Survey: Presidents pessimistic about finances, ratings system

Confidence in business models lower than it was last year

Leaders of colleges and universities are pessimistic about the financial outlook of their schools and the Obama administration's plan to rate institutions, according to a new survey from Inside Higher Ed and Gallup Education.

Researchers surveyed 647 presidents representing a range of institutions, including private, public, non-profit, and for-profit. Presidents answered anonymously, but their answers were grouped by institution type.

College ratings get flunking grades

Some higher education leaders have publicly criticized the Obama administration's ratings system since it was announced last year.

Read our primer on President Obama's ratings plan here

Accordingly, overall ratings for the plan were low. About 33% say they would give it a "C" grade—and more than half (56%) say they would give it a "D" or "F."

Nancy Zimpher, chancellor of the State University of New York, told Inside Higher Ed's Doug Lederman that she sympathizes with her colleagues' skepticism to some degree. But she says that presidents can be too quick to resist efforts to make colleges easy to compare: "We seem to have one speed—'Let's not do this."

Zimpher encourages her colleagues to collaborate and unify around a system that will help students make their decisions, rather than continuing to resist the effort.

Divided on free community college

Presidents are split over President Obama's other major higher education initiative, a proposal to make community college tuition free. Leaders of community colleges are mostly in favor of America's College Promise (68%).

But leaders of other institutions are more skeptical; only 20% of presidents of private nonprofit institutions and 25% of presidents of public four-year institutions are in favor.

Budget concerns looming

Overall, presidents reported low confidence in their business models—less than they reported last year. Last year, about two-thirds of presidents said they were confident in the sustainability of their institutions' business model over the next five years—and half said they were confident about the next ten years.

In 2015, the share of presidents confident about their business model fell to 56% over the next five years and only 39% over the next ten.

This drop in confidence may not be surprising in a year of bad financial news for colleges, as Lederman points out. Dramatic budget cuts in several states have made headlines over the last few weeks. Colleges could lose $807 million in Louisiana and Illinois alone, and Arizona's proposed $99 million cut would completely eliminate funding for some community colleges.

More recently, Sweet Briar College surprised many industry leaders when it announced that it would close, in spite of a fairly strong endowment.

In spite of the low confidence numbers, at least two leaders think presidents still remain optimistic.

Renu Khator, chancellor of the University of Houston system and president of the main campus, told Inside Higher Ed that the industry will experience a "very serious disruption" and presidents are underestimating its potential effects.

Patricia McGuire, president of Trinity Washington University, agreed. She notes that the job of a president is to have faith in the institution's business model. "Presidents are paid to be boosters… as I'm filling out this survey, I may be thinking, 'If I can't strongly agree that my college's business model is sustainable, should I be doing this job?'" she says (Lederman, Inside Higher Ed, 3/13).

The takeaway: In a survey, university presidents report less confidence in their business model than last year. They also report skepticism about President Obama's free community college and college ratings initiatives.

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