Changes in Families’ Ability & Willingness to Pay
for College: How Should This Affect a College’s
Strategy?
Dan Lundquist
The Stockade Consulting Group
Matt Scotty
National Education Servicing
Moodys Offers Vote of Support
Situation Analysis 2014
Ability/Willingness to Pay
Price tags continue to increase, fueling anxiety
But there are fewer college-ready students from
families who are able or willing to pay
Though they see the value of a college education,
families hedge more (negotiate and borrow) and
will “settle” for a second-choice college if it saves
them money (up front in tuition or longer-term in
loans)
Today’s Price
27%
Today’s Parents
10%
$0
AGI
Revenue from Families Declining
Situation Analysis 2014
61 percent of colleges didn’t meet goals by May 1 (up from
60 percent a year ago)
 71 percent of private bachelor’s institutions didn’t meet goals by
May 1 (up from 59 percent a year ago).
32 percent of all institutions – in violation of NACAC’s
principles of good practice – reported recruiting students
after May 1 who committed to other institutions (up from 29
percent last year).
SO expenditure/revenue tensions rise…for colleges and for
families
Situation Analysis 2014
Education (and credentialing) is “evergreen” and can't be killed.
 Its importance and value are inherent parts of society; and given structure in
the form of highered institutions BUT… the past two decades of increasing
demand and price elasticity have led to some purposefully inefficient
practices most can no longer afford
 If allowed to continue with what are viewed as outmoded policies and
practices the structure be driven to change by market forces (consumer
choice) and regulation (government policy)
Kodak presumably had more business savvy than highered and look what
happened to them.
 To be fair, MOOCS won't do to highered what digital did to Kodak… but there
is no reason for us to pass our leadership obligation
Reality Check: You Say…
The 2014 CFO Surveys
conducted by Gallup and Inside Higher Ed
CFO Survey
SUSTAINABILITY
Just over one in four business officers (27 percent) strongly agree
they are confident about the sustainability of their institution’s
financial model over the next five years; fewer (13 percent)
strongly agree their model is sustainable over 10 years.
FACULTY
Few business officers perceive that faculty are realistic about
their institution’s financial challenges.
Are we “hostages to collegiality?”
CFO Survey
BUSINESS MODEL and OPERATIONS
Just 4 percent of business officers responding strongly agree that the business
model of for-profit universities is sustainable; over half (51 percent) say the same
about elite private universities.
Health care costs: Nearly half of business officers (49 percent) strongly agree
they have experienced increases in health care premiums for employees; nearly as
many (46 percent) say the same regarding student premiums. Four in 10 business
officers strongly agree their institution is more focused on the cost of providing
health care and benefits than it was five years ago.
Enrollment: Most business officers (92 percent) say retaining current students is
a very important strategy to increase revenue in the near future.
CFO
Survey
Efficiency: Many business officers (45 percent) say that using technology
tools, such as business analytics technology, to evaluate programs and
identify problems/potential improvements is a very important strategy for
reducing operating expenses at their institution.
 But fewer than half say their institution has the program and performance
data and information it needs to make informed decisions.
Collaboration: About six in 10 (59 percent) agree or strongly agree they were
well-informed about campus issues, including budget, prior to accepting the
job at the institution.
Debt: Only 3 percent strongly agree their institution should take on
significantly more debt than it has now; seven times as many (21 percent)
strongly agree their institution has increased the use of debt to finance
projects.
Un-Reality Check? They Say…
2014 Colleges & University Presidents’ Survey
conducted by Gallup and Inside Higher Ed
Presidents’ Survey
Seven in 10 presidents said their institutions would face budget
shortfalls and increased competition for students this year, in a
climate of cutbacks of state and federal aid.
 But fewer than a third said they expected to take the sort of strong actions
– cutting administrative positions, freezing salaries, changing faculty
roles or teaching loads – that would suggest deep concern, let alone panic,
about their institutions' financial futures.
Nearly two-thirds of presidents are confident about the
sustainability of their institution’s financial model over the next
five years -- but that proportion falls to half over 10 years.
(These numbers were 27% & 13% in CFO Survey.)
2013-14: Most Colleges Missed Goals
And the response? “Off with their heads!”
Where Solutions Will Be Found:
DISTINCTIVENESS: not only having special value but having your value
KNOWN and APPRECIATED
OPERATIONS: 85% see serious sustainability challenges yet fewer than a
third are doing anything about this (per KPMG).
 EXAMINE, AFFIRM or CHANGE your business models (cost overhead,
mergers, etc.) prioritize what's important, cost it out, match against
realistic revenue, draw a line and eliminate below-the-line.
 Sacred Cows (tenure, course loads, health care, TIAA, B&G, academic and
extracurricular programs, etc.) will kill us.

Highered may be “evergreen” but very few individual institutions are!
COLLABORATION: call it getting rid of silos or creating synergy, no
institution is optimized… demand on-going efforts and culture change.
How Solutions Will Be Driven:
Survey after survey shows there are two sources of viable, reliable intelligence on
today’s campus
 The revenue producers
 The financial gatekeepers
There are no universal Silver Bullets
 Each campus culture and college market position is unique, requiring custom intel
garnered from our experience
Who better than vested “owner-operators” to bring data and insist that
acknowledging reality is not a lowering of ambitions?
There will be winners and losers in the years ahead, and the “winners” will be
those who proactively adapted – not panicked or capitulated – early.
Let’s go home feeling empowered. Highered deserves no less.
Highered deserves no less