotiated percentage of the tuition revenue. Eventually, as the provider recoups its original investment, the fundamental for-profit equation holds ==> more students = more profit

    In this case, the fundamental equation also provides a strategic insight. Online service providers are not looking to maximize the number of colleges and universities they partner with; they want to select the "right" institutions as partners who will help them enroll the most students so they can achieve economies of scale. Like the U.S. Marines, the online providers are looking for a few good partners. Better to have five partners that enroll 100,000 students than 50 partners that only enroll 10,000 students.

    How much do these providers invest in each degree program? It depends on the overall market demand for the program, on how much of that demand can be captured by the brand name of the institutional partner, and on the funds available to the provider. Some providers are backed by equity funds; others are owned by equity funds; but the largest providers finance their investments internally. Investments per partner run as high as $10 million. A partial list of online service providers includes EOServ Corp, 2tor, Blackboard, Pearson Learning Solutions, Deltak Innovation, and Embanet-Compass.

D. Survival and Success
The previous sections of this note presented data and links to sources of additional data that indicate that tuition is becoming less affordable for more students, especially minorities. The data provide no basis for hope that this problem will be resolved using the traditional, non-IT intensive procedures that have prevented colleges and universities from improving their productivity.

As tuition rises, more and more colleges will recruit fewer and fewer students, i.e., they will price themselves out of their segments of the academic market. Eventually the hardest hit institutions, including HBCUs, will be forced to close their doors forever. This downward spiral will be accelerated by the "Fed-Exification of higher education" wherein the reformed for-profit institutions make investments in appropriate IT that will enable them to deliver high quality courses at affordable tuition prices. Readers who found the previous sections of this note to be unconvincing should stop reading at this point because the strategies recommended in this section are presented in the context of this apocalyptic vision. The "Good Old Days" are gone forever and the "Golden Age" is over.

But the good news is that non-profit colleges and universities that develop the will to cross this Digital Divide may find new prosperity because they don't have to pay taxes or maximize profits. This may give them sufficient financial leeway to adopt the same productivity enhancing information technologies as the reformed for-profits AND remain loyal to fundamental values that define higher education as something more than vocational training.

1. Overlapping Themes as a Framework
The specific strategies recommended in this section are framed by the following overlapping "themes":
  • Non-traditional students in a global market
  • High quality
  • Intensive use of information technology (IT)
  • Continuous training and retraining
  • Leveraging resources via partnerships
  • Revenue vs. affordability
  • TLC
Elaborating each theme in turn:
  • HBCUs should expand the reach of their course offerings beyond their local physical campuses so as to reach non-traditional students anywhere in the world via courses and programs that are online or blended combinations of online and face-to-face delivery
     
  • HBCUs should offer high quality courses and programs
     
  • HBCUs should greatly improve the productivity of their teaching and administrative processes via intensive applications of information technology
     
  • HBCUs must commit to programs of continuous training and retraining of their faculty and staff in the use of productivity enhancing innovations in information technology. Innovations can't enhance productivity if faculty and staff don't know how to use them.
     
  • HBCUs should leverage their own limited resources by forming partnerships with other organizations
     
  • HBCUs should price their courses and programs for non-traditional students so that they generate revenue. There should be no shortfalls between the tuition charged for a courses and the actual cost of offering the course. On the other hand, HBCUs are not for-profit operations, so they should offer courses and programs that are affordable. Tuition levels will inevitably represent a trade-off between more revenue vs. more affordability.
     
  • HBCUs should differentiate themselves from other colleges and universities by providing their students with the personalized "tender loving care (TLC)" that has been the defining element of their legacy ever since they were founded over one hundred years ago.
As will be seen from the following discussions, these themes sometimes reinforce each other but at other times present mutual constraints.
  • For example, HBCUs should charge high enough tuition to enable their courses and programs generate revenue, but not so high that they are not affordable by most students.
     
  • For example, striving to reach non-traditional students anywhere on the planet is supported by IT, but constrained by TLC.  IT will permit students to be enrolled in courses that are 100 percent online if they have Internet connections that are fast enough and reliable enough. For some kinds of courses, intensive use of IT-based social media will enable instructors to provide sufficient TLC; but for other courses IT-based social media may not provide the enough "human touch." Such courses should be limited to local markets wherein they might be offered as blended combinations of online and face-to-face sessions.
     
  • For example, some courses might cost so much for an HBCU to develop with its own resources that the tuition required to recover these investments might be so high as to make these courses unaffordable. However, if HBCUs shared the costs of developing the courses with partners, the tuition might be affordable and its share of the tuition revenue might be sufficient to cover the HBCU's share of the development and operating costs.
     
  • For example, there is considerable overlap between the concepts of "high quality" and TLC for a student who needs TLC in a course. In other courses, the student may not feel that he or she needs much TLC ... but TLC should always be available in all courses sponsored by HBCUs just in case a student's initial assessment of his or her own abilities to handle the course material without assistance turns out to be incorrect. Indeed, this guarantee of TLC may cause HBCU courses to be priced somewhat higher than courses offered by other colleges and universities which, in turn, may limit the size of the market for HBCU courses and programs.
2. Seven Strategies
The following recommendations are tagged with their dominant themes. Most have already been implemented by some HBCUs and non-HBCUs; therefore links to descriptions of previous implementations are provided wherever possible. Hopefully, this will encourage HBCUs to contact these other institutions in order to learn from their experience. All of the recommendations apply to programs for non-traditional (part-time, remote) students, but some are also applicable to programs for traditional (full-time, on-campus) students.

eLearning technologies
Before proceeding, it's useful to distinguish between two types of IT applications that could enhance the productivity of HBCUs. On the one hand, there are IT applications that support more efficient and more effective administrative processes. On the other hand, there are IT applications that support more efficient and more effective teaching, i.e., the core academic function. Although there are many names for the second group of applications -- e.g., "instructional technology"-- I prefer "eLearning" because the "e" suggests that the most cost-effective are likely to be Internet-based, and "learning" reminds us that the ultimate measure of the value of our technology is how much our students learn.

2.1 Encourage and train faculty to develop more intensive and extensive use of eLearning technologies in all courses, not just those that are directed at non-traditional students  ... intensive IT + training/retraining + high quality + TLC

Online and blended courses make the most intensive and extensive use of eLearning technologies, but an HBCU can't just jump from face-to-face courses to online/blended degree programs overnight.
  • In principle, an HBCU might engage consultants to develop all of the courses that would comprise an online/blended degree program, and do so with little or no involvement of the HBCU's regular factory. This strategy has seldom been effective in the long run.
     
  • Successful development of online and blended degree programs for non-traditional students requires the active participation and support from the faculty in the schools and departments that currently offer the corresponding face-to-face programs for the HBCU's traditional students. In other words, online business degree programs should be developed with the active participation and support of the faculty in an HBCU's school of business; online nursing degree programs should be engage the faculty in an HBCU's school of nursing, etc, etc, etc.
     
  • HBCUs must therefore encourage and train their faculty to move their courses step by step, from face-to-face to Web-enhanced, wherein at least 10 percent of the course content and communications are delivered over the Web; then from Web-enhanced to blended, wherein at least 30 percent is delivered over the Web; and from blended to online, wherein at least 80 percent is delivered over the Web. (Note: this definition of "online" as less than 100 percent via the Web allows for testing to be done in face-to-face, proctored exam facilities.)
     
  • Most courses can benefit by being transformed from face-to-face into a blended format; but faculty may determine that the quality of some courses would be compromised if they were delivered beyond 40 or 60  or 80 percent over the Web. In such cases, the faculty's judgment should be respected.
      
  • A recent report from the Pew Research Center ("Technology Trends Among People of Color" 9/17/10) found that blacks and Latinos use social media more intensively than whites, a finding that suggests that employing social media in online/blended programs for minority non-traditional students might substantially offset the loss of face-to-face contact. Pew's finding merits an extended quotation:

    "Minority adults also outpace whites in their use of social technologies. Among internet users, seven in ten blacks and English-speaking Latinos use social networking sites—significantly higher than the six in ten whites who do so. Indeed, nearly half of black internet users go to a social networking site on a typical day. Just one third of white internet users do so on a daily basis. The same is true for status update services like Twitter—one quarter of online African-Americans use these services, significantly higher than the 15% of white internet users who do so (English-speaking Latinos are right in the middle, with 20% of such internet users using these sites)."

    Therefore HBCUs should regard social media, like Facebook and Twitter, as eLearning technologies that can involve their non-traditional students with each other, with traditional students on-campus, and with an HBCU's extended community of alums.
     
  • HBCUs should give serious consideration to establishing certificate programs and associated high tech incubators that will assist black entrepreneurs to succeed in the T & E components of STEM, especially information technology (IT). Ever since Steve Jobs founded Apple and Bill Gates founded Microsoft thirty plus years ago, the global knowledge-based economy has been driven by highly profitable IT innovations that were developed by courageous entrepreneurs who had minimal formal training  and minimal experience in technology and engineering --  "minimal" as in college drop-outs and graduates without PhDs in any component of STEM.

    Year after year the nation's business press has been filled with exciting stories about founders of start-up ventures who had become billion dollar captains of industry -- Apple, Microsoft, Yahoo!, Google, Facebook, etc, etc, etc  … but to date, none of these "boy billionaires" has been black. Nor is this likely to happen until black wannabe entrepreneurs can benefit from the kinds of technical/financial support networks that many non-black entrepreneurs have received from the nation's leading non-black universities. Bluntly put, now is the time for some leading HBCUs to play the kind of supporting roles for black entrepreneurs in IT that Stanford and Berkeley have played for non-black entrepreneurs.
2.2 Establish strategic partnerships with online service providers to help the regular faculty to develop online and blended degree programs for non-traditional students ... intensive IT + partnerships +  high quality + revenue vs. affordability
2.3 Flip the classrooms ... intensive IT + training/retraining + high quality + TLC
  • As faculty upgrade their courses to make more intensive use of eLearning technologies, they should flip as many classrooms as possible, i.e., redesign courses so that presentations are made online and class time is used by the course instructors for Q&A, discussions, demonstrations, hands-on lab type activities, brief tutorials for small groups, etc (Note: by definition, all "flipped" courses, are blended courses. Flipped classes are also called "inverted" classes)
     
  • Establish training programs for faculty who want to learn how to flip their courses
     
  • Wherever possible, HBCUs should use MOOCs (massive open online courses) offered by the nation's leading universities (for free or for cheap) as the online presentation components of their "flipped" courses, e.g., MOOCs from edX (Harvard & M.I.T.) and Coursera (Stanford, Princeton, Penn, University of Michigan  ... as of 7/17/12 plus University of Virginia, California Institute of Technology, Duke University, École Polytechnique Fédérale de Lausanne (in Switzerland), Georgia Institute of Technology, Johns Hopkins University, Rice University, and the Universities of California at San Francisco, Edinburgh (U.K.), Illinois, Toronto and Washington)
2.4 Establish competency-based degrees and certificates for non-traditional students ... revenue vs. affordability
Wherever possible, configure degree and certificate programs for non-traditional students so that progress towards completion is based on demonstrations of competency rather than on the number of courses taken
  • Develop efficient admissions/assessment procedures that will enable non-traditional students to receive credit for job experience, military service, and life experience. Assistance in developing workable procedures can be obtained from the Council for Adult and Experiential Learning (CAEL)
2.5 Deploy eLearning remedial/developmental applications ... intensive IT + training/retraining
A high percentage of freshmen, and an even higher percentage of black freshmen, enter U.S. colleges every year with inadequate preparation in basic math and language skills.

Traditional "chalk and talk" (low tech/no tech) remedial courses have not provided cost-effective remedies. Deficiencies persist for too many students. In some cases these persistent deficiencies, especially in math, force some students to change majors from STEM to non-STEM fields. Other students with larger deficiencies drop out or flunk out. When they return to college as non-traditional students, they bring their unresolved deficiencies back to school with them.

The good news is that an expanding array of eLearning applications have been developed that can be used in online courses wherein each student can improve their basic skills at their own pace or as online components in flipped classrooms, e.g., the so-called "Emporium" model first developed at Virginia Tech, wherein students interact with online courseware in computer labs at their own pace, but on-site instructors engage the students in one-on-one tutorials when needed. The "Emporium" model is described in these articles:
Some remedial/developmental applications have been produced by major education sector companies, companies that are committed to making the continuous investments required to make their applications more and more effective for wider range of students. A few producers and their products are noted below:
2.6 Use IT to reduce administrative costs per enrolled student ... intensive IT + training/retraining + generate revenue
HBCUs should provide training for their staff that would enable them to use IT as intensively as the reformed for-profits in processing admissions applications, loan applications, grant applications, student records, transfer requests, tuition payments, etc.

Fortunately for HBCUs, the underlying information technologies (hardware and software) they need to become nimble competitors in market niches have become so cheap that any institution can afford to rent what it needs, either locally or as services in inexpensive clouds, e.g., Amazon.com's Web services ... but once, again, the secrets to using these low-cost technologies effectively will be well-trained support staff

2.7 Monitor the reformed for-profit institutions ... high quality + revenue vs. affordability + TLC
The increasing size of the reformed for-profits will make them pervasive components of every HBCU's environment. Nevertheless, HBCUs can thrive as academic boutiques in the sizable niches in the global academic marketplace that are not dominated by these behemoths as they grow bigger and bigger in their endless quests for the larger enrollments that bring larger profits.
  • Potential enrollments for HBCUs as global academic boutiques should not be dismissed too quickly. Let's assume that 500 million people out of the world's seven billion will be interested in obtaining a degree or a certificate as non-traditional students. If HBCUs only captured 0.5 percent of that market, they would enroll 2.5 million students -- which is about eight times as large as the roughly 300,000 students enrolled in HBCUs today.
For reasons spelled out in Part C of these notes, the reformed for-profits are likely to become the undisputed champions in the nation's efforts to develop affordable, high quality degree and certificate programs. Their services will set the benchmarks for quality and affordability against which HBCUs will be measured. HBCUs will therefore need to carefully monitor the playbooks of these competitors in order to be sure that they, the HBCUs, keep abreast of the latest productivity enhancing IT innovations.

As also noted in Part C, the for-profits have to pay taxes to governments and dividends to shareholders, substantial obligations not incurred by HBCUs. This greater margin of retained revenue can be used by HBCUs to finance the extra TLC that will provide their competitive advantage, the definitive component of their legacy that a small but significant percentage of the non-traditional students in the massive, global academic marketplace will appreciate and need. As Tom Joyner once said,
"Historically Black colleges have always been known from their inception to take a student, care for them, nurture them, make it so that they are equipped for success in this world." (CNN Interview with Tony Harris, 9/17/10)
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Related Notes: