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How to Capture Growth Opportunities in the Graduate Degree Market

Episode 45

February 9, 2021 33 minutes


EAB recently launched a multi-year research initiative dubbed Blueprint for Growth, to help universities build a stronger graduate and adult education portfolio. As part of this initiative, Megan Adams and Will Lamb examined the strategic plans from a representative sample of 100 colleges and found more than 70 percent are planning to capture a larger share of the graduate degree market.

On this episode the two urge university leaders to be realistic, to look beyond labor market trends to identify where the real growth opportunities lie, and to assess the true costs of standing up a new degree program.

Finally, they examine the market for graduate certificate programs that typically generate slimmer margins but could help build a pipeline of future master’s candidates. Thank you to the following EAB researchers who helped compile much of the market intelligence data cited in this episode: Lauren Edmonds, Joe Infantino, Brian Schueler, Alexa Silverman, Samantha Smith, and Lauren Webre.



0:00:12.9 Speaker 1: Hello and welcome to Office Hours with EAB. On today’s show, EAB’s Megan Adams and Will Lamb explore growth opportunities in the graduate degree market. University leaders across America are confident in their ability to expand and capture a larger share of a graduate degree market worth tens of billions of dollars. Unfortunately, competition is stiff, and many institutions lack the capacity to gather and analyze the right market intelligence to identify areas where they can compete successfully. Graduate degree programs in fields offering high paying jobs and plentiful work opportunities might look like a sure bet, they often aren’t. Megan and Will both believe in the growth potential of this market, but they urge higher education leaders to proceed with caution. Thank you for joining us today. And welcome to Office Hours with EAB.


0:01:11.5 Megan Adams: Hi everyone, and welcome to EAB’s Office Hours. I will note, very different from actual Office Hours I used to hold at Berkeley, no one here is asking me for an A or for help with their latest essay, but I am pleased to be joined by my colleague, Will Lamb, who used to be a Dean of Business Schools, and is here to talk to us about the future of adult and graduate education. So very excited for this conversation. Will, I wanna start with a question. You’ve been in this industry for a long time. Can you just talk to me about what you’ve seen change over the last 10 years, how institutions are investing in adult and graduate education, how the students themselves are behaving?

0:02:00.2 Will Lamb: Yeah, so one thing that really strikes me as I talk to schools around the country is that, when we separate out the graduate education from the, say adult… The non-traditional adult degree completion audience, I see today, a lot of schools facing issues we faced 10 years ago in the graduate space, when we look at what they’re doing with their undergraduate programs for non-traditional audiences. I think when we look back over the last 10 years, one thing I would say is, at the beginning of the decade, it was a safer, more stable environment, and there was a much higher likelihood, when I was involved in helping to create a new program, that the program was gonna succeed and that it was gonna obtain enough students that it would be okay, and that wasn’t really the concern.

0:02:45.8 WL: And so when I look at the difference between today and 10 years ago, with the impact that new online programs have had, and for-profit institutions have had, and some of the mega universities that are developing out there have had, I think one of the most important themes is, there’s no more captive audience. It used to be you could count on a certain degree of a captive audience that wasn’t gonna be that hard to sell on your program, and they might not be as aware of all the options that were out there in the world. Thanks to Google and the way people shop and Amazon Prime and all the other things we’re learning to do in our daily lives, people are a lot more sophisticated about choices and looking at choices. So I think we’ve really moved from an environment where there was some stability and a fair degree of certainty to an environment that’s much more dynamic and much more competitive. Where you really have to think about students, as unsavory as some people may find it, you have to think about students as consumers because they not only have more choices, they’re far more aware of those choices than they’ve ever been.

0:03:51.9 MA: That’s so interesting, when I first started working at EAB, it was a little over six years ago, and we used to put air quotes around the word “consumer” on slides, and I’m starting to take down the air quotes, we just have to come around to the idea that in fact students are consumers, especially in the adult and grad market.

0:04:08.2 WL: Yeah, and I talk to a lot of folks who’ve let that go and their air quotes have been removed, but I still have conversations with people who need to take that step. And some people aren’t comfortable with the word at all, some of them are in air quotes, and some of them have gotten rid of the air quotes, I think more and more of us need to do that, make that shift.

0:04:29.5 MA: It’s interesting, you’re talking about more choices, students have more choices than ever. I would be curious just from, as you’re working with different institutions, what’s your sense, how many of those institutions are actively looking to expand their grad portfolio, or get into the grad game for the first time?

0:04:51.1 WL: An enormous percentage. I think virtually everyone’s looking for growth, particularly with the stresses that everyone’s living with right now, if I had to put a number on it, and there’s a bit of a bias in my sample because I’m working with people who are trying to grow their programs, but if I had to put a number on it, I would say at least, in my mind, at least 90% of institutions are looking to the graduate portfolio as a place to help make up some of the other financial distress that they may be under, that they’re looking for sources of revenue and they’re looking for growth in those programs.

0:05:25.5 MA: Really? So interesting, just a year ago, we did on a whim, only in EAB research, we do this on a whim. We pulled 100 strategic plans and analyzed them, and we looked at one of the top priorities, and we found it was 75%. I thought that was high, 90% is mind boggling.

0:05:43.5 WL: Yeah. I haven’t been associated with any institutions where it wasn’t at least very high on someone’s agenda that we needed to have graduate growth, and I do think… Yeah. I’d be curious to hear your perspective when schools are looking, based on the research you’ve done, when schools are looking for those avenues of growth, what your thought is on the best way for them to think about that.

0:06:11.4 MA: You know, I think the best way to think about it is in terms of margin, and often I will talk to partner institutions and talk to leaders who really wanna be innovators, and I applaud that. There are so many pedagogical reasons, so many mission oriented reasons to innovate the credentials and learning experiences that they’re offering, but sometimes this will lead our education leaders down the road of going after let’s grow certificates or let’s grow badges, let’s go for really small units of a credential and while short format offers a lot more flexibility, the flip side of that is that it’s pretty tough to generate a good margin on such a slow price point offering.

0:07:02.1 MA: The other thing that we’ve found in our research for Blueprint for Growth is that these markets are awfully small, the certificate market, the graduate certificate market is just a teeny-tiny… I wish I could show you via podcast the pie chart, but it is just the teeniest, tiniest sliver of the overall size of the adult and graduate education revenue pie. Master’s degrees are almost half of the overall market size, and I think that is the place to start for growing revenue in this space. The challenge as you know, is that it’s very expensive to stand up a program, and even more expensive still to market and recruit for that program effectively.

0:07:50.8 WL: Yeah, and one thing people forget is when you’re looking at selling three to five courses in a certificate, it costs about the same amount of money to find the certificate student as it costs to find someone who’s gonna buy 30 credits for a master’s degree. And now the certificate students, they still could turn into master’s students, and in many cases, there’s a lot of overlap, but I view that certificate market as one, as I’m talking to people, that’s really important from a strategic perspective, I think everybody should be in that space in some way, shape or form, but it’s not… But they need to set realistic expectations on campus about what the revenue potential is for it, it’s you’re not in it because of immediate revenue gains, I think you’re in it because it’s a test bed, it can be a place to try new material, it can be a place to learn about the market, it can be a place to get faculty thinking about new formats and new delivery modes, there’s ways to use a certificate also as a recruiting tool. The people who’ve taken your certificates, whether they’re for credit or not, are a nice audience to be marketing to when you do try to promote your master’s programs, but I agree with you wholeheartedly, the master’s space, if the goal is generating more revenue fairly quickly, taking a look at your existing portfolio and new programs you could consider would be the most important place to start, it seems to me.

0:09:16.0 MA: What about… What’s your take on how to generate a lot of revenue from master’s degrees? Should institutions be rushing out to launch a lot of new programs, where have you seen that succeed versus when is it the right call to double down on the existing portfolio?

0:09:37.0 WL: Nearly every school we work with, there’s a lot of potential in their existing portfolio for improvements, so I usually spend more time talking with folks about how to make the current program offerings more competitive and make sure they’re stacking up against all those new choices students are finding as well as they can, and I think for many schools, many schools already have programs in the largest market spaces, and if you had a more attractive offering in those spaces, I think you’d see bigger gains than you will necessarily from stampeding towards new programs. I think everybody should be working on something new, but I think the new program should be a relatively small percentage of where you’re spending the time and energy, because there’s usually gains to be made by taking a look at what you already do.

0:10:28.3 MA: Is there a magic ratio? I’m so curious, is there a percentage that should be new versus existing?

0:10:38.1 WL: If I have a… Say I have a portfolio that had 10 programs for ease of math, I wouldn’t be looking for more than the one or two best new ideas I could have. I would not be looking to add too many things too quickly, because I think the whole process of adding something and making sure it’s added in the best possible form with the right modality, with all the right options and features is a hard enough thing to do that… I think that’s a skill in itself, and it’s probably better in the long term to be doing that on a more measured pace.

0:11:19.3 MA: What about… Now I’m just playing devil’s advocate here, but what about for an institution that really wants to support regional economic development and wants to meet, say, emerging tech needs, wants to meet the needs of the regional economy to make it more competitive or to support economic recovery. Should the institute should be chasing, “Hey, here’s where the hot growth fields are. Hey, here’s where employers need the most help getting highly skilled employees?”

0:11:49.4 WL: I think the trends in the labor market and economic development concerns are really important things to think about when you’re looking for the new idea, but one thing I would encourage people to think about is that you don’t necessarily need a whole degree in the thing. Could it be course offerings, options, flexible choices within some existing programs, maybe it’s adjusting and adapting the existing things in your portfolio to play into the economic development needs that are out there. I know from some of the work that you’ve done, you’ve got some interesting insights into what happens when people stampede towards certain disciplines and that not all markets are created equal. I wonder if you could maybe share with us a little bit about how you see choices of which market to consider when you’re thinking about the new degree.

0:12:39.5 MA: Yeah, you know, this all started kind of with a bit of a mystery that my research team, Blueprint for Growth, was trying to solve. We were looking at fields like, for example, cyber security, and they seem like, “Hey, it’s a slam dunk if you launch a program,” but at the same time, this is back when we used to have our partners to our offices and they’ve come for meetings and we sit and have lunch together, and I was sitting at a lunch table and everyone was telling me about their Master’s of cyber security program that wasn’t taking off. And I thought well what could be going on here? Maybe there’s more with marketing recruiting we can be doing, but something’s up off and we try to solve the problem or the question, the mystery of if they’re a student demand, an employer demand, where are the enrollments? As we looked more closely at some of these programs what we realized, is that winner take all markets in some fields are already here, and cyber security is a great example of one of those fields, and that’s a situation where you’ve got the top 20% of competitors owning over 80% of the market. So there could be a stampede to a hot field, but it could be that the competition has already sewn it up, and it’s actually not the opportunity that it looks like on paper when you’re looking only at student demand and only employee demand in isolation.

0:14:05.8 WL: And I think that goes right back to your question about the economic development. You can get pulled into something that somebody knows they have a need, from a business perspective, they have a need for skills, but that doesn’t automatically mean there’s a market for a full program in the space that you’re gonna be able to fulfill the demand for.

0:14:27.0 MA: Absolutely, and the interesting thing about cyber security is the way that those competitors, those top competitors got big is they had great employer partnership networks and partnerships with the military, and they were really able to build those B2B pipelines before anyone else.

0:14:42.4 WL: Yeah, and some of those faces too, there were some early mover advantages. I know I’ve worked with institutions where they had an alumn after 9/11 who was in that space, the cyber security space or the intelligence space, and gave some advice, if you could get me some people with these kinds of skills, I need as many as I can get, where the school moved quickly, and because they moved quickly, they’ve got a place in that market, but where it’s very hard for anyone else… I’ve had the same experience you’ve had, talking to schools who just can’t understand why they can’t get past four or five students in a program in some of these spaces.

0:15:20.0 MA: And it’s a fair question, because on paper, it does look like a great idea. We did some analysis and in the three big fields, business, health care, and education, around 30% of programs don’t have any more than five conferrals annually. Isn’t that amazing? So it’s not just some of these more defined fields like cyber security, but in the big three, we’re seeing this as well.

0:15:45.9 WL: Yeah, there’s a supply and demand problem in some ways for graduate education that didn’t seem to exist before, and that kind of goes back to the very first question you asked that… It used to be there was gonna be enough demand that anything you launched would be okay, and it’s just not that way anymore.

0:16:06.1 MA: So Will, what’s the solution, how do you out-fox the competition? How do you win in this kind of market? It’s saturated, but really the big threat is concentration. What’s the secret? Tell everyone the secret.

0:16:18.3 WL: Right. I think actually having a clear sense of what the table stakes are in a particular space is really important that you can’t just do something because you think this is the way a program should be structured, full stop, that you really have to take a hard look at what others are offering in the space, you have to do some benchmarking, you have to look at the competition and think about how you can build something that allows the faculty to do whatever it is, that’s distinctively their own, but within a framework that makes sense to the prospective student. And one of my favorite words for all of this is flexibility. I think we do ourselves a great disservice when we’re building programs with all required courses, with clear cut structures that can’t be easily changed because of governance on campus to the extent… One of the first things I look at when I’m looking at people’s programs is I look at the electives. How many electives are there and what kinds of choices do those electives give the prospective student.

0:17:21.0 WL: Is there some way for lots of different pods of people to find the program interesting and valuable, because they can satisfy their unique mix of needs with whatever it is that you’re offering. If you have a 36-credit program, that’s 12 courses you take in the pre-set order and there’s no electives, you end up just curving away, you think about an iceberg, you keep chopping off chunks of the iceberg as people drift towards programs that do give them what they want, not everyone wants to do your thing your way, they’re looking to do your thing their own way.

0:17:56.8 MA: Okay, Will. So what’s the golden ratio of electives to required courses?

0:18:03.3 WL: [laughter] Yeah, you want me to reveal, I feel like I shouldn’t let my secret out of the bag on that. I actually think as much flexibility as you can give people is good. I think it’s a travesty if you don’t have at least say 30% of your courses where the student gets some choice. But I have to say, one program that I was involved with, we went from 14 required courses with no choices to a model that was a four-course core and lots of… And then people could package the other courses anyway they wanted to, and that was a much more popular model.

0:18:50.0 MA: I’m having a flashback right now to about, how many years? I don’t wanna think about how many years ago, when I was choosing between graduate schools. And I went to one of them, very elite, excellent program, I was honored to be admitted. And I remember sitting down with the person who’s going to be my advisor. And he said, “In year one you’re gonna take these classes and learn this canon, in year two you’re gonna learn this, that, the other,” and just ticked off, showed me the shelf of books I was going to read, and that was the plan. And he really thought he was painting me a vision of the wonderful things I would learn. And to a certain extent he was. Then I went to Berkeley, and it was like, “Well, you know, you’re gonna read these things and you’re gonna get to choose among these courses, we really want you to explore, we really want you to develop your own interest and pursue your own questions.” And that’s why I chose Berkeley.

0:19:40.4 WL: Actually, you’re bringing back a memory, when I was picking doctoral programs I had a similar experience at Virginia Tech where they had a very unique structure to the program, and you were in the field of management but you were either gonna be categorized as a micro person or a macro person; and whichever focus you picked, the structure of the curriculum was 3-2-1, and you picked which thing you took three of, which you took two of, and which you took one of, so they had each sphere of study, but you got to choose your weights. And that was a huge part of why I was excited to go there, I could imagine putting together the program that spoke to me. And I think that’s true for prospective students today, they do see a lot of options where they get to have some agency and saying, “This is the story I wanna tell about my degree when I get finished.”

0:20:28.9 WL: And I think having been a faculty for… A member for more than 20 years, there’s just a dangerous temptation to try and get everyone else to take the courses exactly the way you would take them, and follow your strict vision for things. Now, some disciplines don’t have a lot of flexibility, they’re going for licensure, they’ve got strict requirements, there’s prerequisites that have to be done in a particular order because of the nature of the discipline, but that’s one of the… I think that’s a good place for some soul-searching is your discipline one where there are actually three or four things that are at the foundation of everything, and lots of pathways that people could take, that could be different.

0:21:11.5 MA: Yeah, let’s not let the physician’s assistants choose their own adventure when it comes to their curriculum.

0:21:17.6 WL: Right. I think in some fields you’re stuck, there’s no way around.

0:21:20.7 MA: Yeah. No exploration.

0:21:21.1 WL: But I do think in some fields, places I’ve been, a lot of the most interesting things the faculty are doing are in the elective pool, that’s where you try out new ideas, you test to see if students are interested in a topic. And the degrees of the future are probably some course that a faculty member’s cooking up in your elective pool. If you have no elective pool, you’re cutting off an important source of innovation for the whole curriculum.

0:21:47.9 MA: What a great takeaway for anyone who is trying to launch a new program or revitalize an existing program, you put faculty innovation at the center of what you’re doing, make it less about requirements, make it less about the traditions of the discipline, and really make it about where is the most creative thought happening at your institution.

0:22:08.1 WL: Yeah. Basically, opening things up, in a sense trusting people’s judgment. And maybe that’s different from 10 years ago, 15 years ago versus today. I think smart schools have folks who are learning to trust a prospective student, they have goals they’re assertively pursuing, so trust their judgment, give them some choice and then trust their judgment about exactly how they wanna proceed through a program. I think that’s a good rule in general.

0:22:40.5 MA: This has been all very aspirational and wonderful. I wanna just add maybe a dose of realism to the conversation. What kind of school that’s trying to… Maybe we’ll put some boundaries around, how big is this school, but what are the realistic goals? And how do you know when a school has set, an institution has set an unrealistic goal for graduate growth? What are the telltale signs, Will?

0:23:15.4 WL: One of the telltale signs is, how big is the goal? I think you actually have some data, don’t you, on what people’s goals are versus what’s really happening in the marketplace? I’d be curious as a starting point to answering that question, maybe it’d be good to give people a dose of some market realism based on what we see out there in the space.

0:23:34.7 MA: When we started to categorize the market and look at what are the different types of competition, we set a threshold for what constitutes a large number of students in a program, and that threshold for large is 20 conferrals annually. 20. That’s a big program. Now, that’s across the board, all master’s programs, but I was surprised to see it so low, especially when we talked to institutions that have big goals of, “Hey, we’re going to enroll hundreds and hundreds of students in a given program.” The other point of reference that I’ll give you is that we also analyzed on this work of my colleague, Brian Schueler, who’s a senior analyst on the Blueprint for Growth team. He analyzed just how many online graduate students do institutions have, and for half, they’re enrolling 152 online graduate students or less. And for most of them, it is a lot less than 152. So the numbers, triple-digit enrollment growth just simply isn’t the reality for most institutions.

0:24:49.4 WL: And you asked, in your question you asked, what would I see that’s an alarm bell or a yellow light when I’m talking to somebody? It’s pretty… You can tell fairly quickly if a school is being realistic about their goals based on what they’re proposing to offer the prospective student. You see people with aggressive goals who don’t have flexible modalities, for instance, or don’t have their online approach up-to-date, or don’t have a mix of offerings that offer the size market that makes it possible to do what they’re proposing to do. I just think that everyone’s still learning to be in a more business-like frame of mind when they’re putting programs together, and there’s a disconnect sometimes between what I’d like to have happen because my institution needs X to occur and what I have to put in place for X to be possible.

0:25:52.1 MA: Here’s a question for you as a former business school dean, do you notice that business schools are better at this? Are they better at marketing, recruiting their programs? Are they better at aligning their programs to market need? Or are they better understanding and reading the competition, or do they need the same help that everybody else does?

0:26:11.4 WL: They need a lot of the same help that everybody else does. I think that it’s probably true at many schools, that the business faculty are more amenable to some of the market-driven facts of life, than other members of the faculty. But that’s not etched in stone. It’s not a definite fact across all schools. But I do think… I think the professional disciplines also, look at pharmacy and law schools and some of the health sciences, you have people tied to their profession who are used to interacting with folks who are hiring their students, where there’s a discrete profession that has particular needs, and where you’re regularly hearing about changes and adjustments on those needs, and I think that pulls you to being more market-savvy. If you’re in a field where your students could go in a lot of different directions after they complete the degree, it’s a little harder to have that tangible reminder that maybe something in the program needs to be re-evaluated. In business law and some of the other professional fields, it happens more naturally.

0:27:18.8 MA: That makes sense.

0:27:20.7 WL: Yeah. I know you’ve got a new set of intelligence reports, that’s exciting a lot of people’s market insights. Could you tell us a little bit about what those reports are and how they could help somebody who’s navigating?

0:27:37.5 MA: Yeah. We’ve been thinking a lot, as you know, about this question of competition and market concentration, and what are the best big opportunities? And so, originally, we had this idea, “Hey, let’s go just run the report on what are the 10 biggest master’s degrees fields in every state.” And I thought, “Won’t that be valuable?” Every institution could take a look at their master’s portfolio, look at what’s big in the state and say, “Hey, are we playing where the big opportunities are?” Well, the thing is, we ran the numbers, and as the numbers came back, we looked at both national and state level competition, and the thing that I was surprised to see, we had already done some analysis on national competitions, that wasn’t as surprising. I was surprised by the level of state competition, and for so many of these large fields, the top three, not a percentage, but the top three institutions in the state conferring degrees in that field, own the vast majority of the market, to the point where it’s hard to recommend launching a program in that field as necessarily a big opportunity. We still show all of that data in these reports, we show the largest fields, we show the national market concentration, how much does winner-take-all apply? We also show, how much does winner-take-all apply at the state level? And then we also show the growth trajectory, hey, how much has this field been growing or declining over the past five years or so?

0:29:11.3 MA: So we do that for the largest fields, but because so many of the fields were so competitive, we also created another kind of ranking called “opportunity score ranking,” and we look at what are the best fields to launch new programs in in terms of competition and growth and size. And that yielded in some cases a very different list than what the largest opportunities are. And so every institution can go right now, you can go on, type into the search bar, this is a lot to say, Master’s Market Competitive Intelligence Report, and you’ll see a list of all the states. If you’re from a teeny tiny state, you get a regional report. And you can download the data for your state or region right now in a report that you can forward along to whoever needs it on campus. And look, right now, “Hey, how well does our portfolio line up with not only the largest fields in the state but the best opportunities in the state? Where do we still have room to grow? And where are opportunities actually maybe a little more limited than we might have thought?” A good way to put some boundaries around growth ambition, but also to look at, “Hey, here’s the possibilities, it’s a crowded market, it’s a competitive market, but there’s still a chance for us to earn some significant run in here.”

0:30:28.2 WL: Yep, that’s an exciting resource to have, I think. Hopefully people, when they’re able to look at a resource like that, it helps reduce the likelihood that they’re just chasing the thing they know people talk about a lot in the market, and they take a more critical eye to…

0:30:50.5 MA: It was interesting, we’ve been talking about faculty a lot in this conversation, and one of the uses that I’ve heard for these reports is to give faculty, “Hey, here are the list of fields where you can look to launch a new program,” instead of bringing each and every idea. It’s, “Let’s innovate within these parameters,” and using it as a guardrail for some of those conversations.

0:31:11.4 WL: Well, there’s this balancing act that has to occur between market discipline and what we are actually good at, where do we have the resources and the capabilities, and the history, to be able to succeed without having to reinvent ourselves completely? How do I trade off sticking to the things I already do well, versus some of these new opportunities that are out there? And having some hard data, I think, could help people have a good discussion about, “Which of these opportunities do we actually stand a chance to be a really successful competitor, and which ones do we not?”

0:31:49.1 MA: I think that perfectly sums it up, Will. Well, thanks for the conversation.

0:31:55.3 WL: Yeah, thank you. Have a great afternoon.

0:31:57.8 MA: You too.

0:31:58.4 WL: Or evening or morning.

0:32:00.7 MA: Time has lost all meaning.



0:32:10.6 Speaker 1: Thank you for listening. We have a special episode coming up next week that features a book discussion between EAB’s Sally Amoruso, and noted author, Nathan D. Grawe. Dr. Grawe is perhaps best known for his 2018 book, Demographics and the Demand for Higher Education, a book that continues to strike fear in the hearts of admission leaders everywhere. The two will talk about Nathan’s new book that looks at how proactive institutions are preparing for the demographic challenges that lie ahead. Thanks again for listening, and join us next week on Office Hours with EAB.

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