Assessing the University’s Potential for Closing Amid the COVID-19 Pandemic Crisis
On Friday, NYU Business professor Scott Galloway posted this to his professional blog outlining his prediction that hundreds of universities across the country will close due to issues surrounding the lack of appropriate COVID-19 response. It’s an interesting read, but for the reader’s convenience the points are summarized below.
In short, two characteristics of universities were plotted on a quadrant: one axis contained the value of the education received at that university (taking into account Return on Investment [ROI], cost of tuition, the amount spent on instructor wages, admission rate, and student life quality) divided by the average tuition cost, while the other axis contained vulnerability of that university to disruption in its revenue flow, modeled by endowment size and percent of international students in the student body (over the years many universities—including Truman—have turned to increasing their international population as a way to shore up budgets, and these students’ enrollment is currently threatened by a xenophobic federal government).
The position on each axis puts a university into one of four quadrants, each labeled by Prof. Galloway as to his prediction of its fate: Thrive, Survive, Struggle, and Perish. Briefly: high value and low vulnerability schools are predicted to Thrive, high value and high vulnerability are predicted to Survive, low value and low vulnerability are predicted to Struggle, and low value and high vulnerability are predicted to Perish. Thrive means a school will not only weather this crisis just fine but will be in a position to consolidate and gain students, faculty, and power due to their existing resources and the value we as a society put on their diplomas. Survive means that a school will see drops in revenue and enrollment, but due to strong program value the school will likely pull out of the crisis damaged but alive. Struggle means a school already has issues dating back to pre-COVID, and the pandemic crisis will only exacerbate these problems. Perish means what it says on the tin: these schools are ill-equipped to weather the storm and are likely to close.
Here is an Excel copy of Prof. Galloway’s Google Sheet dataset as linked in his blog. As Truman’s information was not included in the original list, the data were added using the same sources as Prof. Galloway’s original dataset, with the following exceptions: as no Regional university is present on the list, Truman’s current rank of #7 was used, and its converted percentile was taken from the other schools that ranked #7 in the US Colleges and US Universities lists from US News & World Reports. Also, Truman’s Monthly Search Volume was unavailable, so the average of the four UM system schools was used instead. Instructional Wages were calculated by summing the total wages associated with Truman from Missouri’s Blue Book, so admin salaries were intermingled with faculty; thus, the real number may be lower in reality (a “worse” value for this metric).
The findings: Truman’s Value-to-Cost ratio is absolutely insane compared to other schools. While this seems great, the large ratio is not coming from the Value side of the equation but rather from the cost; Truman’s tuition is in the bottom 1% of the schools in the dataset. Only this absurdly low cost is suggesting that Truman will survive the pandemic, as our credentials are closer to average and not what one would expect from “The Harvard Of the Midwest.” Looking at Vulnerability metrics, Truman’s small endowment and moderate international student body suggest a limited capability to mitigate COVID-19 disruptions. Taken together, high value and high vulnerability place us in the Survive category: Truman will most likely weather the storm and come out on the other side.
A hidden value of this model is that it suggests targets for improvement to university operations. In no particular order:
- Low Instructional Wages per Full-Time Student: low values here are a detriment to a value score, so this model is incorporating the concept that “low paid professors teach more poorly.”
- Low Search Volume Metrics: while Truman’s precise metrics were unavailable, all Missouri schools had metrics in the sub-10,000 range, so Truman would likely be similar. In short, potential students don’t know about the University.
- Average Student Life Scores: while a score of B is an alright score, it could be improved.
- Low Endowment Per Student: endowment size is a proxy for the university’s capability to handle unexpected financial chaos, such as what we are experiencing now.
- Moderate International Student Population: 6% international students is in the upper half of universities in the dataset. These enrollments are threatened by the increasingly xenophobic tendencies of the United States government.
Creative solutions are required to boost the value of the university in these categories. For example, highly aggressive advertising could be very effective due to the psychological makeup of Zoomers and the data provided in this spreadsheet; specifically, the ROI on a Truman Education is almost identical to that of a Grinnell education, despite that a Grinnell degree has more perceived value and costs over five times more per year. Thus, creating ads informing students that they can get 100% of the benefit of a Grinnell education at 20% of the cost here at Truman could be an effective strategy. Mild to moderate tuition cost increases also need to be a priority; a $10,000 average tuition is simply too low to support university operations in 2020. Even raising the average tuition to $12,000 would provide the University with enough funds to increase faculty pay to the discipline medians, thus increasing perceived value and extracting more resources to bounce back from COVID-19. Obviously, the state government is in control of this facet, but perhaps an impassioned plea by our administration could sway them to allow such an increase. Student life could be improved in a number of simple ways, such as improving institutional food by reevaluating suppliers, moderately increasing student entertainment budgets to bring in some top-name acts to campus, and other similar quality of life improvements. More radically, the university could abandon dry campus mandates and open a campus pub a la University of Wisconsin, Iowa State University, and Oxford University. While this seems farfetched, adult beverage rules have already begun to loosen on campus, which may provide not only an opportunity to enhance Truman’s student culture but also a financial opportunity to return some money into the University’s coffers.
In conclusion, these data suggest that Truman will survive this crisis, albeit likely battered and bruised by the end. While working to mitigate these issues, we should also be looking to the future, as the chance exists that we could stabilize, or even increase, enrollment numbers after other regional universities close. Time will tell if this model is representative of relevant factors, but if the model does hold, we have suggested avenues of approach to capitalize on the aftermath of the pandemic.
In Solidarity,
The Truman State University AAUP Chapter