The Challenges Presented to Hartwick College Today Due to the Changing Marketplace

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The Challenges Presented to Hartwick College Today Due to The Changing Marketplace

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Hartwick College is a small, private liberal-arts college located in the hills of Oneonta, New York. The origin of the college is rooted in the founding of the Hartwick Seminary in 1797 through the will of John Christopher Hartwick. In 1927, the seminary expanded to a four-year college and was moved to Oneonta, becoming Hartwick College. In 2008, the United States was paralyzed by the biggest recession in the post-war era. Like every college located in the United States, Hartwick was affected greatly by the recession. However, the biggest affects came post-recession, as the marketplace for higher education began to shift dramatically. Jon McGee discusses this shift in his book, “Breakpoint”. Jon has been a cabinet officer at two liberal arts colleges in Minnesota over the past several years, both of which enroll traditional-age undergraduate students. Neither college is highly endowed and both are dependent on tuition, which is very similar to Hartwick College. These characteristics influence and frame how Hartwick views themselves and operates. Although it is evident and probably doesn’t need mentioning, Hartwick College can’t operate and make the same choices as a big university like Syracuse or Buffalo. So, a summer intern working for the marketing department at Syracuse, will interpret Mr. McGee’s book a little more differently than I do. Throughout this paper, I hope to landscape the challenges that are presented to Hartwick College today due to the changing marketplace and how it can better understand its world and choices.

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To better understand higher education today, let’s talk about higher education prior to the recession.

If you view higher education as an industry, it is one of the greatest success stories in the last 100 years. Less than 10 percent of all American’s between the age of 18 and 24 went to college in the fall of 1946. Post-recession, that number sky-rocketed all the way to 43 percent. Now, what happens when the number of consumers in a market quadrupole? New producers enter the market, trying to get their piece of the cake. Since the 1950’s, the amount of institutions in America that you can earn a degree from has increased by more than 2.5 times. Today, the 4,700 institutions that make up the United States are home to nearly 21 million students of all ages, races, and ambitions. College has not always been an option to nearly anybody that wished to roll the dice and take their chances. Prior to World War II, higher education was for the rich and much more fortunate. Not many people earned a college degree in the early 1900’s, mostly because not a lot of people even finished high school. Unless your family could afford to send you to college, you either left high school early to work and help provide for your family or you finished high school and chased after the American dream for yourself. College was not considered as necessary as it is today because the US economy was primarily a manufacturing and agricultural economy more dependent on physical labor. This physical labor did not need much training, let alone a college education. Children that grew up on a farm, especially boys, went to school until they were big enough to start greatly contributing to the family. Even if they continued their education, it was during the slow months of the year. Following the war, college was extended as an earned privilege thanks to the GI Bill to all of those that risked their lives for this great country. By 1965, 21 percent of all American’s between the age of 18 and 24 were enrolled in college. In 1965, higher education in America took a giant leap with the Higher Education Act. Since 1965, college attendance has been on the climb, resulting in the powerhouse that it is today. During the late 1900’s, the number of people graduating high school was decreasing, however, college enrollment was increasing. How? College officials moved their attention to a whole new market. A problem was identified, and colleges adapted and made the necessary changes, something we will talk about later. Higher education focused on the enrollment of people over the age of 24 and females.

Throughout the novel, Mr. McGee talks a lot about the college decision process and how it affects the student and family. Before I go into more depth about the college decision process and how it affects the “traditional family”, I would like to talk about my personal experience. Now I know that plenty of others share my experience, and most have had a harder one than me, but I feel that it is important to share some of my experience to help justify my thoughts and ideas about higher education and my internship at Hartwick College. I knew I was going to be responsible for paying for my college experience long before I stepped onto Oyaron Hill. No matter the cost, I knew that I wanted to go to college and achieve something not many others in my family have. My mom went to nursing school and my dad went to work after high school. I never asked for anything growing up and I always had a roof over my head and food on the table, but my family was very middle class. I knew my family didn’t have the money to pay for an expensive school like Hartwick, and I never put them in the position to try and do so. In high school my parents divorced, leaving me in the middle of a tug and war battle. It only pushed me away, I moved in with my grandparents and I became very independent, going days and even weeks without talking to my parents. So, when it came time, I went to the bank with my grandmother and I got a loan to pay for my four years at Hartwick. I did this without a doubt because I understood the importance of a college education and the benefits that it would provide. Easily the best decision I ever made.

When considering college, potential families and students are faced with three important questions: How much does college cost? How will we pay for it? What is the college experience worth? When researching a college, students go straight to price, because it would be a waste of time to show interest in a college out of their price range. When you go car shopping, you walk on the lot with a number in your head that you can’t afford to go over. It would be pointless to test drive a car that is way out of your price range, but it doesn’t hurt to look. When you go to the google search bar and type in an institution, unfortunately somewhere in the statistics that appear there isn’t a number showing the salary that you will make after graduation. There is no guarantee that the investment that you make will pay dividends, however, the numbers are promising. According to ‘U.S. Today’ college graduates, on average, earned 56% more than high school grads in 2015, according to data compiled by the Economic Policy Institute. That was up from 51% in 1999 and is the largest such gap in EPI's figures dating to 1973. For parents, things get really sketchy with multiple children. If they spend too much on their first child’s education, how will they pay for the next? And so on. “Fear for paying for college is pervasive today and is the single most disruptive force college and university leaders face as we plan for the future of our institutions.” The price of college and the value of college go hand and hand and is the driving force for concern of all potential students and their parents. One major concern for parents is not the price they are going to pay for year one, but for year four. Rising tuition prices are a major concern, because all over America, colleges are getting more expensive each year. Unfortunately, income is not rising as fast as tuition prices, which means a much greater financial effort to pay for college. Years ago, when a college education was much cheaper, the “college experience” was a big factor for parents and students. In 2018, with prices the way that they are, it is all about economic return. Yes, the experience is an added bonus but if there is no economic return, you might as well dig a hole in your backyard and bury the money or buy a boat. Parents are feeling the squeeze of rising prices and the pressure is only tightening. According to Mr. McGee there are three kinds of students, those that clearly need financial aid, those that full-pay and the ambiguously needy or wealthy. That is what makes higher education so special, each student has their own story, background, financial situation and motivation. When you sit in that chair or desk, your success is in your hands and you are equal to the person sitting next to you. One must put their head down and stay on track, but it is important to have fun along the way. Enjoy the little things like snow days (especially at Hartwick), midnight madness, sporting events, chicken nugget day, and other campus activities. Not only do these things ease some of the pressure that comes with a college semester, but they open the door to new friends and possibilities. So, what can we conclude from all of this? Tuition prices are a very big concern for potential students and families, more now than ever. Without a good amount of certainty that the investment is worth it, there will be no deposit. Institutions leaders’ biggest hurdle is price concern, and the choices they make revolve around this concern. However, there is no denying the benefits that a college education has on post-graduates. Income, job acceptance and job quality are all much higher with a degree, and all of these numbers are increasing at a record rate.

In 2013, the Federal Reserve Bank of New York reported that the total outstanding balance for student loans across the country had approached 1$ trillion in 2012. This number represented students that were currently enrolled and those that were no longer enrolled. Millions of people around the United States owed money in loans. In the span of just six short years, the outstanding student loan balanced nearly doubled, and has yet to slow down today. Student loans were the only outstanding debt to not fall after the Great Recession. In 2011, the average student owed roughly $26,000 in student loans. Today, over 44 million Americans collectively hold nearly $1.5 trillion in student debt. That means that roughly one in four American adults are paying off student loans. When they graduate, the average student loan borrower has $37,172 in student loans, a $20,000 increase from 13 years ago. With family savings decreasing, it only makes sense that student loan debts are increasing. Student loans are relatively easy to get, why? One of the biggest priorities of the federal government is to ensure that its citizens are highly educated and resourceful. The return is much greater than the cost, almost as if the government is making an investment in higher education along with the student. That is why the money keeps flowing without any hiccups.

The changing market for higher education requires college and university leaders to take comparative advantage and market development much more seriously. However, without a more sustainable fiscal future, concerns about comparative advantage are useless. Every institution has a dream experience that they wish to deliver to each student, but do they have the revenue to do so? Changing economic characteristics of potential students and families, along with real economic constraints on families have colleges and universities of all prices spinning in circles. If you are an institution leader faced with this problem, do you lower cost and sacrifice quality or do you keep raising prices and keep/increase quality? “Should we charge more or less?” “Are we doing enough to justify our price?” “What can we do to lower costs?” are questions filling institutions around the country. Of course, state funding plays a large role in this dance. How do colleges and universities allocate their resources to create the best outcome? These are all very tough decisions, such as the one we saw this past spring at Hartwick, when they made the decision to cut all D1 sports. Whether it was right or wrong, the board felt the resources were better spent elsewhere and it was a decision that had to be made. Institutions raise as much money as possible and spend the money they raise, but this doesn’t seem like a sustainable action that can last forever. Expenses grow every year, so how long until you can’t raise the money fast enough? Opposed to what most believe, most private institutions are not very wealthy. The decrease of income across the United States has limited and, in some cases, stopped tuition revenue completely, which has been a huge disappointment for tuition-dependent institutions like Hartwick.

Unfortunately, college affordability conversation begins and ends with sticker prices. A lot of families do not understand that the sticker price is not what they are going to pay per year. After financial aid and grants, the price can be much lower. This creates a lot of confusion for institutions and families, especially for price strategy. “Unfortunately, the leap from sticker price to post-financial aid net price is not intuitive, is often complex and is not well understood either by students and families or by people outside of the financial aid or admission office on most campuses.” Imagine selling bread in a grocery store, and trying to set a price, while not knowing what each person is actually going to end up paying for the bread. A student’s character plays a large role in the price they pay, for good reason. An institution is not going to charge a student with great grades and characteristics the same price as a student with poor grades and a bad attitude. As a school leader, I want to fill my institution with outstanding citizens, even if that means less revenue. In the end, pricing is a slippery slope because a large price point deters potential students and a low price point appears to hold no value.

So, how does Hartwick build a comparative advantage to other institutions around the United States? First, they must distinguish the qualities, programs and experiences that make them distinctive. What sets them apart from similar institutions like Ithaca, Hamilton and Gettysburg? Not only does this knowledge give them leverage with the assets that they already own, but it tells them where they need to develop and expand. Every institution offers lots of programs and experiences, some of which may not be offered elsewhere. However, like elsewhere, Hartwick is only distinctive or valuable with a few. “What about this college either is not available or is not available as well at another institution?” And of course, every institution has a generic slogan, making a promise separating themselves from others. Most are vague and left up to interpretation. When you Google Hartwick you will find, “We transform students into critical thinkers who make a difference in the evolving world.” The first step in identifying true distinctiveness is to resist the temptation to be everything for everybody. The Hartwick Board of Trustees can’t fall in the trap of trying to please everybody and their interests. Not only will this be extremely expensive, but it will decrease quality. It is better the be “great” at a few things, then to be “alright” at a lot of things. The research to understand why people chose Hartwick is important. Why did they choose Hartwick? Hartwick must continuously research distinction and comparative advantage demand in order to keep continuous commitment.

So, what are these qualities, programs and experiences that make up Hartwick’s comparative advantage post-recession? The simple questions like enrollment, student profile and programs are much more complex than you would expect. All are closely connected, and each has consequences for the other. Hartwick is very well-known for their small class sizes and professor interaction, 65% of classes have fewer than 20 students. With a student-faculty ratio of 10:1, students are not just another number, their voice matters. Students interact directly with the professor, which makes for invested office hours. With a small enrollment, Hartwick College is one large family. Everybody at Hartwick belongs to something. A strong advantage Hartwick has over its peers is their study abroad program. Hartwick’s J-Term, “allows students to choose from one of their many great off-campus programs abroad or on-campus classes without interrupting their fall or spring semesters.” Hartwick’s faculty is very dedicated and educated, however, they are very challenging and push students to reach a potential that they would otherwise never even touch. Hartwick’s nursing and business/economics programs in particular receive very high praises. Hartwick has a beautiful campus, with very nice facilities. The view from the mountains is second to none. All of these things play an important role in Hartwick’s comparative advantage and should be a major focus for administration. This is not Hartwick, but a rival school that put together a great video discussing higher education price and return.

Unfortunately, I do not know the revenues and expenses of Hartwick College. The only number I am trusted with is the one at the bottom of my bill. However, I do know that the sticker price of $58,370 for the 2018-2019 academic year is made up of the college’s judgment of what they need to pay for their expenses and keep the doors open for many years to come. Like Utica, Hartwick offers a lot of financial aid, so the sticker price is not what you will pay per year, however, it is still a very scary number. The truth is in the pudding, the market for higher education is shifting dramatically, and college leaders must dedicate a lot of resources to stay ahead of the curve. Comparative advantage and market development are more important now than ever before in the history of higher education. The economic strains that are placed on families today have created a potentially devastating imbalance between revenues, expenditures, perceptions and expectations. For years to come, institutions will fight and struggle with price and cost. They must charge a price that seems fair to families and students, but offer programs, qualities and experiences that convince them to make the investment. Families and students will not invest in an institution unless they are convinced that there will be significant economic return, that is just the higher education market today. Luckily, the statistics prove the return on investment, along with the importance of a college education in today’s society. So, people all over the world will continue to invest in American higher education, and the student debt will continue to increase at a record rate. America will become more educated every year, and this country will continue to be the greatest country in the world. The recession spurred student interest in higher education, remarkable. There is not a specific answer or formula for how Hartwick can adjust to this changing marketplace. However, they can continue to research comparative advantage, market development and excel in the things that make them who they are. Hartwick is small class sizes, great faculty, beautiful campus/facilities, strong programs, and full of great opportunities. Hartwick is home.

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