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CEO Roundtable: Education

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Springfield Business Journal Editor Eric Olson discusses higher education with Drury University President Tim Cloyd, Evangel University President Carol Taylor, Missouri State University President Clif Smart and Ozarks Technical Community College Chancellor Hal Higdon.

Eric Olson: What are some degree studies that you’re seeing more students drawn to that maybe they weren’t so much in years past?
Hal Higdon: For us, No. 1 fastest growing is aviation. We just opened our second program. We had a goal of having 40 students, we had a cap of 50, and we have 78 this fall. The shortage of commercial pilots is just amazing. The Vietnam veterans have aged out and airlines did no planning. Now they’re paying $40,000-$50,000 signing bonuses. We have with Drury, first, and then Missouri State a general studies degree that our pilots, as soon as they finish their associate degree, go directly into it. We had our first two graduates this year – I think they’re both at Drury – that will go to work for United Airlines in about a year.
Olson: It seems like a program that’s a little outside the box.
Higdon: I said no to this program for five straight years. And Brian Weiler at the (Springfield-Branson National Airport) kept coming to me and I said, “I’ll do it, but I’m not paying for it.” He finally brought it in a way where he gave us the facility, he found the partner and all I had to do was say yes. It’s the easiest program I’ve ever done and the demand was there.
Clif Smart: On the big public university side, it’s marketing, finance, general business. All have close to a thousand majors, plus or minus. Computer information systems, cybersecurity, computer science are all growing areas. And then kind of health care in general. There’s 300 applicants for 72 spots for nursing. This generation, it seems to me more so than the last one, is very much interested in careers, owning their own business. There’s a significantly greater interest in making sure their college degree is going to lead to a career.
Tim Cloyd: At Drury, one of our biggest majors is biology, biochemistry, molecular biology. Computer science with the interest in artificial intelligence and data analytics and then, of course, business. But one of the things we’ve done at Drury with Your Drury Fusion is … a program across the university that allows a student to pursue their life or intellectual passion while at the same time earning or being guaranteed to earn two or three certificates.
Carol Taylor: Our biggest growth areas are business management, nonprofit business, the allied health field, athletic training, biology, which has our pre-med students and also nursing. Health sciences is huge for us. Education is also a big part of what we do. Secondary ed has grown 30% in the last few years. We’ve done partnerships with some public school systems where we can offer master’s programs for those teachers who are still in place serving their districts. This year, we received (Council for Accreditation of Counseling and Related Educational Programs) accreditation, so that’s our graduate clinical counseling program.

Trend lines
Olson: For those of you who offer a master’s, what’s the trend line in those programs?
Smart: We’re not going to have an enrollment record this fall, except in the graduate area. We’ll have the most graduate students we’ve had ever; it’ll be 3,800 and some odd.
Cloyd: We see that, too. The master’s programs we have are all well subscribed, with the exception, interestingly enough, of the MBA program. People who are looking to do an MBA now are looking to do it with a focus area, such as cybersecurity.
Taylor: The other opportunity in graduate education is offering fast-track programs, linking your undergraduate to your graduate programs. So, you can offer a student, (for) one additional year, you can have a master’s degree. One of our collaborative efforts is with MSU. Our students can finish their accounting degree, marketing degree, business management degree, and go directly into a master’s program at MSU and complete that in one year.
Smart: People don’t want to waste their time. If we’re able to do the accelerated degrees such that you get a bachelor’s and a master’s in five years instead of six, then it’s very important. It’s a benefit for us that they finish with us and it’s a benefit for the Evangel students that they can get both degrees in five years instead of six.
Higdon: We now have several students graduating across the district with an associate degree and a high school diploma in the same week. We started Middle College as a way to help with dropouts, and now it’s becoming high achievers because these kids know what they want, they’re more mature than high school and so they’re going to come right out and they can start as a junior.
Smart: Or it allows you to figure out how you’re going to do a semester abroad, for example, because you may not be ready to just go to work at age 18 or at age 20 with a bachelor’s degree.
Taylor: Or double majors.
Higdon: Or take that gap year. People want less debt. That’s the one thing we hear over and over. And they’re going to take the path that gets them without the huge debt that their parents may have had.
Taylor: We used to think that in four-year undergraduate programs, your freshman class coming in is a pipeline that will be with you for four years. Increasingly, they’re with you for three because they’re doing dual-credit programs.
Olson: Is that why Missouri State’s enrollment was down?
Smart: That’s a part of it. We were a little bit out of step a couple of years ago and were requiring 125 hours to graduate. We moved that to 120. Well, that means fewer fifth-year seniors, which means fewer students enrolled. But that’s for the benefit of the student and that brought us in line with our competitors. We have to manage that on the revenue side, because it’s less revenue for the university.
Cloyd: Our enrollment was flat, but our net revenue was up.
Higdon: Our enrollment is flat, but our freshman class is 11% larger than last year. That’s going to be a good thing for, really, all four of us because the vast majority of our students don’t leave Springfield when they finish at OTC. They’re going to go to one of these three institutions or (Southwest Baptist University).
Taylor: We haven’t finalized our census yet. We’re pleased our traditional undergraduate enrollment, as of today, we’re at about 8% growth from last year and overall about 10% up.
Cloyd: That’s very unusual for higher education, particularly across the Midwest.
Smart: If we look at where we’ve been as a state for the last eight years – I pick eight years because that’s how long I’ve been doing this job – we have 12% fewer people in higher ed in Missouri. So, there are fewer people going to college here. That’s the backdrop of which you judge where you are. We’ve been on a tremendous run. We actually had 14% growth at a time that the market is down 12%. We ran up against the wall this year, and we’re going to be bumped down 4% or so. It’s a tough market.
Higdon: There’s an inverse relationship for higher ed as a whole, but particularly for us. At the height of the (Great) Recession, we went from a fall to a spring and we’re up. That never happens where you have more people in spring than you had in fall. We had a 12% growth between ‘10 fall and ‘11 spring.
Cloyd: The unemployment was 10.8% in this region, and now it’s 3%.
Higdon: We’re really in full employment. We have to build capacity. I can’t be up in nursing because I can’t take more nursing. Biology is our No. 1 major, so we’re creating all these people who want to go into health care, but I can’t increase my class sizes.
Smart: You also have got to hire teachers, and there’s a shortage. And you have to have classroom space and lab space and it’s costly.
Taylor: That’s when you start looking for these creative ways. You’re probably aware that Cox School of Nursing got approval to expand. Several of us wrote letters of support because our nursing students do their BSN program in partnership with Cox. We can admit more nursing students if there were more seats available in the Cox nursing program. Nursing programs are among the most expensive programs to run, in part, because of the required faculty student ratio.
Higdon: Just 2-to-1.
Taylor: It’s because of all the clinical supervisions.
Higdon: Our most popular program that we can’t do anything about growing is dental hygiene. Average starting salary this year of $65,000 a year, and I take 18 a year. I have to have one instructor for every eight students and a dentist. It costs me $360 an hour to teach a dental hygiene student. So, if I want to add eight more students, I have to spend $150,000 more.

Enrollment and debt
Olson: In enrollment, numbers are down 1.7% nationwide in fall 2018. That’s from the National Student Clearinghouse Research Center. If you break it down by the sectors of higher ed, there’s some really stark numbers here, particularly for four-year, for-profit institutions. We’ve seen closures.
Smart: No one in this room is going to shed a single tear.
Higdon: That’s the payday loan of higher education. Those people are nothing but predatory. I see all the people from Vatterott that flooded us with $30,000 of debt for a one-year HVAC degree that they didn’t get because they closed two weeks before graduation.
Cloyd: You talk about student debt – $1.5 trillion (nationwide). A large percentage of that is for-profits’ students. Their average debt is about $45,000 per student, and their average default rate now over six years is about 50%. Whereas, the largest proportion of that $1.5 trillion in debt are professional and graduate school students who take on debt. At the undergraduate level, our debt average is about $26,000. And the average payment on a student loan is $350 and the median is $222. When you compare that with a new truck, which is a $550 a month payment, it’s a pretty doggone good deal.
Smart: The question becomes, if you just have a bachelor’s degree, on average, you’re going to earn $1 million more than if you had a high school diploma. Would you borrow $27,000 to earn $1 million more? If you have the time and the ability, most people would say yes.
Taylor: Now, it has shifted from ability to pay to willingness to pay. So, the number of families who say we don’t want to pay anything, that’s a new conversation that we have to have with families. The other side of that is the number of students that we have to advise to say just because you can take that loan money doesn’t mean you need all of it.
Olson: What about student housing?
Higdon: It depends on what student housing. If you want to talk about the apartment I lived in at the University of Alabama, my roommate and I paid $185 a month and the ceiling was coming down. That’s a lot different than the quads we’re seeing now at $750 a month. There is an expectation now that a lot of kids want to have the same lifestyle that they left at home when they get to college.
Cloyd: It’s a part of our responsibility to counsel students. The formulas that allow you to borrow are not just based on tuition, room and board, and fees. If they’re abusing the system, they come in and get a change check, which is actually cash.
Higdon: When the Obama administration made the changes they made, they made it much easier to borrow. We saw an immediate jump, and so we started putting in some stopgaps. The year we were up 6%-7% in enrollment, we actually went down $3 million in borrowing because we had those mandatory counseling sessions.
Taylor: Let’s take a look at how you can navigate college in financially and fiscally responsible ways. This makes it sound like students are really fiscally irresponsible, and that really isn’t true. We have a lot of students who work hard and they’re smart and they manage their resources well.
Smart: And they’re working 20 or 30 hours a week.
Higdon: Our average student works 30 hours a week and goes to school 10 hours a week. That’s a lot of pressure. I’m not worried about the ones in school. Those are the good ones. I’m worried about the ones who aren’t in school. Right now, we have potential students who are 25, 30 years old who are working and they’re making just enough so they don’t feel like they need to go back to school. But they’re never going to make more than that. That’s why the governor and the legislature came up with this Fast Track. It’s aimed at that 25-year-old and up for those high-demand jobs where currently the folks are making less than $40,000 a year. You’re going to essentially go back to school for free if you can complete your degree or certificate or program in less than two years.
Cloyd: Our view is that there are enough of those folks in southwest Missouri that this program should be open to private not-for-profits as well as public.
Higdon: I look at this year as more of a pilot. It’s only funded at $10 million. It was actually recommended at $23 million.

Funding source
Olson: Where are the funding challenges?
Smart: The private colleges get almost 100% percent of their operating budgets, I would presume, based on tuition. Your endowment by and large is not funding ongoing operations. And so, you have to have a certain (number) of students to fund that. You can dip into reserves for a period of time if you bump down as long as you bump back up. I’ve got two major sources: 98% of my budget is either tuition and fees, which is about 65%, or the state funding to supplement that, which is why my cost is lower, which is about 35%. Hal gets less from the state, but he also has a local tax base that helps supplement.
Higdon: The lowest in the state.
Smart: I knew that was coming. [Laughs] But on the private side, it’s driven by enrollment.
Cloyd: Enrollment and fees. Auxiliary revenue would be housing and food services and gifts and a formula on endowment draw.
Higdon: I can’t let Clif mention state funding without making the point OTC is the lowest funded community college in the state. We’re at $1,780 per (full-time equivalent). The state average is $2,600, and the highest is $4,000. We’re the third-largest community college in the state, but the last funded. Our ask this year is $8.5 million to get us to slightly below average. If I get my ask, I will go from 12th to eighth. We’ve got to get our core budget up. Our local delegation has got to get our local public institutions up to at least state average.
Smart: We need a formula. Right now, it’s just based on politics.

Excerpts from Features Editor Christine Temple,


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