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It is not an easy time to be Marty Meehan, president of the University of Massachusetts.
As is common with public institutions, UMass is facing some difficult headwinds. The population of traditional college-age students in Massachusetts is shrinking. Despite being a relatively wealthy state, Massachusetts is in the bottom 10% in terms of spending relative to the size of the state’s economy for higher education. The per student funding for higher ed in the state is well-below its 2001 peak, and has been rebounding extremely slowly. Like a lot of public universities, they’ve been endlessly tasked with doing more with less.
It is difficult to see a sustainable future for institutions that are facing these conditions. If your enrollment is going to shrink and the state is not going to pay to maintain even the present unsustainable status quo, something must be done.
But I am concerned about that something, which is a plan to establish a national online college aimed at adult learners.
There are a number of reasons for this concern. One is that several institutions have a significant head start. Southern New Hampshire University (SNHU) has over 60,000 students in its online programs. The University of Maryland Global Campus just announced it’s going to invest $500 million on marketing over the next six years as it reaches for a national audience. SNHU spent $132 million on marketing in 2017 alone.
Another concern is the high-profile implosions of similar attempts at UT-Austin and the University of Florida, among other places, as discussed in a very thorough piece of reporting from this publication.
The UT-Austin Project 2021 initiative was given an exhaustive post mortem in The Chronicle of Higher Education, revealing a lot of champagne dreams and caviar wishes over “innovation” that appeared to have little direction or planning behind it.
Florida has scaled back from a goal of 24,000 students and $77 million in revenue by 2023 to a more “modest 8,400 students and $29 million in revenue, which includes a $5 million subsidy from the state.”
Evangeline Tsibris Cummings, the director of U of F online told The Boston Globe’s Deidre Fernandes, “The initial assumptions are that online education is cheaper, and it’s a global phenomenon. We’ve learned the opposite. Online education is more expensive . . . and it takes time to grow enrollment, and the students are surprisingly local. Success is possible, but it’s a matter of making sure we’re focused on the right thing.”
Still another concern is that a report commissioned by UMass and prepared by EY Parthenon makes it clear how daunting a task this is. While the UMass brand is looked upon favorably - 55% say that all things being equal they would choose UMass over their current education provider – the “all things being equal” part is a heavy lift. Kasia Lundy of EY Parthenon told IHE,
“Then the question becomes, can they actually deliver this in a way that is good for the student? Can you get your pricing down to a level that is affordable for students while still providing the quality of supports that these students need to succeed? That’s where things often break down -- many people vastly underestimate what it actually takes to put up the infrastructure and wraparound supports that good online programs require.”
And here’s the concern as I see it. As reported Deidre Fernandes, “UMass has not detailed how much it will cost to run the enterprise, but Meehan said the university would borrow money to get it underway. While the UMass system maintains a high credit rating, agencies such as Fitch and Moody’s have warned the institution about taking on large amounts of additional debt.”
When you add these things up, it looks as though UMass is betting the future of the institution on what looks to be a longshot requiring near perfect execution in a crowded marketplace, and they’re going to go in hock to do it.
This is the kind of bet you only make if you don’t have any other choice, and maybe that’s the case here, or at least appears to be the case here. If Massachusetts is running out of college-age students and the state won’t properly fund education, money has to come from somewhere.
But this kind of debt can become an albatross from which the institution will never escape. Consider the University of California – Berkeley football stadium financed with $445 million in bond debt which has an annual debt service of nearly $20 million, will be $26 million in 2023 and will last until 2113, long after the lifespan of the stadium itself.
Imagine what happens when the debt puts further constraints on the core institutional mission. If you think a shrinking number of traditional college-age students is a problem, consider what years of legislative infighting over a budget has done in Illinois, where the number of public high school graduates enrolling in out-of-state institutions has increased from 30% in 2002, to nearly 50% today.
Rather than forcing UMass into a Hail Mary pass, the government of Massachusetts should be discussing how to put their flagship system on sustainable footing for the foreseeable future. Given that we are in relatively prosperous times, they should be doing this as soon as possible.
Massachusetts clearly supports higher education. Harvard and MIT, anyone? Ah, but those are private institutions, you’re saying.
Except not really. As illustrated by Jeff Selingo, these private institutions receive significant public money in the form of tax subsidies. In fact, the total federal, state, and local tax subsidies add up to $48,000 per student for Harvard.
It’s only $9,900 per student for UMass – Amherst.
Maybe the Massachusetts legislature can start with that discussion, asking whether or not it makes sense to lavish so much public money on an institution with a nearly $40 billion endowment.
That endowment equals 100 years of total revenue for the UMass online university, if UMass online lived up to its wildest dreams.
Before UMass and the state of Massachusetts makes this bet, I hope they consider the alternatives.
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Programming note: I’ll be away from the Internet for the next two weeks, but I’ve arranged for a more than able substitute, Paula Patch of Elon University, to keep the space warm in my stead. As a longtime instructor and writing program administrator she has some unique perspectives on academic labor structures and the work we do in higher ed.
