The future of higher education will not depend on how much investment there is, but on where it goes.

It’s a worrying time for institutes of higher education in the US.

As widely reported, student enrollment has been in decline for the past half-decade. Some predict that it will be another half-decade before figures return to growth. Even then, recovery is expected to happen slowly.

Given the complexities and scale involved, pinpointing the problem is extremely difficult. However, exorbitant tuition fees and crippling student debt are considered the de facto contributors, and not without some merit.

But there are others: the availability of more jobs in an improving economy tends to coincide with fewer college applications; a greater choice of career development pathways has given students a more affordable alternative to higher ed; and the fact that colleges and universities are now themselves saddled with mounting debt is having a knock-on effect on their budgets and survival strategies.

Survival strategies – how higher education institutes are investing

To combat the enrollment decline, institutes of higher education are investing more money but are borrowing incredible sums to do so.

As reported in The Atlantic, the combined amount of college and university debt now stands at $240 billion – a record $41.3 billion of which was borrowed in the last year alone.

As a result, 9 percent of college and university budgets now go toward servicing this debt.

To cope with this, most higher education institutes are forced to increase tuition fees, which negatively affects student enrollment numbers, thereby completing a vicious cycle of spending and borrowing.

“Borrowing isn’t necessarily bad,” says Howard Bunsis of Eastern Michigan University in the same article. “What matters is what you’re borrowing the money for.”

Indeed. For many colleges and universities, however, the problem is that their investments have become too heavily focused on improving perception rather than on improving actual performance.

Risk and reputation

Most people would agree that reputation is important to any institution’s success – in fact, many would insist that it is a college or university’s most valuable asset.

This may go some way towards explaining the amount of money that higher education institutions have invested on enhancing their campuses. From January to August of 2017 colleges and universities spent a total amount of $8.4 billion in renovations and new constructions – a 10 percent increase in spending on the same period last year.

According to a report by the credit rating agency Moody’s, out of 26 universities studied, 8 put themselves at “substantial” or “speculative” credit risk by expanding their campuses even while student enrollments declined. In an effort to appear more appealing in the eyes of prospective students, less-wealthy institutions are more likely to invest heavily in constructing dorms, fitness centers, and other similar facilities.

Ivy League schools on the other hand, though they are among the largest borrowers, are more likely to invest their considerable resources into research and instruction – investments that are consistent with their longer-term vision and strategic goal of providing a higher standard of education.

Prestige depends on performance

Because prestige is so valued, its development takes considerable time and planning – both of which may seem something of a luxury for higher education administrators under pressure to increase revenue by increasing student enrollment.

Ultimately, however, the effectiveness of any institute of higher education’s drive towards greater prestige and prosperity is reliant on performance.

Typically, this is measured by core metrics such as graduation rates, time to degree, and completion rates (though such metrics have been identified by some as being overly simplistic). To place highly in university rankings such as the QS or Times Higher Education – another means of attaining prestige – college or university performance is gauged by criteria such as reputation (among other academics and employers), faculty/student ratio, citations per academic paper, and so on.

However, such criteria are generally the end result of an entire process that hinges on the actual day-to-day experience of students in higher education. This is why investment should help optimize learning rather than merely improve optics.

Student performance and the future of higher education

In a paper published by the OECD, author Robert Wagenaar discusses a number of performance criteria in higher education that focus on key learner outcomes.

The process Wagenaar used to outline performance is known as the Tuning Approach, which was launched in 2001 by a group of European universities to promote transparency and comparability across higher education programs. Another purpose of the approach was to “raise awareness about role of employability and citizenship when setting up and implementing degree programs”.

Chief among the key learner outcomes is one’s level of competency (both generic and subject-specific):

“Competencies represent a dynamic combination of cognitive and metacognitive skills, knowledge and understanding, interpersonal, intellectual and practical skills, and ethical values…Fostering these competencies is the object of all educational programs…”

In other words, how good a job is an institute actually doing in providing a high-quality education to its students?

The effective development of competencies could essentially be distilled into the following:

Identify the competency to be taught and the content required Identify an effective learning and teaching strategy Identify or develop a suitable means of assessment

The overall aim here is to allow for “comparison of the quality of different programs as well as the quality of its output: the graduates”.

To maintain or improve upon program and graduate quality, higher education institutes must move with the times by rethinking how they deliver courses and evaluate their effectiveness.

Inevitably, this means investing and implementing the tools and technologies that will best support a higher quality of teaching and learning. We have already seen this with the advent of online learning. Rather than dismiss this as a trend, elite colleges are in fact using technology as a way of “unbundling” higher education into smaller, more bite-sized pieces.

EdSurge reports that more universities are developing “MicroMasters” programs that cover less material than their in-person masters programs but offer learners a higher level of specialization at less expense.

Such initiatives come as a response to the changing world that students enter upon graduating. They are designed with the understanding that having the ability to use technology to enhance learning opportunities either inside or outside the classroom will be invaluable for students looking to compete in a global marketplace.

As severe and widespread budget cuts are making prudent investment even more of a priority, more colleges and universities will diversify their offerings in other to increase enrollments and attract a wider array of learners. Therefore the technology they invest in will help in setting them apart from others.

Education is a process, not a product. The end value of a careful investment will surpass its initial costs as it should help drive improvements in terms of course quality and student performance. Once this remains the focus, prestige should come as a welcome by-product.