March 7, 2016
Operational Models and Educational Debt in ATS Seminaries
Why do we care? What do we know? What can we do?
Part One: What Can We Do?
We have spent the past nine weeks looking at the topic of operational models and student educational debt at seminaries within the Association of Theological Schools (ATS). We’ve spent some time looking at why we care and what we know. Today, we begin providing several practical ideas that may help us move forward.
Student debt is a multi-faceted issue, and we believe institutions must attack it from three angles: cost reduction, revenue generation, and curriculum development. Today, we will look at cost reduction. Next week, we will dive into revenue generation. Curriculum development will be the last category that we address.
It is important to note that what follows are merely examples. Others may very well have additional examples. At the same time, some of the examples that we provide may seem controversial or even disconcerting to some. It is here that we ask everyone to remember what we said in the first article in this series. We are offering suggestions not because we believe they are the only answers but so that we might encourage or spark a conversation. The simple fact is that, as an industry, we are spending and ever increasing amount of money to serve a smaller number of students, which means that we are not being good stewards of the resources to which we have been given. With that prelude, let’s get started.
Variable Cost Structures
As we know, many costs within theological education are fixed or semi-fixed. To combat this reality, some schools have developed variable cost structures for faculty payment, building usage, software usage, and more. In one case, a school built an entire Doctor of Ministry program around variable costs for faculty. In another instance, schools developed rental agreements that expanded or contracted based on usage. In yet another instance, a school decreased its physical plant en route to model where fixed costs comprised only 20% of its budget. We must develop systems and structures that are founded on variable costs.
Variable Cost Faculty Models
Faculty costs are an important aspect of all education, and the role of faculty cannot be diminished. At the same time, some schools are attempting to create different models for paying faculty. One school pays faculty per student rather than per course. Another implemented a master faculty model through which faculty members develop courses but then instructors do the bulk of student interaction. The number of instructors expands based on the number of students.
When moving down this path, schools are able to leverage one course by making it available in several different channels simultaneously. For instance, a faculty member would teach one section of church history, but that section may have asynchronous online students, students in the classroom, and synchronous online students. The skill and technology required to do this effectively is quite substantial, but when accomplished it allows cost to dramatically decrease while options for students dramatically increase.
Many consortia exist within theological education. Some schools are beginning to look at what they refer to as Consortium 2.0. In this model, geography is not the primary driver behind collaboration. Instead, a common mission or common desire to reduce the duplication of costs drives the conversation. In one instance, schools jointly developed an online course platform. In another example, schools collaborated on everything from business office functions to library services to information technology to student financial aid processing. We believe there is great promise in this model. If seminaries were able to creatively collaborate on a large-scale, we could see significant changes in cost.
Another area of great promise is automation. As an industry, higher education has been relatively slow to adopt the automation made possible through software and software integration. For instance, the technology to automate the entire enrollment management process exists, but few schools have capitalized on that reality. To be fair, the cost of implementing such a system can be substantial. Although, it could be argued that the cost to implement such software could be addressed through large-scale collaboration, as mentioned above.
Over the years, theological schools have operated on the concept that they must be an all-inclusive shop. This philosophy extends into curriculum development, instruction, maintenance, support services, and much more. Schools that are strategically outsourcing various components of their operations are seeing significant gains in efficiency. Some schools “outsource” program development, others course content, and still others everything not connected directly to student learning. Obviously, the way that outsourcing could be used varies from school to school, but it seems that each school could benefit from the concept.
Willingness to Make Hard Decisions
When it comes to cost reduction, the bulk of seminaries are going to have to look at how they utilize human and physical resources. The pain caused by looking closely at these two issues cannot be overstated. It is difficult to consider reducing the number of physical assets or human resources used by a school. However, if underlying issues related to process complexity, inefficient systems, and process integration are not addressed, changes to physical or human resources will have no impact on cost.
Symbiotic Relationship between Profit and Mission
Schools that emphasize theological education have something much more important to focus on than profit. Our respective missions should drive our decisions each and every day. However, it may be true that we have paid attention to mission without giving adequate attention to margin. We once heard someone refer to a “nonprofit” institution as a “for-profit service organization.” That reality resonates with us because good stewardship of resources creates space for innovation.
Limit Access to Credit
The quickest and most direct impact we can have on student debt is through limiting students’ access to credit by lowering our Cost of Attendance. However, lowering the Cost of Attendance means that we have to wean ourselves off the flow of federal loan dollars. If we begin to receive fewer loan dollars, we must also begin to adjust our costs to account for this decrease in funding. I would argue that reducing access to credit would force us to make the decisions that need to be made thereby making it a cost-reduction strategy (in addition to a curriculum strategy).
As stated above, these nine examples are meant to spark a conversation. In what ways might we be able to reduce the cost to deliver theological education? At the same time, we must recognize that cost reduction must be supported by our work in revenue generation and curriculum development. Come back next week to see a few examples for these two areas!