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A Strategic Vision for Baylor University

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The State of Higher Education

As we begin this new period in Baylor’s history, we must consider the state of the economy and the state of higher education as we chart our course. In spite of the myriad critiques of American higher education — concerns about access, affordability, accountability, and student learning — overall enrollment continues to grow. According to data from the National Center for Education Statistics (NCES), in fall 2009 more than 17 million undergraduates were enrolled in postsecondary education throughout the country. Of the undergraduates in 2009, 40% (more than 7 million) were enrolled in public two-year colleges (community colleges and state-supported technical institutes). Approximately 36% (more than 6 million) were enrolled in public four-year institutions, and nearly 15% (more than 2.5 million) were enrolled in private four-year institutions. For-profit four-year institutions, with about 1.2 million students, account for nearly 7% of the total and for-profit two-year and private two-year enrollments account for the remaining 2%.

Some have suggested that the demand for lower-cost education combined with the increase in education-on-demand being delivered by for-profits could threaten the existence of other institution types. Although growth in those sectors is certainly expected, NCES projects all sectors will experience growth, with more than 22.4 million undergraduates enrolled in postsecondary institutions by 2019. Assuming the proportions will not change radically during this decade, Baylor will be able to attract and retain our historic share of the more than 2.5 million undergraduate students who will be in the market for private undergraduate education in any one year.

Still, in the midst of increased enrollments, American higher education is coping with challenging financial conditions. The economic crisis America has been weathering since fall 2008 is inextricably linked with jobs, education, and government leadership. The country has struggled under the weight of a major recession for the past several years, as well as with a highly polarized political environment that has labored in its attempts to return the country to more stable economic footing. This has led some to refer to the years since the late 1990s as the “lost decade.”1 Despite substantive endowment losses, the erosion of net-tuition revenues, and increasing governmental and public pressure for greater affordability and accountability, colleges and universities have found ways to stay afloat. The easing of recessionary pressures and the beginnings of job growth experienced during the first quarter of calendar year 2012 allow for the hope that the worst of the crisis has passed, but there is little reason to anticipate that the trajectory of economic growth will approach that seen prior to 2008 any time soon.

Indeed, new economic realities are the order of the day within higher education. Even those institutions that have the luxury of rejecting more than nine out of 10 of their undergraduate applicants for admission are tempering annual tuition increases and continuing their expansion of grant aid — for merit and especially for need — as a response to calls for greater affordability.2 For example, while Princeton, Dartmouth, and Yale have announced tuition and required fees increases ranging from 4.5% to 5% for the 2012-13 academic year, their respective scholarship budgets will grow by even greater rates as they draw on other revenue streams to protect students and families with need from these increases.3

While private philanthropy to higher education in 2011 rebounded to slightly more than $30 billion (just shy of the record $31.6 billion donated in 2008), 86% of these funds went to 25% of the institutions. A quarter of the funds contributed in 2011 were concentrated in but 20 institutions, each with an endowment in excess of $1 billion.4

During the recent recession, federal support for research and development was temporarily expanded by stimulus funding through the American Recovery and Reinvestment Act (ARRA). Although these funds were obligated in fiscal 2010, their actual expenditure will continue through fiscal 2012 and into 2013. Apart from ARRA, federal research funding has not been entirely immune to the overall shrinking of government spending, though, comparatively speaking, it has fared better than many other sectors of the federal budget. Looking forward, while there remain advocates in both Congress and the administration for the need to significantly boost federal support for basic and applied research, the reality is much more likely to be that any growth at all would barely outpace inflation. Nevertheless, as federal support is stagnating, industry commitment to research and development is growing and sizable portions of these funds are expected to continue to find their way to academia.5

Tempering these economic circumstances is the expectation that student demand for higher education will remain strong for the foreseeable future, as noted earlier. This will be especially so for institutions that differentiate themselves by the perceived quality of their educational offerings and their commitment to fostering “intensive personal development, intellectual growth, broad reasoning skills, career network building, political/community engagement, and general preparation for life and careers.”6 In the current economic environment, therefore, no alternative threatens the demand for a college experience like the one Baylor offers. Nevertheless, it is important for all universities, Baylor included, to regularly evaluate opportunities to enhance learning through the use of technology and flexible learning environments that can meet the learning needs and expectations of future students.

1 EconMatters. (2011, September 15). America’s lost decade and the rise of middle class poverty. Business Insider. Retrieved from http://articles.businessinsider.com/2011-09-15/markets/30158289_1_poverty-rate-poverty-line-official-poverty.

2 Tuby, K.S. (2012, January 20). U.S. Higher Education Outlook Mixed in 2012. Moody’s Investors Service, 8. Retrieved from http://www.scribd.com/doc/79097920/2012-Outlook-Higher-Education.

3 Kiley, K. (2012, March 21). Wait, Isn’t This the Old Normal? Inside Higher Education. Retrieved from http://www.insidehighered.com/news/2012/03/21/big-tuition-hikes-private-colleges-complicate-affordability-picture.

4 Biemiller, L. (2012, February 15). College Giving Rebounded Last Year. The Chronicle of Philanthropy. Retrieved from http://philanthropy.com/article/College-Giving-Rebounded-Last/130798/.

5 Battelle. (2011, December). 2012 Global R&D Funding Forecast. R&D Magazine, 3-8. Retrieved from http://www.battelle.org/aboutus/rd/2012.pdf.

6 Tuby, K.S. (2012, January 20). U.S. Higher Education Outlook Mixed in 2012. Moody’s Investors Service, 3. Retrieved from http://www.scribd.com/doc/79097920/2012-Outlook-Higher-Education.