Managing Student Outcomes By Modeling Financial and Strategic Challenges
Many industries have been hit hard by the onset of COVID-19, and the higher education sector is no exception. Institutions face a range of complex issues, including increased competition, capped fee structures, excessive student loan debt, and reduced international student demand.
There is a pertinent need to resist additional admissions to maintain cost flexibility during a heightened period of uncertainty when it comes to post-graduate education. This is evident in the University of Minnesota’s recent decision not to accept new students into most of its liberal arts doctoral degrees, citing a need to “focus on supporting current students.”
Universities generally guarantee five years of funding to support their student’s studies. This is a costly allocation, considering the unknowns of the next year, as well the disruptions and delays faced by current students under the system. The financial and operational impacts of the situation are not one-off. Higher education institutions will always face similar challenges that require effective strategic planning to navigate successfully.
The need for new programs and initiatives
To stay competitive, you need to innovate. This is true for every business. All too often, however, higher education institutions have relied on old ways of thinking. Prestige and traditionalism are not enough to succeed in a rapidly changing, modern world. Universities and colleges must deliver meaningful value to their students in a way that is financially appealing and outcome-dependent. COVID-19 has certainly accelerated this trend, providing an opportunity for forward-thinking organizations to adapt digitally, operationally, and financially.
There has been a massive exodus from university campuses. States have shut down, lockdowns have been enacted, and general perceptions have shifted public travel and behaviors. There is a growing sentiment among students that online classes are not what they have paid for, and many now feel entitled to refunds or decreases in future tuition fees. By the same token, lecturers and other educationalists “are learning the hard way that simply delivering course materials through digital platforms is not the best way to teach students.”
Student outcomes must be managed not only in the context of their educations but also by their employment prospects and the financial impacts on higher education institutions themselves. Without a sustainable balance, neither students nor organizations can achieve success.
In the University of Minnesota’s case, cuts to their Ph.D. programs are grounded in four main concerns:
- State funding cuts and hiring freezes. While not exclusive to this university, higher education institutions are often subject to funding from their state or national governments. There is pressure to reduce funding across the board, driving caution to future admissions. Furthermore, staff hiring freezes necessitate a limit on students so that the quality of education is maintained as resources are pressured.
- Delayed clinical rotations and fieldwork. Many Ph.D. students have been forced to put off critical clinical rotations, placements, travel, and other fieldwork needed to complete their degrees.
- Poor job market for graduates. Part of managing student outcomes, particularly in a post-graduate context, relies on their suitability for employment. Given internal hiring freezes and a scarce private market for scholars, the job market is more challenging than ever. Universities must manage their alumni’s images as much as those of future students.
- Balancing opportunities. Supporting current students is a necessity, but reducing opportunities for future students also comes at a cost. First-generation and low-income college hopefuls planning to pursue Ph.D. degrees will have to wait longer for admission than they can afford—potentially missing out altogether.
The importance of modeling financial outcomes
Implementing new programs and initiatives is not as simple as doing what sounds good or what is popular. This goes for both management and students. There are financial realities at stake that are vital to a higher education institution’s short-term liquidity and long-term sustainability.
Chapman University is an excellent example of a liberal arts institution that has effectively utilized financial modeling software to evaluate strategic initiatives. In the context of increasing competition and a need to do things differently from what has worked in the past, variance to a range of operational factors may be unprecedented. How do you assess the impact of a comprehensive range of exceptional and unprecedented initiatives?
Using Synario’s modeling software, Chapman enabled their finance team to evaluate financial drivers, such as tuition rates, alongside changes to program offerings, increasing endowments, and capital projects designed to serve students and staff better. There is a range of possible outcomes over the coming years. Hence, it is imperative to use an inclusive and dynamic model—one that ties in all relevant variables—when forecasting and driving effective, immediate decision-making.
In the University of Minnesota’s context, modeling the impact of paused admissions on their financial profile would be an integral step to take when evaluating the consequences of such a drastic decision.
The importance of integrating operations with capital requirements
Strategic planning requires integrating operational decisions with capital requirements—both today and years into the future. Improving student outcomes is not independent of what it costs to achieve those goals. Once an institution has built a holistically linked financial model, new projects and operational changes (such as limiting student numbers) are straightforward to evaluate.
According to Chapman, “the best feature of Synario is its integration of what you’re doing on the capital side with what you’re doing on the operating side—seamlessly and effortlessly.” Without this link, management cannot truly see the consequences of their decision-making. This is why it is so worthwhile to explore alternative future scenarios.
For example, the shift to online learning will have a lasting impact on higher education campuses. How will this change flow through to capital investments, such as upgrades to on-campus facilities? What has worked in the past will not work the same way moving into a disruptive future. Academic outcomes, operational excellence, and financial impacts all go hand in hand.
If your higher education institution would like to learn how Synario can help your financial teams model the outcomes of strategic, academic, and operational decisions to enhance your future, get in touch with us today.