Economic recovery requires investing in higher education transformation (opinion)

President Biden’s $4.1 trillion, two-part economic package has a lot of good news for higher education: $40 billion in the American Rescue Plan; $20 billion in new Title I funding, $109 billion for two years of free community college, $88 billion to increase Pell Grants and $46 billion to increase investment in historically Black colleges and universities, tribal colleges and universities and other minority-serving institutions.

What it does not include, however, is any money explicitly earmarked to encourage and support the transformation of the higher education system in the face of tectonic, long-term shifts in demographics, technology and competition. These shifts include declining birth rates; a diversifying student-age population; the rise of online, hybrid and competency-based learning; and changing interstate migration patterns.

While such forces are likely to continue unabated, regardless of federal policy, they also offer a golden opportunity for the Biden administration to encourage institutions to develop timely, student-centric responses.

The higher education “system” is a decentralized and fragmented set of public and private institutions, many of which are more than 125 years old. The system is increasingly out of date: some institutions are in the wrong place; some are too small; others need capabilities they will be challenged to develop on their own. While there is widespread recognition that the system needs to be transformed, there is no central planner to guide that transformation. As a result, change can only happen incrementally as individual institutions and state systems take the difficult, but necessary, steps to better serve students by exploring things like shared services and infrastructure, joint academic offerings, even mergers or preplanned, well-funded teach-outs.

Supporting this institutional transformation is not an objective in itself, but rather a highly effective way to support students. If institutions fail to make proactive, timely decisions to ensure their effectiveness and stability, students — particularly BIPOC and low-income students — will be at risk, and other stakeholders will have less time to adjust.

One recent study suggests that 19 percent of Black undergraduates are already enrolled in an at-risk institution. That’s unacceptable. But those same students could thrive if their institutions were able to use more of their resources for academic and associated support rather than for institutional survival. Local communities also gain when their colleges make planful transformations if the alternative is abrupt closure in the face of forces that, though they can be temporalized for a while, will eventually overwhelm the status quo.

In March, we launched the Transformational Partnerships Fund to provide seed money for institutions interested in beginning the exploratory process. Although transformational transactions are very difficult in higher education given the complexities of shared governance, the passion of alumni and the centrality of place, we have already received more than 40 inquiries from brave institutions willing to engage in this challenging work.

In New Mexico, for example, five colleges are coming together to share back-office services, academic programs and technology. In Tennessee, public and private institutions are working collaboratively to better serve students. In Wisconsin and Arkansas, private nonprofit colleges are exploring partnerships. And many others around the country are poised to begin similar journeys.

Exploring these transactions takes a lot of courage and a little money, but completing them successfully requires a whole lot more. For example, the New Mexico shared-services partnership will require millions, while some proposed state system consolidations will require tens of millions. Not only is raising this money a barrier to completing transactions, it also may discourage others from even beginning the process.

While some of the billions set aside for higher education might be available to cover these transactional costs, there will be many competing and compelling uses for this type of general purpose funding. Instead, the Biden administration should set aside a pool of money to defray the out-of-pocket costs associated with well-planned academic partnerships that prioritize student success.

The funding should be reserved for that small fraction of institutions truly committed to transform rather that allocated on a formulaic per-student basis or to a whole set of institutions. More importantly, these should be doing grants, not planning, thinking or stalling grants. The allowable costs could include uninspiring but unavoidable things like severance, IT integration, moving/relocation, etc. — costs that, while vital, are the hardest to raise money for from traditional sources. The pool might also prioritize transactions involving institutions — public or nonprofit — that enroll a significant percentage of BIPOC or low-income students. In the interest of time, the pool might flow through existing programs like the Title III Strengthening Institutions Program or Fund for the Improvement of Postsecondary Education.

The funding required for this type of pool is a rounding error in the context of what has been proposed for higher education. Assuming 10 percent of 5,000-plus degree-granting institutions enter into transformational transactions in the next few years, and up to $5 million were available for each of those 500 or so transactions, the whole pool would be only $2.5 billion. It’s a minuscule number in the grand scheme, but to the institutions doing the work, the support would be truly catalytic.

Given the philanthropy sector’s growing interest in higher education, the pool might even be structured as a public-private partnership — giving private donors the opportunity to support not just individual institutions but the transformation of the system as a whole.

The Biden administration must know that even its proposed billions will not obviate the need for many institutions to make fundamental changes even while it gives the wise ones more breathing room to plan. An explicit pool of funding to help colleges and universities implement these kinds of transactions would make a huge difference for the communities and students they serve. It would also encourage proactive, brave decision making in higher education, an area of vital national importance.

Successful transformation is a team sport involving presidents, boards, accreditors, faculty and states. We need Joe Biden on that team.

Inside Higher Ed