In looking at that picture of the Ohio on the Charles......I at first thought it was a picture of South Green from the "Bong Hill" vantage point.

While the arms race has probably always been a part of the college landscape it is really getting out of hand in my opinion.

I love so many features and thought processes about America and our culture but the buy now, pay later (if at all) mentality is going to be our downfall if we are not careful. 

When schools such as Leland Stanford Junior University - yes, that's Stanford's full name - begin offering online for-credit courses, the future of brick-and-mortar universities seems increasingly fragile.

Except for heavily endowed schools, I expect brick-and-mortar universities to slide slowly into oblivion. 

Today's Wall Street Journal includes a sobering story.  Headline: Who can afford State U?

Schools such as our beloved Ohio?  Unless they become much more rigorous in their financial management, future generations will be listening to their grandparents reminiscing about schools that once were...

I talked to a guy I know who is an administrator in a large public university (not Ohio University.) He told me that campuses like our beloved Athens are in pretty good financial shape due to our reputation and tradition. He told me the same goes for many older public universities and religious oriented schools who have stayed true to their mission. 

Those schools who are in trouble are newer run public schools in mismanaged states, pricey small private schools (you know those charging $30,000-40,000 a year,) along with liberal oriented religious schools who have strayed from their original mission.

While online growth is important for smaller schools like Ashland, there will always be a need for the campus experience. I think our tradition, reputation and sound financial footing leave us with little to worry compared to others who wouldn't be able to survive another economic downturn, as well as the coming education bubble which will be akin to the housing bubble.

I couldn't agree more with Mike. College is a business. They provide a service for a cost, and if their customers don't think they are getting the proper value for their dollar, they will go elsewhere. One problem I see is that the cost is already almost to the boiling point for the masses. I seriously doubt we will see tuition decreases, so at what point to students and their parents determine the cost outweighs the benefits.

Community colleges and branch campuses don't provide the same collegiate experience as a traditional campus, but one could argue that their core classes and curriculum are very close, especially for the first two years. While I think the college experience is just as important as the classroom experience in molding young people, many others don't share that same feeling. It will be increasingly more difficult to convince people that the experience is worth an extra $20,000-$30,000 over four years.

I hope the administration recognizes this and becomes aggressive in the business management side of running the university, as well as marketing. There probably are a number of programs that will disappear, while other "hot" majors like those based in technology will grow. I am very interested to see how this evolves since I will be writing tuition checks for two kids starting in 7 years.

I had a similar financial situation with my one daughter, now 25 years old.  I started putting funds aside right after her birth and then later started an account in what was then called Ohio Tuition Trust.  In simplistic terms, back then, college credits could be ‘bought’ at current prices and would be banked for future use.  When the tuition caps came off, I saw the hand writing on the wall and was lucky to be able to front load what was left of the balance to ensure four years of tuition at any publicly funded Ohio school. (The funds could also be applied to private schools towards tuition.)  Since graduating, my daughter has thanked me more than once.  At least one of her friends, still attending a nursing program, is already $100K in debt.

 

Not sure if the tuition trust program still is available as it was but I also would also urge anyone with young ones to start saving what you can now and to seek out structured disciplined programs.

I am a Financial Planner, and have had my practice for nearly 20 years, so I am quite aware of college costs and the pain it takes to save enough.  I started saving for college years before we ever had children.  I still think college is way overpriced.  I also recognize that I have no leverage if I want my boys to be educated, so I'll just suck it up a pay it.  Last year I received fantastic news about OU.  They rolled out a legacy tuition waiver which will allow my kids to attend OU for the in-state rate since my wife and I have dgrees from there.  I have been saving for over a decade in anticipation of paying out-of-state rates in Athens.  It's like I received $80,000. 

To JSF's point, I think you are right.  McDavis makes around $400,000, which is far less than one would make in business.  A person that is even second level like a VP, CFO or other similar role at a medium sized company would make far more than that.  The CEO at our local hispital makes over $700,000.  He has 1/3 of the employees that are at Ohio, and less reliance/interference from government agencies.  His job is far more desirable to most leaders. 

When the VP of Finance role opened up at OU, I was curious at the salary.  For the responsibility and pressure, it pays nowhere close to what one could make in business or industry.  I think this is a big problem in education.  Of course, you will always have the academics complaining like crazy at the salaries of administrators if they are actually paid market rate.  It is likely to never be resolved because of this. 

Great posts everyone, let me just say that my former colleague whom I sourced earlier has a pretty stellar reputation. Mike, I am not quite sure what you mean by Ohio pricing itself out of the market. Besides community colleges, who is really cheaper than Ohio and other state schools? I can honestly tell you that I have heard some parents wonder if state schools are a good place for their child because they are cheaper than the Wittenberg's, Kenyon's, Dennison's and Ohio Wesleyan's. I have seen families who could scarcely afford a public schools tuition max their credit out on the belief that the aforementioned schools will somehow help their child.

A couple of points, in some ways college has become a racket when one considers what the price was in the 1970s and 1980s. It has far exceeded the rate of inflation and yet the average professor's salary has not gone up exponentially either. In some colleges there are far too many professors simply not teaching, but spending their time in research. Corporations are pouring money into colleges, especially for scientific and medical research. If anything this should make the experience cheaper. If one considers that most of the university presidents make 5-10x what the Governor makes, I don't think have it too bad. They live rent free and have their expenses paid for, not a bad way to live. Even if you get fired, it isn't like you have to worry about your next job, these folks are in heavy demand.

I don't believe you have to have a Business degree to be a good administrator, as evidenced by our recent successful crop of university leaders. The ability to be a successful leader is an innate skill which can't be taught, one is either a good leader or one is not.I still believe we are a far better position for the future as compared to schools I referenced in the first paragraph.

This belief that college presidents and those who assist in running finances of universities are dumb is astounding to me.  Wow.

Change is happening.  And, its going to happen organically.  The market will change somewhat, with the Columbus State type schools gaining and small liberal arts private colleges losing at first, and then the Ohio's and Bowling Green's and Central State's -- isolated public schools -- struggling next.

Online education is nice but I think it will be a long time before major employers hire individuals with 100% online degrees.  So far, it appears online MBA programs are gaining acceptance.  Not sure about any others. 

I remember listening to Mark Cuban attack higher education not so long ago.  But, I'm guessing he doesn't have any University of Phoenix folks working for him at all.  Likely exactly the opposite.

Indeed this thread has generated some thoughtful posts. 

To clarify, I don't see anyone here alleging that college presidents are "dumb."  It is, though, an inescapable fact that many college presidents have no grounding in financial management.  How many can look at and understand an income statement or balance sheet and implications for their enterprises (universities)?  How many of them possess a body of experience that intuitively enables them to make financially sound choices? 

Alan Swank, your point about the increasing numbers of university administrators is spot on.  I've seen little or no evidence that university presidents have heard and absorbed messages or lessons related to doing more with less or practicing continuous improvement.

JSF, re your comment about steadily increasing tuitions and fees - ones that have been consistently larger than inflation - having "no downside," and that loans continue to be available.  The salient point is that increasing numbers of families are declining to take on crippling debt loads.  And thousands upon thousands of students and parents who have taken on such loads have found them to be albatrosses to advancing their quality of life. 

Two examples: A niece of mine who graduated from Ohio in 2001.  She has been building a good career but still is paying off her student loan and has little in the way of discretionary income.  A friend who made the mistake of co-signing a student loan for his Ohio-degreed daughter.  She has defaulted on loan repayments and he finds himself on the hook when, now past 65, he is trying to negotiate his way out of this web.

Studies continue to conclude that individuals with college degrees achieve larger lifetime earnings than persons without them.  But sharply increasing tuitions and fees and the necessity for many families to take on debt to pay those costs are eroding the advantage conferred by degrees.

The future?  Youngish bobcatattack parents would do well to examine the current total cost of a year at Ohio or other state-assisted university.  Then consider how many years will pass before your child or children enter college.  Then compound that current total cost figure by 6%.  Then after the shock dissipates start planning.

Problem is, 20+ years ago a kid could work their way through college, however today, the cost is so high and wages low in those part time jobs that one cannot pay their tuition through part-time work, and many entry level jobs will not pay for a year of school.

Again very interesting posts, one thing that hasn't been discussed are endowments which are becoming a modified pryamid scheme of their own. I don't disagree with the concept but when you have hundreds of millions of dollars in the bank and you are only drawing a small portion of the returns each year, something is wrong. Secondly where does the money go? It certainly doesn't go to reducing the costs for the rank and file.

Without disclosing too much info let me just state that in my line of work I have collaborated with these fundraising agencies. Believe me, they don't come cheap. Before the Economic Meltdown of 2008, I know that some of the companies (some of which are connected to many Ohio Higher Ed institutions) did very well. Now believe me I am a card carrying Capitalist and I certainly don't begrudge anyone for legally making as much money as possible. However, some of these companies were giving their employees bonuses like you wouldn't believe. Even younger employees who weren't making nearly the bonuses that some of their senior colleauges were making did ask for 50%-100% salary increases for their next higher ed fundraising effort. Not surprisingly many of these salary requests were met.

Now this was pre-2008 Economic Meltdown but suffice to say these fundraising organizations were hardly struggling as are many parents and students today. If anyone knows the current state of these companies and where they stand in relation to Ohio University, I would be very interested to know.

I consider this a friendly conversation -- Just to clarify.

Really the only thing I'm disagreeing with you on is your belief that university leaders are lacking in financial acumen.  Many universities are doing more than folks realize.  It seems many peoples first instinct is to see how many people were laid off.  Well, OU for example hasn't laid off hundreds, but through attrition has reduced many departments, including some very large ones, by 25-30% in the last decade, including mine.  I know one segment of the staff this is down like 150-200 bodies.  Also, there appears to be a national move to instructors over tenured faculty, which will not reduce head count but will reduce costs.  Etc.

I do think the industry right now is built so that decadence = success.  The customer wants state of the art dorms and facilities.  The customer wants a high touch experience in and out of the classroom.  The customer wants small class sizes.  The customer wants a tenured professor teaching all classes.  Etc.  And, those who rank universities do so in a way that high cost strategies result in high rankings.  When the customer starts changing, so will higher education.  It feels like we are in the initial stages of a shift.  If the US economy recovers, the shift will be delayed.