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The Hechinger Report
High cost, low returns for many new majors
By Delece Smith-Barrow
Dec 3, 2020
For many students, some of the most attractive parts of the college
experience are the variety of classes and the number of majors offered.
But many of the newest majors showing up in course catalogs are proving
to be financially disastrous for the institutions, according to a
recent analysis from Burning Glass Technologies. And with nearly every
institution now calculating how to survive the coronavirus pandemic
when fewer students are enrolling in college, some education experts
say it’s worth taking a hard look at programs that don’t add revenue.
Using federal data from the National Center for Education Statistics,
Burning Glass Technologies examined how academic programs that first
graduated students in the 2012-2013 and 2013-2014 school years had
succeeded at graduating students in 2018. About half of programs that
conferred degrees for the first time between 2012 and 2014 reported
five or fewer conferrals in 2018, and 30 percent reported no conferrals.
New academic programs that reported few or no conferrals in 2018
included construction trades, education, philosophy and religious
studies and some foreign languages, literatures and linguistics.
And creating a new academic program can be costly, which means many
institutions may be investing in majors and courses that will have no
return on the investment. Once you add up the salary and benefits for
two or three faculty members, classroom space, curriculum design and
marketing, institutions may spend between $350,000 and $500,000 to
start a new program, according to the analysis.
“Higher ed has historically focused on quality, on doing things well,”
said Rick Staisloff, senior partner and founder at the rpk GROUP, a
consulting firm that helps colleges and universities and other
education-focused organizations create sustainable business models.
“They’ve focused on student success. They haven’t really focused
historically on: ‘What does it cost to do all that? Why does it cost
that? What are the levers at our disposal to reduce cost so that we can
maintain affordability, but also so we can make sure that we are
investing in the pieces that we think are truly strategic?’”
The Burning Glass analysis covers for-profit and nonprofit
institutions, as well as two- and four-year colleges and universities,
and some institutions are doing markedly better than others.
At four-year public colleges and universities, for example, 24 percent
of programs had zero conferrals in 2018. This was the lowest percent of
zero conferrals for all institution types. Private, for-profit two-year
institutions had the highest, at 43 percent.
Part of the challenge of having a breadth of majors is that most students are concentrated in a few.
“At any institution, more students are in fewer programs,” said
Staisloff, whose research is cited in the analysis. “About two thirds
of students are in 12 or fewer programs.”
Becoming more business savvy and investing in more research about
market demands can help colleges be more strategic with how they spend
money, he said.
“In making decisions around program creation, program growth, program
elimination, colleges need to be able to have better data and analysis
to raise the questions around the business model behind their academic
portfolio,” Staisloff said.
Burning Glass Technologies Report, Jan. 7, 2020
Bad Bets: The High Cost of Failing Programs
When looking to demonstrate the value of earning an MBA, business
schools can point to three core areas that show MBAs as the key to
unlocking career goals.
Every new program launched by a college or other institution in higher
education is a bet that the idea will resonate with students and grow
enrollments—and too many of these bets don’t pay off.
Roughly half of the programs that first graduated students in the
2012-13 or 2013-14 academic years reported five or fewer conferrals in
2018, according to an analysis of federal data by Burning Glass
Technologies. Some 30% reported no 2018 conferrals at all. In other
words, not a single student that year marched in commencement to
receive a degree from these new programs.
When you widen the aperture, the picture doesn’t improve. A staggering
two-thirds of new programs produced 10 or fewer graduates in 2018. That
figure roughly holds true across public and private institutions,
two-year and four-year, and for undergraduate and graduate programs.
That doesn’t mean these programs produced no graduates at all during
those five years. Even the 30% of programs that produced no graduates
at all in 2018 reported some 48,044 degrees conferred since they were
launched. On average, that works out to about 15 conferrals per
program, or three per year. Under the broader lens of programs with
under 10 conferrals five years after launch, the average increases to
about four per year.
Not every program will produce large numbers of graduates, in the same
way that not all products succeed in the market and not all movies
become summer blockbusters. But the stakes are high for U.S. higher
education, which is in an unprecedented financial crisis that was
brewing even before COVID-19 struck.
Many colleges and universities are rushing new degree programs into
place, hoping to draw in new students and the revenue they bring. But
that strategy will only work if those new programs cover their costs,
which we estimate can conservatively run to $2 million over four years.
A program that grants no conferrals cannot be paying for itself—and in
fact may be dragging an institution closer to the brink.
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