20 years ago in America, members of Congress, armed with studies showing that a college degree meant more lifetime earnings on average than a high school diploma, decided the way to boost income for everyone was to make sure everyone got a college degree.
What changed? Very little. The best and richest students still go to the top universities while everyone else does not; but student loan debt has climbed as universities, able to charge unlimited amounts, did just that and hired more people and built more buildings.
Almost all (90 percent) of higher education leaders in a PA Consulting Group survey predict a dramatic polarization of the higher education system. They predict the emergence of an elite 'super league' of large research-intensive institutions, able to secure the lion's share of research funding and the most financially and academically able students, with low-cost, 'no-frills' schools at the other end of the market.
A number of respondents also expressed fears for institutions in the 'squeezed middle' that may find it difficult to compete at either end of this polarizes market. Almost 50 percent expect to see institutional failures and two thirds foresee forced mergers.
While some institutions still expect traditional degree programs to sustain future growth plans, the majority believe that government financing will no longer be able to fund the runaway cost increases and growth, forcing them to look outside public teaching and research to keep revenue going upward. Over two-thirds see no prospect for growth in undergraduate teaching and grant-funded research and only six percent expect to secure growth from publicly-funded research, down from 40 per cent in 2011.
Established and new providers are quietly hoping to reshape the structure of the higher education market. Over 80 percent of providers are developing strategic partnerships and alliances to diversify their business profiles, often with several different partners for different ventures, and 42 percent of universities have substantial arrangements with private education companies.
Who are the new partnerships with? Higher education institutions are prioritizing non-regulated markets, such as overseas, in markets with less government micromanagement (88 percent of higher education institutions are developing partnerships overseas), or with industry and commercial organizations. For example, Laureate International Universities, one of the world's largest networks of private higher education institutions, and the University of Liverpool are working together to deliver on-line programs for students worldwide.
74 percent are developing partnerships with industry or commercial organizations, like where H-P and the University of the West of England (UWE) are working together to create 'industry-ready' graduates.