High cost, low returns for many new majors

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By Delece Smith-Barrow

For many students, some of the most attractive parts of the college experience are the variety of classes and the number of majors offered. But many of the newest majors showing up in course catalogs are proving to be financially disastrous for the institutions, according to a recent analysis from Burning Glass Technologies. And with nearly every institution now calculating how to survive the coronavirus pandemic when fewer students are enrolling in college, some education experts say it’s worth taking a hard look at programs that don’t add revenue.

Using federal data from the National Center for Education Statistics, Burning Glass Technologies examined how academic programs that first graduated students in the 2012-2013 and 2013-2014 school years had succeeded at graduating students in 2018. About half of programs that conferred degrees for the first time between 2012 and 2014 reported five or fewer conferrals in 2018, and 30 percent reported no conferrals.

New academic programs that reported few or no conferrals in 2018 included construction trades, education, philosophy and religious studies and some foreign languages, literatures and linguistics.

And creating a new academic program can be costly, which means many institutions may be investing in majors and courses that will have no return on the investment. Once you add up the salary and benefits for two or three faculty members, classroom space, curriculum design and marketing, institutions may spend between $350,000 and $500,000 to start a new program, according to the analysis.

“Higher ed has historically focused on quality, on doing things well,” said Rick Staisloff, senior partner and founder at the rpk GROUP, a consulting firm that helps colleges and universities and other education-focused organizations create sustainable business models. “They’ve focused on student success. They haven’t really focused historically on: ‘What does it cost to do all that? Why does it cost that? What are the levers at our disposal to reduce cost so that we can maintain affordability, but also so we can make sure that we are investing in the pieces that we think are truly strategic?’”

The Burning Glass analysis covers for-profit and nonprofit institutions, as well as two- and four-year colleges and universities, and some institutions are doing markedly better than others.

At four-year public colleges and universities, for example, 24 percent of programs had zero conferrals in 2018. This was the lowest percent of zero conferrals for all institution types. Private, for-profit two-year institutions had the highest, at 43 percent.

Part of the challenge of having a breadth of majors is that most students are concentrated in a few.

“At any institution, more students are in fewer programs,” said Staisloff, whose research is cited in the analysis. “About two thirds of students are in 12 or fewer programs.”

Becoming more business savvy and investing in more research about market demands can help colleges be more strategic with how they spend money, he said.

“In making decisions around program creation, program growth, program elimination, colleges need to be able to have better data and analysis to raise the questions around the business model behind their academic portfolio,” Staisloff said.

A personal note: Today is my last Hechinger higher education newsletter. Thank you for all of the emails, tweets and story ideas these last couple of years. The newsletter will have a new writer in 2021 but the same reliable, accurate and timely reporting to keep you up to speed on higher education news.

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