National Enrollment Volatility
Enrollment has a direct impact on HEIs’ operations, and national trends are far from simple. Between 2001 and 2019, national U.S. postsecondary enrollment saw highs and lows spanning a delta of 6M students (National Center for Education Statistics, n.d.). Compounding that figure was the number of HEIs that lived in that space. At the peak in 2012, there were 7,253 “postsecondary institutions in the United States that award[ed] federal student aid” (National Center for Education Statistics, n.d.). Enrollment peaked at 29M students (National Center for Education Statistics, n.d.). That averages approximately 4,100 students per HEI.
A large portion of those students attend universities that have over 10,000 students already increasing the competitive nature of higher education, something that will later be discussed in more detail (National Center for Education Statistics, n.d.). Directly related to national enrollment is the supply of HEIs. From 2009 to 2010, 279 new institutions entered the space, and from 2015 to 2016, 499 closed their doors (National Center for Education Statistics, n.d.).
National enrollment volatility is forcing HEIs to transition from its supply-side economics to a supply and demand structure. The economic theory transition supports the concepts for institutions to become, as Dr. James Sawyer, President of Macomb Community College, stated, the need to become “lean, agile, and flexible” – words not typically associated with HEIs. HEIs have begun to recruit individuals for leadership positions that are master’s in business administration versus the traditional faculty-based education (Kowarski, 2018). These leaders have the training, and often experience, in employing a number of business-based process improvement strategies that HEIs now require to operate in a manner Dr. Sawyer referenced.
Colleges and universities need to become “lean, flexible, and agile”
Dr. James Sawyer, President, Macomb Community College
Legislative Pressures
Legislative pressures continue to compound HEIs’ challenges and have forced many to pivot to an outcome-focused education versus providing the subjects and content once published by faculty’s sole intuition. A number of factors worked in tandem to bring about this result, including graduation or completion rates, student persistence, college retention rates, and student debt to gainful employment ratios. National graduation rates have hovered just above 50% for decades (National Center for Education Statistics, n.d.). Graduation rates peak as of 2013 at 60% for four-year HEIs. Two-year institutions peaked at a measly 35.7% during the same period. Those numbers alone speak to the shortcomings of student persistence and HEIs’ retention of those students.
With so many students dropping out of postsecondary education, their student-loan debt became a serious concern. Especially as “increasing numbers of low-income and minority youth [were] pursuing shorter-duration sub-baccalaureate credentials at for-profit trade and technical schools” that consistently saw higher than average drop out rates and larger student debt (Holland & DeLuca, 2016, p. 261). All of which forced legislatures to take action and create public policy that tied education to a pre-determined goal, gainful employment (Fredman, 2018). These policies threaten to pull federal funding if certain outcomes are not met or maintained, forcing HEIs to adjust and begin program creation with outcome desirables versus faculty desires.
Industry 4.0
The fourth industrial revolution commonly referred to as Industry 4.0, is a driving force to HEIs’ evolution. Industry 4.0 “can be attributed to its broadening focus on automation, decentralization, system integration, [and] cyber-physical systems” (Mian, Salah, Ameen, Molduddin, & Alkhalefah, 2020, p. 1). Automation Alley (n.d.), “a World Economic Forum Advanced Manufacturing Hub and a nonprofit Industry 4.0 knowledge center,” describes Industry 4.0 “as the convergence of digital and physical technologies disrupting the manufacturing industry and being realized today in smart factories across the globe” (What is Industry 4.0?, n.d.). They continued by stating it is the integration of sectors such as “additive manufacturing & advanced materials, artificial intelligence, big data, cloud computing, cybersecurity, modeling, simulation, visualization, immersion, robotics, and the industrial internet of things (IIoT)” (What is Industry 4.0?, n.d.).
This revolution has, and is, transforming manufacturing and transcending to impact industries that include health, business, and education. The challenge facing colleges and universities in this space is that HEIs have operated efficiently for decades within sector siloes such as business, manufacturing, and information technology. This integration forces departmental lines to blur, curriculum to be antiquated, and approach to be lacking the same environment the students will operate within.
Internet of Things (IoT)
The internet has provided both opportunities and struggles for HEIs. One of the foundational elements that permitted the formation of Industry 4.0 was all things related to the internet, commonly known as the Internet of Things (IoT). Without internet connectivity and the speed of current technology, Industry 4.0 would not exist. Massive amounts of data must be transmitted across vast distances for Industry 4.0 to operate successfully.
For HEIs, IoT brought about new possibilities in instruction formats and operation. Virtual instruction provided HEIs the opportunity to instruct with limited distance restrictions. The struggle for HEIs was that IoT also removed those same geographical boundaries HEIs once enjoyed that bolstered a new level of competition.
Heightened Level of Competition
In addition to the impact of the national enrollment volatility, IoT, horizontal, and vertical integration have forced HEIs to operate in a newly formed competitive environment. The same IoT that brought new teaching opportunities has developed a competitive element many HEIs have never faced. Colleges and universities now face the reality that a student could not only compare one institution over another that are hundreds of miles apart but not attend those institutions while conserving income by living at home.
Before the advent of IoT, geographic location gave shelter to many institutions’ pricing assuming the student would have to move to the area and consider the total cost of their education, including room and board. Even community colleges with in-district rates are forced to evaluate the sustainability of such tuition divergences when students from all over the country can compare the value of such price variations to graduation, completion, and retention rates. The community college down the road was compared to institutions all over the country.
IoT and online education have forced HEIs to evolve and put forth new strategies to increase recruitment, advising, and counseling efforts to address the new competitive environment. Woods, Richard, Park, Tandberg, Hu, and Jones (2016;2017) stated, “In an era of greater student choice, colleges diversified their advising protocols and methods of guiding students in a variety of ways” (2016;2017, p. 290). For many HEIs that relied on a steady supply of local students now have to compete for the same students. This adjustment requires a new look at the recruiting practices of HEIs and investment of capital and labor to support the efforts.
HEIs, as with any supply chain entity, are being forced to adapt to vertical and horizontal integration. Schuldenfrei (2019) explained, “Industry 4.0 has further amplified the importance of horizontal and vertical integration.” He continued by clarifying, “a horizontally integrated refers to the acquisition of companies that address the same customer base with different but complementary products or services (Schuldenfrei, 2019).” Versus vertical integration that “involves acquiring companies that bring new capabilities to the table in order to reduce costs, secure access to important supplies, and respond faster to new market opportunities” (Schuldenfrei, 2019).
Due to the significant need for continued education based upon the speed in which technology and innovation are proliferating throughout society, education and training have become a cost companies are integrating. Training providers are vertically integrating by merging while the industry is looking at education and training as a part of the supply chain to incorporate in order to lower costs – excluding the need or use of colleges and universities. Also, to address the rapidly changing environment, as noted earlier, businesses are integrating education because they see higher education’s response to Industry 4.0 as too slow. Higher education is being forced to evolve.
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The Digital Revolution of Education 