Changing Student Demographics

U  p until the nineteenth century, higher education used to be pursued primarily by those from elite background. So demographically speaking, young men predominantly from affluent well-connected families largely formed the pool of such students. Many factors have caused this demographic profile to shift from privileged few to general mass. It is anticipated that by 2020, almost 50% of students studying in the U.S. and U.K. universities will be from diverse cultures, backgrounds, age-groups, and nationalities.

Latest UN data indicates that there is a direct correlation between mean-years-in-school and income-per-person (GDP per capita). As shown in exhibit 1, people from developed countries having better avenues at taking up higher education are generally better-off financially. They appear on the upper-right end of the chart. On the other hand, people from poorer countries with lower education levels languish at the bottom-left of the chart. There seems to be a widespread perception that higher levels of knowledge and skills open doors to higher-paying jobs and thus result in better quality of life.

The outcome is that people from diverse cultures worldwide are pursuing higher education in the courses relevant across the world today. There is an increasing trend to study in prestigious universities in the developed countries, especially in the U.S. and the U.K, for higher education.

Let us briefly analyze how the higher education landscape is panning out in terms of nationality, age, and gender diversity.

Compared to a decade ago, 30% more international students were studying at U.S. colleges and universities, and 5% more international students were studying at U.K. universities in 2011-12 (see exhibit 2 for the trend in U.K. universities). The most noticeable increases in international students are from Asia, the Middle East, and other emerging economies. This trend of greater participation of ethnically diverse population points toward globalization in the education sector.

There is one other interesting trend that has been noticed recently. Universities in the U.S. are witnessing an increase in the older (typically aged 25-34) students than in the past. In today’s information age, innovation is happening fast and things are becoming obsolete faster. People are feeling the need to learn new technology, new business models, and new skills, to stay tuned with the changing times. This perceived need to keep the knowledge current and to remain relevant in the job market is prompting students from various backgrounds to return to school. These are the older students, a.k.a. students of non-traditional age-group, that could not continue their education earlier due to various reasons such as low income, lack of suitable avenues, family obligations, and other socio-economic reasons. With the advent of internet and online education options especially in the U.S., there are an increasing number of older, even married, students with more varying demographics joining higher education, thereby skewing the overall demographic profile of students. By contrast, universities in the U.K. are experiencing an increase in the number of younger students and decrease in those aged over 30. This may be explained by the fact that online channel as an effective medium of learning is yet to get widespread acceptance in the U.K. Most of the well-known providers of online education today, for example, Coursera, Udacity, and edX, are based in the U.S. Online medium of education is typically preferred by older students having jobs and families.

Finally, gender diversity is playing a big role in the changing trends. Female students are fast occupying the seats in classrooms that once were occupied by their male counterparts. In the latest report published by HESA (UK), more than 50% of students studying in U.K. universities in 2011-12 were female. The trend is not much different in the U.S. universities either. There were interesting trends within region-wide distributions too, such as lower female students population from countries considered conservative. However, in general, there is an evidence of definite increase in participation of female students in higher education.

But why are student demographics important to universities?

Students are the main stakeholders in the success of an educational institution. Students’ curricular and extracurricular activities, interests, and opinions are driven by their beliefs, faiths, likes, and dislikes which in turn are based on their cultures and ethnicity. Thus, their demographic profile directly affects the way their experiences will shape-up in any educational institution. The universities can no longer assume that students from diverse communities will participate in courses and activities traditionally offered by them. This calls for detailed analysis and deep reflection on part of university leaders to design and offer an ideal educational experience for this shifting student demography.

How leaders are acting in response to the changing demographic trend?

The student population will become more ethnically diverse in the years to come. Educational institutions are now getting accustomed to the rapidly changing student demographics in the sector. Leaders from the top universities are making the most of this opportunity by putting in place such mechanisms that will ensure responsiveness to the needs of these new learners. The development of this yet untapped student demography means new avenues of revenues for the universities already grappling with funding issues. One of the first steps the leaders are taking is to institutionalize analytics at individual student and course level. This will help them in the following three ways: First, student-level-analytics includes a well-defined feedback seeking mechanism from students that let the leaders feel running pulse of the students’ preferences, likes-dislikes, and attitudes. Second, course-level-analytics gives inputs on performance of teaching faculties on all courses, research activities, and course-effectiveness index, and checks the courses’ continued relevance. The combination of these two analytics can be very effective in keeping a tab on ‘drop-out-risk’ of students. Last and most important, the leaders now have hard-data to take quick information-driven decisions with less gut-feeling and less uncertainty. Better still, they are able to be accountable with more confidence and can utilize the information to win over their sponsors and stakeholders. They are able to apply it in a day-to-day decision making so that the educational institutions become ready to embrace the future with welcoming arms.

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<– Universities: Funding and ROI challenges

Shifting focus of universities –>

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T  raditionally, universities in the U.S. have earned their revenues through state (government) funding, tuition and fees, research and development grants, returns from endowments, and philanthropic donations.

Funding and ROI Challenges

The prolonged cash-crunch due to the long-winded recession of 2008 forced the policymakers to make some nearsighted (and some say misguided) policy changes like cut in public spending on higher education. The policy changes caused steady decline in state funding to universities and many universities found themselves grappling with financial sustenance. The slump in economy also caused research grants and philanthropic donations to shrink. In the face of volatile and unreliable nature of returns from endowments, universities were compelled to shift the burden of additional costs to students in the form of increased tuition and fees.

Universities in the U.K. too are facing similar funding challenges. According to the data published by Higher Education Statistics Agency (HESA) and the Universities UK (UUK), the public spending in U.K. on higher education reduced by 6.9% post the recession. Over the last few years there has been a reduction in the proportion of income from funding body grants to total income. The funding from Higher Education Funding Council for England (HEFCE) is expected to reduce further. The recession has also contributed to a large decrease in the ratio of research income from research grants and contracts. Nevertheless, the past three years have seen relative stability in terms of the total amount of money flowing to institutions. HESA data also points to 38.6 per cent decrease in endowment and investment income over 2009-10 and it decreased by 25 per cent across the U.K. over the period 2000-01 to 2009-10. Gradually, the universities in U.K. too increased tuition and other fees to cover for the costs. One major difference between universities in U.S. and U.K. is that, the private expenditure on higher education is much greater than public expenditure in the U.S. universities.

Overall, the balance between the funding grants, and tuition and fees is moving towards fees, a trend seen in the U.S. universities too. Gradually, the rise in tuition and other fees are becoming unsustainable, especially for postgraduate students, already under huge debt from undergraduate studies. Exhibit 1 shows the comparative trend between changes in college tuition and fees vis-à-vis the changes in the cost of all consumer items in the U.S.. Starting at the same level in 1978, the tuition and fees cost seems to have increased five-fold as compared to consumer prices over the last few decades.

Moreover, the rates at which people’s incomes have gone up have not been able to catch up with this high rate of increase in college fees. The rate of change of college tuition has overshadowed the inflation rate consistently since 1981 as shown in exhibit 2. Considering that students join higher education primarily for higher pay packages, this unsustainable rise in the cost of college fees in the face of high unemployment is impacting universities’ enrolments adversely.

From the perspective of the universities, the costs are steadily increasing. The costs such as faculty salaries, college infrastructure budgets, administrative expenses, IT infrastructure costs, and marketing overheads form the fixed costs that are incurred irrespective of any student taking admission. If the number of students enrolled goes down, the average cost per student goes up. This situation makes it unsustainable to run the famed institutions delivering the same level of quality. This results in pressure to achieve surplus funds, after accounting for staff, administration, and operating expenses. While the universities in the U.K. have managed to achieve a surplus in the last couple of years, it is not before raising the income from other services rendered such as, residences and catering operations, grants from local authorities, income from health and hospital authorities, and income from intellectual property rights.

So how can universities respond?

Universities can take a series of steps that will help them stand-up to these multi-dimensional challenges to save costs and increase incomes.

Firstly, in order to save costs, university leaders need to improve productivity on teaching related activities. This can be done by rationalizing the programs and courses offered, integrating departments to normalize instructional costs, streamlining operational processes to leverage synergies, and outsourcing non-instructional activities to specialized vendors. Many universities accept that the programs and courses offered by them have experienced proliferation over the period of time. Thus, merging similar programs will not only make them more effective but also save costs for the colleges. On the same lines, integrating departments and streamlining operational processes that are similar in nature will help making the operations leaner, faster, and cost effective. Most importantly, institutions must focus on providing value in the area of their competitive advantages. This entails outsourcing non-core activities to reduce non-instructional expenditure. Analytics can come very handy in helping to understand the potential levers to realize savings from taking up these activities.

Secondly, ensuring enrolments of the ‘right’ students will pave ways for improving incomes. In addition to bringing tuition and fees, the right students can help make the universities look good through their research and development activities, which in turn will help the institutions to attract funding from existing and other green-field sources. One big aspect of improving income is to retain existing students from dropping out. High drop-out rates has become an area of serious concern for many universities. Reasonably so, every dropped-out student creates a hole in tuition fees that invariably remains unfilled. Moreover a high drop-out rate impacts twice, in lost revenues and sunk costs. Therefore, student retention should be looked-at through the same lens as businesses look at customer churn, and earnest measures should be implemented to control the high drop-out rates.

To summarize, universities need to take unconventional actions to effectively overcome the funding challenges and strive to be lean in order to embrace the opportunities of the future.

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<– MOOC and the education system continuum

Changing Student Demographics –>

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T  he rapid penetration of internet across the world coupled with the brisk pace of innovation in telecom technology enabling higher speed of access is changing the way people operate in various fields. Education is one such area that is undergoing huge transformation at the moment. The last decade has seen the advent of online delivery of educational courses that are open for registration free of cost and are accessible by millions at any given time. Popularly called MOOC - massive open online course – it promises to change the landscape of the current education system continuum.

The education system continuum comprises of multiple approaches of imparting knowledge that are only slightly different from one another. It stretches from teaching an individual at one end of the spectrum to self-learning at the other. We have analyzed the various modes of teaching on this continuum based on several parameters such as the method of teaching, types of courses offered, level of interaction between students and teacher, level of rigour, and most importantly, perceived merits and demerits of each.

Teaching Individuals (aka tutorial system)

This is the most individual-oriented teaching system in which a student and a teacher share a personal tutor-tutee relationship. It is also the most traditional system of imparting education that existed in the ancient world. Some of the oldest universities in the modern world still follow it in the form of ‘tutorial system’ or ‘supervision system’. The student and the teacher meet regularly to discuss a topic threadbare. The teacher is typically an expert in her field and the focus of interaction on her part is to encourage new thinking rather than teaching. This type of education seems more ideal for research oriented learning that requires deep reflections, detailed dialogues, insightful analyses, and constructive criticisms. This is an extremely demanding routine that entails complete dedication on part of the pupil. While it is highly rigorous and academically challenging, it is also highly recognized and reputed worldwide for the same reasons. There is a constant flow of feedback between the tutor and the tutee because of the focused learning process. Thus, there is a high probability that one will make good use of the learning opportunity, thanks to the personalized attention. The overall experience is geared towards making the man ready to take on the world, and not just for survival, and hence the stress is on guiding the pupil to educate himself and helping him attain his own mental growth.

Small group teaching

In this system, students are taught by faculty fellows in groups of one to a few (typically not more than five) students. So, in a way, this one too is individual-focused to a great extent. Most of the characteristics of the tutorial system are applicable to small group teaching. It is more suitable for research oriented courses, and for courses like medicine where there is a lot of stress on experimentation within a close group. This is also highly recognized worldwide and is a rigorous system demanding great discipline and initiative from the students involved. The objective of this education system is directed toward grooming the select few and thus is quite flexible to needs of those individuals. Students can assimilate the subject and get opportunities to ask questions of the tutor so as to completely understand the subject. However, a laidback student afflicted with inertia may lose out in a group of students and gradually the teacher may lose interest in him.

Classroom teaching

This is currently the most popular system prevalent in universities. In this method, teachers, expert in their field, facilitate interactive and constructive discussion on a given topic in a class of many students. The teacher and the entire class learn from the experiences exchanged in the class. Such a system is ideal for studying and learning the courses in which communication with a fellow student is immensely beneficial. All courses that require interpersonal collaboration and practical experimentation are best served by this type of an arrangement. Engineering and management are some such courses where students need to learn from past experiences, collaborative interactions, and each-others’ knowledge. While the structure of classroom teaching is most popular and is offered by almost all the educational institutions, it lacks the rigour of the previous two structures, despite its competitiveness. Nonetheless, this method offers the benefit of sharing thoughts and inputs with teachers and fellow students, which is unique. A student enjoys an opportunity to see various viewpoints and experiences from multiple individuals that helps broaden their perspective about the given topic and assists learning by sharing others’ experiences. The responsibility of seeking feedback rests entirely with an individual because of the practical limitation that teachers cannot attend to each individual in a class of many students. Thus, the learning experience is only as good as an individual – the proactive ones tend to maximize their learning while the lethargic ones may end-up losing out.

Blend of classroom and online learning

In recent years, a new demographic segment, of working professionals returning to school, has emerged. These (student) professionals are keen to get themselves exposed to new ideas and latest developments to keep their knowledge current. However, they are unable to stay away from their base location because of their work and personal commitments. Hence they are looking for partial-instructional teaching method in which they will need to visit school only at specific intervals to attend classroom lectures and can complete their remaining course online. They can ask queries of the instructors and seek feedback from them during the on-site discourses. Students can decide when to complete their online learning sessions as long as they accomplish it within the stipulated time. There is not much opportunity for students to cultivate individual relationships with the tutors because of only a small window of presence in the school. The self-disciplined students, who keep the feedback channel open with their tutors, benefit the most in this style of learning. The nature of these courses is such that they are fairly comfortable to complete with no rigour in terms of time and contents. It is one of the reasons that these courses, having a balanced portion of on-site learning, are gaining more recognition. Typically, vocational courses where physical experimentation is not required and where only a cursory supervision might help are good candidates for such type of learning system.

MOOC – 100% online learning

Massive open online course or MOOC forms the other end of the education system continuum in which the entire course is delivered online without any physical interaction with the faculty. There are some professionals that cannot afford to stay away from their work and family even for a small duration. MOOC serves as a great alternative for such students as there is no rigour in terms of time. It provides them with complete flexibility where the pace of learning can be managed by the students themselves. This anytime-anywhere learning experience is very narrowly focused on ‘teaching’ a particular skill, primarily a vocational subject. It facilitates only a limited exposure to practical aspects of the course and hence is more suitable for skill-oriented topics than knowledge-oriented ones. The feedback mechanism is highly dependent on how the course is designed and delivered. Presently, these courses are offered by only the most reputed universities that are most sought-after by professionals worldwide.

MOOC is still, relatively, a nascent system. Each system has its own pros and cons. The education system continuum is likely to undergo further change with more innovations in technology and changing preferences of students. What is important is for the universities and their leaders to reflect upon their specific competitive advantage, and embark upon a system that serves their students (and them) best.

Relevant Posts:

• Universities: Funding and ROI challenges
• Changing Student Demographics
• Shifting focus of universities

<– Welcome to Veravizion

Universities: Funding and ROI challenges –>

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W  elcome all to the first blogpost at Veravizion analytics!

We are very excited to be able to offer our services to you and to make a sustainable positive impact on your business and on the businesses and lives of those you serve. The opportunities are limitless. We are also thrilled to have the opportunity via this blogpost to share our perspectives and your thoughts on topics that are as much crucial for your business as they are dear to our heart.

All these preceding years, I have observed one thing consistently. Like Newton’s observation, this one too is as common as an apple falling down a tree, and one that most of you have noticed too. However unlike Newtonian one, this one concerns matters of business. It is that, the data and time at hand, for a business executive, are inversely proportional to one another; and the proportion is worsening every passing day. BBC cites IBM to say that, “2.5 exabytes – that’s 2.5 billion gigabytes (GB) – of data was generated every day in 2012.” We are already 700-odd days ahead of that.

The enormity of data carries grave implications for a business (and for our business executive). The top three concerns that instantly come to mind are:
1. Additional cost to analyze the data in a rushed manner
2. Risk of missing the main point
3. Impact on bottom-line and business strategy

From my own professional experiences, I have seen C-suite executives asking senior-managers for instant reports on a variety of business parameters. Naturally, the top-guys need it to keep the business profitable and chart future course of the business. The senior-managers – the business executive in our observation – rarely have an easy way out. So under severe pressure, they are forced to employ resources, at times unskilled, to quickly run queries and generate reports. Many a times, the hugeness of data and paucity of time make the analysts churn out some reports to satisfy the top-execs’ invariably urgent requirements. The entire process becomes quite frustrating and traumatic for the managers. Moreover, there is a high risk of such reports being incomplete and/or inaccurate. It will be nothing less than a gamble to base critical business decisions on such reports. Worse, the managers can be accused of misrepresenting the facts for no fault of theirs.

Fortunately, there is a large upside to this situation. The senior managers can put in place mechanisms, like management dashboards, frequently required charts, and a few useful reports pertaining to any and every information on their customers. These proactive actions on their part can go a long way in helping them and their organization institutionalize a new competitive strategy to keep a step ahead of their competition.

Veravizion was born to help executives with these requirements.

The objective is to have something simple, yet something incredibly useful. These tools can not only save the managers from stress but also help them create win-positions for themselves in their organizations. The business executives can actually differentiate themselves and their organization with this strategy.

I look forward to interacting with you in the coming weeks through future posts and your comments.