The higher education sector has been headed down a path of declining financial stability for years, which recently has been accelerated by the COVID-19 pandemic.
Government funding is fluctuating, causing an ever-increasing reliance on tuition revenue, and the pool of high school graduates continues to shrink. And as current and future students are looking for options that better fit their needs and lifestyles, more traditional institutions have limited ability to adapt quickly to those changing market demands.
The pandemic pushed resources in higher education to new extremes, with most institutions needing to switch operations substantially or fully remote in a short period of time. Many institutions are looking to turn that challenge into a new opportunity for business by increasing online learning (through both more online courses offered and fully remote program offerings). Institutions are also investigating revisions to existing business models that involve creating shorter-term programs and courses, as well as more part-time options. Targeting individuals outside of the traditional pool of students may also lead to success through workforce training programs or high school partnerships for dual enrollment or pre-college prep courses.
Alternatively, institutions are also searching for ways to earn revenues beyond the typical tuition-centered approach. Some examples include energy generation, space rentals and leasing parking operations. However, it’s important to consider that while these alternative revenue streams contribute to financial goals, a need exists to also balance them with the institution’s mission. Engaging key stakeholders early in the exploration process is critical to success.
Whether it be adapting current revenue streams to respond to student demands or heading down alternative revenue paths, it’s evident that institutions are using this time to implement changes and to gauge the potential for value in new and sometimes unexpected places. Utilizing the Internal Audit function to assess the risk associated with new revenue streams and new business models can help your institution to further focus on achieving its core mission and to ensure future success.
