A snapshot outlook on higher education – using profitability analysis to drive strategy

By - November 7, 2017

Trends in higher education

The accelerated demand for education by increasingly more diverse student populations has piqued the interest of leaders in higher education. Higher education is becoming progressively global, leading to cross-border migrations of universities and students. Growth in international student enrollment has nearly doubled from 2005-2015. The NCES projects the rate of students age 25 and beyond to increase by 20% from 2012-2023. The rise in non-traditional students increases the value proposition for non-traditional degrees. Students seeking to circumvent rising tuition costs and student debt are looking to leverage the availability of information by acquiring job market-relevant skills through non-traditional degrees. The means through which students are learning have shifted towards online course enrollment, which has continued to climb for over a decade now.

As the traditional business model is under pressure from increases in student debt and reduction in public aid, institutions must focus on aligning their operating model with core competencies.

Funding dilemma

Higher education decision makers are being forced to evaluate the efficiency and cost structure of their institution to cope with the industry’s changing landscape. State funding for public universities has decreased significantly as states struggle with their own budget shortfalls. The U.S. government is scaling back funding for university-based research programs, disrupting a critical revenue source for the higher education sector.

It’s not just public universities. Private universities have lost significant value in their endowments as a result of the 2008 market crash, which has hampered investment returns.

As a result, gross tuition rates are rising faster than education spending per student, causing schools to turn to focused revenue enhancement.


The changing landscape is putting pressure on institutions to operate efficiently and concentrate their revenue generating strategies on the most profitable types of students, markets, channels and education methods. RSM leverages highly skilled management consulting professionals to build robust models that help higher education leaders understand the true profitability across multiple dimensions for drastically improved decision making. RSM assesses customer types (e.g. online students, international, in-state, out-of-state, etc.) and geographic markets to determine contributions of certain student populations to revenue, costs and margins so that higher ed. leaders can make informed decisions on how to market, sell, and retain student populations across focused geographies. RSM will evaluate service capabilities (degrees, online, classroom, etc.) and provide insights into which services are the best fit for the institutional vision and align competencies with the operating model, which presents cost savings opportunities as well.

To learn more about how RSM can assist you with your management consulting needs, contact us at 800.274.3978 or email us.



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