Backing Into Fairness

I have to admit being fascinated by the Inside Higher Ed story about the Council of Independent Colleges Presidents Institute. The presidents of many small, tuition-driven colleges are panicking, with reason, about the sustainability of their colleges. I can’t blame them.

It’s a tough sell to skeptical parents to charge twice as much as a state college for a degree with no more prestige or clout than a nearby state school. Elite private colleges are thriving, of course, because they’re elite. It’s the levels below that -- especially the smaller ones in out-of-the-way places -- that are facing danger.

I recognize many of the issues. In the Northeast and Midwest, the number of 18-year-olds is dropping. It’s easy to say, “Well, then, just pivot to working adults,” but actually doing that at scale is harder than it sounds. That’s especially true for colleges that have always been residential, and that rely on substantial tuition. Even with 50 percent (!) discount rates, half of $60,000 is still $30,000 a year; for the target demographic of working adults, that can be prohibitive.

One way to get around that, unmentioned in the article, would be to cultivate transfer relationships with area community colleges. Students who complete associate degrees have shown the ability to complete a program, which makes them ideal candidates. Many are relatively place-bound, for various reasons, so their local options are often fairly limited.

Unsurprisingly, Southern New Hampshire University has figured out how to do it. According to a story in The Philadelphia Inquirer, it has signed a 3 + 1 agreement with the entire Pennsylvania community college system whereby students coming from a community college can transfer 90 of the 120 credits of a bachelor’s degree. Even better, they get a discount on the final 30, so SNHU is actually underpricing the local state colleges. The programs are only online, so they won’t apply to every major or appeal to every student, but I could see a lot of working adults jumping at the offer.

Locally, we’ve developed a few 3 + 1 agreements with other schools, both public and private, and we’re in the process of developing more. Even if the fourth year is expensive, if it’s the only expensive year, that may be more realistic for many students. And students who’ve made their way through 90 credits successfully know how to do college.

Historically, one of the major barriers to successful degree completion for community college students has been credit loss upon transfer. When it was a seller’s market, four-year schools often became unreasonably picky about accepting credits. Early in my career, I had several meetings with folks at four-year schools who would offer to take only about half of the degree credits; when I objected, they shrugged in a “take it or leave it” gesture. (Alternately, they’d offer “free elective” status, which is where credits go to die.) That doesn’t happen much anymore. They used to see acceptance of transfer credits as “giving away” credits; they’re starting now to see them as loss leaders. Better to get a student for the fourth year than not at all. Besides, for colleges with nontrivial attrition rates, those fourth-year classes could get pretty small (and therefore expensive to run) if relying only on students who started there. They have unused capacity in the upper-level classes that transfer students could fill at little marginal cost.

As an advocate for community college students and graduates, I may feel bad about what forced the change of attitude, but I welcome the change itself. Forcing students to retake classes they’ve already passed, and to pay again, was never fair. The new fairness may be a result of a sort of economic gunpoint, but it’s good for students.

The economic pressures on these small private schools are less different from mine than they used to be. Public disinvestment isn’t such an issue, because they (mostly) didn’t get direct public support in the first place. Fixed costs are real, though, and Baumol’s cost disease doesn’t distinguish between sectors. To the extent that they’ve defined their appeal by small classes and personal attention, it can be difficult to generate economies of scale. We have that issue, too, but at least we can amortize our facility costs over a larger student body. Private colleges tend to rely much more on private philanthropy, which community colleges have historically neglected, but we’re starting to figure that out. In fact, with tuition now covering a majority of the budget here, we’re starting to look and act more like the tuition-driven private colleges that are in trouble now.

We’re backing into a harmony of interests. Nervous presidents, hear me out: good transfer policies can be a lifeline and still keep you on the moral high road. Better that than waiting for a well-known national competitor to swoop in and eat what’s left of your lunch.