Could 5, 50 or even 200 new colleges help save higher ed from freefall?

If we don't welcome new institutions, College 101 CEO Stig Leschly says the future is murky.

Despite falling enrollments, the higher education landscape has remained largely unchanged for the past half-century. Very few institutions have been added during that time and costs have soared, beating inflation most years. Colleges and universities largely have failed to meet the demands of a fast-moving marketplace and that is a significant problem, said Stig Leschly, the CEO of public policy think tank College 101, a Harvard Business School lecturer and a 30-year veteran in education.

Speaking the ASU-GSV Summit, Leschly called the academy “the most inflated product in American society. The outcomes haven’t changed much. You have a coin flip’s chance of finishing. Colleges are non-selective institutions where you can go if you can pay. If someone wants to pay $50,000 and go watch the football team, and live in a dorm and go to a dining hall—if they want the bundled product—they’re still around. But I think the space is wide open for innovation and disruption.”

There are a few that are pushing the margins—notably Southern New Hampshire University and Western Governors University. But Leschly said of innovative models now in higher ed, “It’s a little bit cheaper. It’s a little bit more flexible. [But] It’s a lot like when Britannica encyclopedia went on to the CD-ROM. I used to work at Amazon. I know what change and innovation looks like.”

He said this isn’t it, noting that 50% of students go to non-selective institutions and many are willing to give up subsidies. In a perfect world, according to Leschly, disruption would include the introduction of new colleges. “It’s completely possible to imagine that colleges, if they were redesigned from scratch, would magically lower costs,” he said. “They would finally unbundle. They would create leaps forward in outcomes, particularly the 80% of college-goers that just want to make a living. That’s the future that is almost impossible to imagine.”

Why? Because new colleges are just not a thing in higher education. After working for years in the K-12 space and noticing poor outcomes when kids got to higher ed, seeing them “learning very little” while getting bankrupted, Leschly and his colleagues tried to get one going several years ago in Massachusetts. They had the backing of the governor and philanthropy in place. They just could not get it accredited.

“You need two things to start a college,” Leschly noted. “You need a governor and the state Board of Higher Ed to say yes. That’s hard, but doable. You also need accreditation. You cannot qualify for financial aid, particularly Title IV, absent of being accredited. Accreditors are deeply powerful institutions. They do very little to sanction or to discipline colleges for enforcing poor outcomes and they also, in effect, block entry. I can think of a handful of new colleges that have gotten through. They’re extraordinary feats of perseverance. It takes 10 years to get done.”

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Meanwhile, he added, the “incumbents,” or those 5,000 that currently exist, continue to slide through without adapting much to maintain their status. Other than the students who pursue hot majors or attend elite institutions, Leschly said “various outcomes make the cost and ROI very dicey and flat out dangerous at times. Price is up and quality is down.”

He suggested that those that want to transform or are promising to do so likely will struggle to get there. “The deepest delusion is the false presumption that colleges can change. Almost all American colleges are structurally bankrupt. They have no cash. They live quarter to quarter. So they can’t invest in the [outcomes] that can accompany change. Ninety percent of their cost structure is tied up in fixed obligations—literally buildings and deeply protected staff. You’re asking to manage change in an organization that can’t relocate its costs. They are not designed to make difficult decisions in any way.”

What needs to happen next

Leschly offered two potential outcomes for the future of higher ed, including a perilous cliff that might be closer than anyone thinks. “Imagine Congress writes into Title IV of the Higher Education Act one line that says, ‘Hey student, here’s your grant, and in addition to using it to go shop among 5,000 colleges, you have an alternative route and can spend it on a company-based apprenticeship or training program,’” he said. “ ‘Freeing Title IV’ would end half of American colleges in two years. Imagine a low-income student with a Pell grant given the choice to go to community college or to go and buy training in a company. You would have an enormous exodus.”

He believes the other choice might be more palatable: an embrace of new colleges and a more streamlined accreditation process where individual accreditors could oversee startups and non-profits. “I know humans who work inside established colleges who would love the opportunity to start from scratch designing it,” he said. “There’s a mountain of philanthropy in this country that would underwrite them. The new accreditor would create a rigorous, demanding, but predictable pathway into the college space. Imagine being approved over 12-24 months, rather than put on a boat to nowhere.”

Leschly said a credit for outcomes would “hold colleges accountable for short-term earnings outcomes of their students,” while a credit for transparency would help regulate the variety of new college ideas. One key is that accreditors remain “at arm’s length from the college.”

If this embrace were to occur, higher education could look vastly different—probably uneasier for the incumbents but better for ingenuity and for students. “Were that to happen, I can easily imagine 5, then 50, then 200 new teams arriving over time with extraordinary ideas, [with] very quick demand shifts in higher ed away from incumbents towards startups,” he said.

Chris Burt
Chris Burt
Chris is a reporter and associate editor for University Business and District Administration magazines, covering the entirety of higher education and K-12 schools. Prior to coming to LRP, Chris had a distinguished career as a multifaceted editor, designer and reporter for some of the top newspapers and media outlets in the country, including the Palm Beach Post, Sun-Sentinel, Albany Times-Union and The Boston Globe. He is a graduate of Northeastern University.

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