The controversy at Mount St. Mary’s University in Maryland illustrates the paradoxical challenge facing American higher education: universities need to be run with more of a focus on the bottom line, but at their core, colleges are not corporations. Colleges and universities are unique institutions driven by a mission to expand and disseminate knowledge through research and teaching.
If you haven’t followed what’s been happening at Mount St. Mary’s you can read about it here and here. Basically the trustees at the 2,300-student private university hired a businessman who had worked in finance, Simon Newman, to be president in 2015. He promised dramatic changes to expand the name recognition of the university through improved marketing, increased enrollment, and career-focused majors.
But his presidency hit a rough patch last month when he used colorful language to suggest forcing out struggling freshmen to improve the university’s rankings. When those comments became public, he fired two professors in what many saw as retribution for their opposition to the president.
And then on Monday night, Newman abruptly stepped down.
During the saga, however, few seemed to question the original premise behind Newman’s plan: just how was Mount St. Mary’s going to turn itself into a national brand given it was barely surviving as a regional college?
Mount St. Mary’s attracts a traditional 18- to 22-year-old crop of students. The nation’s population of high-school graduates reached its peak in 2011, and is not expected to grow again until the beginning of next decade. Most of that growth will come in the West and South, and there no evidence that students are clamoring to go to college along the Maryland-Pennsylvania border where they now pay tuition of about $26,500 a year, on average, after discounts.
The high-school population is largely declining in the Northeast and Midwest, which house a disproportionate share of American college campuses. Many of those campuses already have been following the same strategy as Newman.
And for the the most part, the approach is not working elsewhere.
According to one survey, about half of small private colleges and regional public universities are either discounting their tuition heavily to attract students or are missing their enrollment targets.
Mount St. Mary’s is not only trying to play catch-up in admissions, it’s also starting in a deep financial hole. In recent years, Moody’s Investors Service has given the university a “negative outlook” because it has operated with annual deficits and tens of millions of dollars in debt. Last March, the rating agency revised its outlook to “stable,” but still noted Mount St. Mary’s high level of debt and rural location as concerns. Forget about expanding the brand; there is a real question about whether Mount St. Mary’s should even continue to exist as a solo institution.
In many ways, Newman was the perfect choice to turn around the school’s finances.
But as we have seen at a few other universities recently that have hired corporate leaders as presidents — namely the University of Iowa — the sensibilities of running a business don’t always translate to academia.
There’s a reason why the country’s most well-known higher-education institutions have lasted centuries, while nearly 90 percent of the Fortune 500 list has either gone bankrupt, merged, or fallen from the top spots in the past 50 years. Rather than focus on the gains of the next quarter for shareholders, higher education as an industry takes a long view — there is always a desire to do more, to explore new emerging fields.
Higher education also operates in a culture of shared governance, where faculty, staff, and students have a say in how campuses are run. What’s more, higher education is probably the only business where customers pay for a product for four years in their late teens and early 20s, but remain tied to the institution for the rest of their lives as alumni.
Now the dilemma facing American higher education is whether the culture that has propelled its institutions to among the best in the world needs to undergo a drastic overhaul in order to usher in a new financial model that will allow universities like Mount St. Mary’s to survive into the next decade.
Newman clearly believed that change needed to happen, but he couldn’t figure out how to achieve his goals without trying to make the college more like a corporation.