COLUMBUS, Ohio — In a wood-paneled office lined with books, sports memorabilia and framed posters (including John Belushi in “Animal House”), E. Gordon Gee, the president of The Ohio State University, keeps a framed quotation that reads, “If you don’t like change, you’re going to like irrelevance even less.”
Gee, who is often identified with a big salary and spendthrift ways, says he has taken the quotation to heart, and he is now trying to persuade Ohio State’s vast bureaucracy, and the broader world of academia, to do the same.
At a time of diminished state funding for higher education and uncertain federal dollars, Gee says that public colleges and universities need to devise a new business model to pay for the costs of education, beyond sticking students with higher tuition and greater debt.
“The notion that universities can do business the very same way has to stop,” said Gee, who is also the chairman of a commission studying college attainment, including the impact of student debt.
College presidents across the country are confronting the same realization, trying to manage their institutions with fewer state dollars without sacrificing quality or all-important academic rankings.
Tuition increases had been a relatively easy fix but now — with the balance of student debt topping $1 trillion and an increasing number of borrowers struggling to pay — some administrators acknowledge that they cannot keep putting the financial onus on students and their families.
Increasingly, they are looking for other ways to pay for education, stepping up private fundraising, privatizing services, cutting staff, eliminating departments — even saving millions of dollars by standardizing things like expense forms.
And Wall Street is watching.
Moody’s Investors Service, in a report earlier this year, said it had a favorable outlook for the nation’s most elite private colleges and large state institutions, those with the “strongest market positions” that had multiple ways to generate revenue. Ohio State, for instance, received a stable outlook from Moody’s last fall, though the report cautioned about the school’s debt and reliance on its medical center for revenue.
But Moody’s issued a negative outlook for the majority of colleges and universities heavily dependent on tuition and state revenue.
“Tuition levels are at a tipping point,” Moody’s wrote, adding later, “We anticipate an ongoing bifurcation of student demand favoring the highest quality and most affordable higher education options.”
Many colleges are top-heavy with administrators and woefully inefficient, having not undertaken the kind of paring public companies did years ago — until now.