Here are the challenges impacting the community college business model in 2018

Expert Insight

Here are the challenges impacting the community college business model in 2018

As the Trump administration begins to enact new tax and education policies, administrators wonder if the sector is at a turning point. Here are the top concerns we’ve heard from community colleges in 2018.

Tax bill reform, demographics will increase colleges’ tuition reliance

Community colleges are likely to become even more dependent on tuition revenue as a result of the Tax Reform and Jobs Act. Caps on state and local tax deductions will cause many residents in high-taxed states to see higher bills, which may prompt calls for cutting taxes and lead to further declines in funding commitments by local and state governments.

Even before the tax bill was written, only 11% of presidents had confidence that their institutions would be financially sustainable over the next decade. As the number of high school graduates is projected to decline, especially in the Northeast and Midwest, increasingly enrollment-dependent colleges will compete over a smaller pool of potential applicants. This has made onboarding and student retention increasingly important for colleges’ bottom line.

Promise programs improve access, but fall short as panacea

In 2017 we saw a proliferation of promise programs. Rhode Island and New York recently joined Tennessee and Oregon to offer free community college for state residents. Arkansas, Minnesota, and South Dakota also began similar programs for students who enroll in high-demand fields.

While promise programs advance community colleges’ open access mission, these programs often fail to increase institutional funds, straining ever-shrinking operating budgets. Further, the perception that community colleges are completely free may discourage donors from contributing to scholarship funds. As a result, community college leadership must improve their advancement efforts to retain high-quality programming and services.

Geography continues to drive enrollment disparities

Declining enrollments mean excess college capacity—especially in sparsely populated regions. Recent proposals to consolidate community colleges under a state-wide umbrella in Connecticut and Wisconsin demonstrate the impact of this enrollment strain.

In many areas, declining enrollments are symptoms of larger economic challenges. Colleges face questions about their central mission when acting in the best interests of students and serving their local community don’t align. To attract prospective students, many community colleges will need to benchmark programs to market demands outside their region—or even their state. This focus on labor market alignment and strategic partnership is especially relevant as many community colleges consider expanded online offerings.

Increased competition erodes market share

Community colleges will see enhanced competition in the foreseeable future. The prospect of deregulation in the Higher Education Act reauthorization will likely shift resources from non-profit community colleges and universities towards for-profits and non-traditional credential providers. In addition, a 7% drop in international fall enrollments in 2017 will only further incentivize four-year institutions to offer associates degrees.

To remain competitive, community colleges will need to double-down on their mission to provide—and successfully market—strong links to the workforce. California’s Strong Workforce Program, an annual $200 million effort to expand CTE offerings in the state, is one example of states working to ensure better community college market alignment.

How will these issues play out in 2018?

To hear how other colleges will prioritize their 2018 initiatives to meet these challenges, download the on-demand webconference to get our experts’ take. Download the recording.

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