Real-World Case

Here is a real-world situation.

You’ve been hired by an industry association representing the 3,000 colleges located in the United States. Due to COVID-19, nearly all universities in the United States will be conducting classes via video conference at the start of the new academic school year, which begins in August 2020.

A few months ago, the association sent out a survey to the college students attending their member universities. The survey asked a simple question:

Given the remote learning situation, do you plan to re-enroll and attend school in the next academic year?

25% responded "No."

What should the association’s member universities do regarding this finding? How would you structure this problem? What are the possible implications of this finding?

Post your answers in a comment below.

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24 comments… add one
  • Shu Jiang Jul 10, 2020, 6:36 pm

    First of all, I would say: “Umm, thanks Victor, it is a very interesting problem!”.

    Then, I would ask the following clarification questions:
    1. What are the objectives of the association? Education outcome? Economics? Minimizing long term effects (e.g., disruption to the higher education model)?
    2. Is it set in stone that the classes will be online? Or are we deciding among online, in-person, or hybrid?
    3. Is the survey still valid since it was taken few months ago?

    Assuming it is decided that most colleges will adopt remote model for Fall semester, the survey is still valid, and the goal of the colleges are to serve 100% of its student population, then the root problem is to figure out why the 25% would not want to re-enroll.

    With the stated assumptions, I would start with the hypothesis that:
    Most students do not want to re-enroll because their schools are not suited for remote instruction.

    To test the above hypothesis, I would structure the problem as follow:
    1. 25% “No” students – Why they don’t want to re-enroll?
    – segment students by college types (e.g., art school, tech, liberal arts, general, etc)

    2. 75% “Yes” students – Why they would reenroll?
    – segment students by college types (e.g., art school, tech, liberal arts, general, etc)

    3. colleges
    – segment the colleges by type and look at the following for each type:
    1) online readiness
    2) suitability for online instruction

    If the hypothesis that the main reason that most students would not re-enroll is that either their schools are not ready or not suited for online instruction, the association can do the following:
    1. For schools that are not ready, reallocate resources to help these schools to be online ready by building out the infrastructure and needed trainings
    2. For schools that are not suited for online instruction, consider the risk of COVID, and maybe adopt an in-person or hybrid model if feasible

  • U. Halim Jul 10, 2020, 6:20 pm

    How significant is this 25% decrease in enrollment?
    Enrollment-related funding typically contributes to approximately 70% of a University’s total revenue (a combination of tuition, state, and federal contribution). (https://nces.ed.gov/ipeds/deltacostproject/)
    A 25% reduction in enrollment would entail an approximately 15-25% decrease in total funding from the previous level. If a university also faces a 25% reduction in new registration, it would create a persistent funding shortage.
    Student’s decision to postpone/quit college will also hurt a University’s 4yr and 6yr graduation rate. This 4yr and 6yr graduation rate is a crucial metric typically used in future accreditation and federal/state funding allocation.

    Goal:
    The main goal should be to maintain or increase enrollment as high as possible even at the cost of short-term pain.
    Failure to do so will not only hurt funding this year but also in future years.

    Possible Actions (broken down into 4 points for brevity):
    Revenue, Expenditure, Content and, Marketing.
    A. Revenue
    Universities should entertain reducing the effective cost of tuition by offering “aids” without lowering the sticker price. This option is not as costly as one might initially imagine as a large percentage of students already receive federal aids.
    The cost of aid should be structured to maximize Federal and State contributions and tailored only for students who express reluctant to come back.
    In addition, colleges should heavily inform their student body that CARES ACT provides funding for the student (Full-time students receive more federal aid).
    College should have a dedicated group to explore other possible methods to maximize revenue from CARES ACT and dispense the information to faculties.
    Given the recent development of International Student Visa, colleges should consider their ability to offer limited face-to-face instructions.

    B. Expenditure
    There is no obvious way to “cut cost” other than the obvious: reduce facilities temporarily.
    Expenditure may increase in the form of “aid” to students (previously mentioned in revenue). Aid may be in the form of Laptop & webcam loans, aid students for the internet subscription. Given that most students already have laptops and broadband, it will not be a considerable expense.
    Temporarily, colleges should invest heavily in faculty training and class re-development. Ask each department to identify the minimum number of classes that require heavy re-development.
    Hire a few faculties in the summer to create online content, especially in introductory courses that will be seen by hundreds of students.
    Preferably, minimize the need of purchasing items that can only be used in the summer.

    C. Content
    Contents should be developed to better facilitate online learning.
    Hiring faculties in the summer to create online content should mitigate this problem.
    Focus re-development on the introductory courses that would be seen by a large number of students.

    D. Marketing
    Market the content re-development to current and potential students to show the “value” of education and commitment.
    More importantly, ask faculties(or at least department head) to share their redevelopment plan for fall with their former students through email. (Student are more likely to open an email from a professor rather than an email blast).

  • Jakub Hojsan Jul 10, 2020, 6:14 pm

    Before I give a recommendation, I’d like to break down the case and the problem universities face in the United States during this turmoil.

    The problem at hand is enrollment, a large segment of cash flow to a university. Does the university have enough runway to allow for twenty-five percent of their student body to not attend the 2020-2021 education cycle? What are the students’ alternatives to re-enrolling, as well as their motives? Are the students concerned about the quality of education and loss of social interaction? Are the students worried about their finances? Is there a potential focus problem when attempting to learn in a residential environment like home?

    Since the survey was taken, we have also seen one more international crisis; ICE agents will be deporting international students that do not have 3 units/credit hours in person.

    Given that the average tuition/housing for a four-year university is $120,000 across the board, colleges would be losing on average $30,000 a student per year for the students not attending at all (the students that answered “No.” on the survey). The remaining students that would still attend online university would not be paying room and board fees, which average $11,000 a year. We can estimate that 20 million students attend college every year, so the cost would be 166.5 billion dollars in loss. [$11,000 * 15 million students + $30,000 * 5 million students]

    This number is on the conservative side, considering the ICE crisis international students are facing. Some esteemed universities are even suing the US Government to keep international students in their schools for the 2020-2021 school year.

    Schools would incur even larger losses if the decision stands.

    One million international students attend universities in the United States, which some answered “No.” in the survey, and for this reason, we can say that in a worst-case scenario that the losses incurred can increase by an additional 19 billion dollars. [$19,000 * 1 million students]

    Hence the implication of the survey is the following:

    In a worst-case scenario we see a 185.5 billion dollar loss this year and in a best-case scenario 166.5 billion dollar loss this year; a whole 28-31 percent reduction in revenue for US colleges.

    This can be translated into roughly 100 billion dollars best-case scenario and 110 billion dollars worst-case scenario for your organization as your association represents roughly three-fifths of the US universities as clients.

    This is detrimental to the university ecosystem, and my analysis hopes to shed light on a recommendation that we can help you implement.

    To begin, we can segment the problem into a couple of categories.

    1. Financial Burden

    a. During the pandemic, students may have the inability to pay for education and have less willingness to take on loans even at record low-interest rates.

    2. Quality Control and Focus

    a. Will the quality of learning be the same? What can we do to improve the quality of learning while on-campus resources are not available?

    b. How will social interaction take place with online learning? How can we help transition common on-campus activities online? Can the experience be the same?

    c. How can we help students maintain goals and focus during a global pandemic?

    In terms of financial burden, tuition is at an all-time high. Even with in-person attendance students are weary in their finances. We need to make sure students see that their money is being put to good use.

    And in terms of quality control, we need to make sure students feel comfortable in their new online classes; there is no frugality when it comes to production quality and teaching.

    There must be ways for students to interact with one another to maintain a connection to their community, as well as interaction during extracurricular activities; as well as a way to allow students to not get burnt out by looking at a screen all-day to maintain student focus.

    For these reasons, my recommendations include the following:

    1. Hire additional TAs to handle an influx of office hours due to fear of declining grades. The students will need additional help to maintain a healthy state of mind when it comes to their studies and having someone to turn to when they require assistance even if it is online.

    2. To help students maintain focus on their studies, allow time between blocks of classes to allow for adequate rest between screen times. In our connected world, it is easy to get fatigued behind a computer screen.

    3. Make sure every professor has good quality streaming equipment for live video and a place to upload high-quality lectures for students to rewatch.
    Publish press releases and articles that help students understand what the university is doing to help instead of staying silent during this turbulent time.

    These recommendations require campus resources to be reallocated to online resources. While this may seem counterintuitive when campuses want to reopen, this virus will not disappear instantly. The transition will require time, and these steps will allow students to feel more at ease with their online educations for the 2020-2021 school year.

  • Ezequiel Narvaez Jul 10, 2020, 3:42 pm

    First, I would want to know what information we have on the profile of students that responded and the why of their response. The profile permits us to uncover certain characteristics that might be important to understand the rationale of the student to say “No” to the survey question. Furthermore, by knowing the why of their response we can discern the reasoning behind it.

    Second, the association’s member university should first identify if any of the students that responded are from their institution and contact them personally. While COVID-19 hit the US in a strong fashion, it did not impact each university and its student community equally. This leads to some institutions facing unique situations others might not be facing, making them more important to address for their specific academic establishment. For instance, a significant portion of the student population might be international students, which usually pay full tuition. These might face challenges from lack of reliable infrastructure for remote learning to currency devaluation of their local money relative to the US dollar. Moreover, the members should detect if any common trends are present in the general survey both in the profile and responses. This might shed light on pivotal information such as academic year, financial situation, etc. After gathering all this information, the university should prepare solutions to tackle those issues they see as applicable and achievable. It might not be in their best interest to solve minor problems, when there is a finite amount of time and resources at hand to address every issue possible.

    Third, the structure of the problem would be as follows. Initially, I would group students by their profile and their why response. In terms of profile, I would divide them into several groups classified by academic year, major, location of university, student population of university, student to faculty ratio, international and US students, and financial situation. This would enable me to have an idea if there is a group that should be especially considered. Thus, it grants us a clearer picture of WHO is saying “No” to re-enroll and attend school in a remote learning environment. In terms of why response, I would divide them into several group classified by financial situation, remote learning experience, lack of reliable tools/ infrastructure and other. If any response were to overlap, then one would have to take a judgment call and decide which part of the response is highly expressed. Then, I would enlist possible solutions towards each issue addressed in the why response and rank them in importance. This would be done in accordance to the previous classification of why responses. Finally, one would determine the feasibility of each solution and select which ones to address to optimize time, money, efficiency, and health.

    Fourth, there are numerous possible implications of this finding. I think due to the numerous financial struggles arising from this pandemic, the prudent thing would be to divide implications from financial to non-financial. In terms of finances, there could be reductions in revenue due to fewer student attending and higher costs due to sanitation and hygiene protocols needed to follow for maintain people in school’s grounds safe (even if classes are online, there are people still going to housing or faculty going to their offices). In terms of non-financial, there could be implications in terms of logistics and operations of how to accommodate to all student needs in terms of educational experience, physical and mental well being.

  • Marlos Jul 10, 2020, 3:07 pm

    I) Problem understanding and structuring part:

    At first I would like to understand how would this event could affect the universities free cashflow. In order to do that I would look at effect on the following (costs of providing the classes, revenues from students and possible news investments necessary)

    a) Costs: I think that fixed costs should actually increase more than variable costs fall.

    The universities will spend more to stream their classes and to offer online support. I don’t think they could cut the number of professors or the staff necessary to support them.
    Moreover the marginal costs to serve students should be a relatively small part of overall costs. Here I am thinking about costs of material provided to the students, one on one mentoring sessions individual assessment costs. Of course, these are assumptions, so data on how both fixed and variable costs would be nice if available.

    b) Revenues: They will fall as 25%, on average, do not re-enrol and potentially more will less first-year students enrolling.

    Here we can definitely say revenue should drop. However it is important to understand if there are courses that are more affected than others. I believe some courses bring in different revenues (and also have different costs structures, therefore resulting in more or less profits) than others. Furthermore are the university considering any change in their courses pricing? Then we could have a clearer picture of the revenue drop.

    c) Investments: Building infrastructure to stream all their classes while protecting the professors and staff from covid19 will require extra investments, therefore decreasing further the universities cashflow.

    Hypothesis: The universities cashflow will decrease because profits will drop as a results of higher costs and lower revenues while investments required to stream classes and protect their staff should increase.

    Recommended actions:

    1) probe deeper into the extra costs and investments incurred to provide online classes. Do the universities already possess some of these infrastructure in place?

    2) What courses are more affected? Some should probably be more profitable than others impacting our class flow differently.

    3) could we increase the number of students per classes? Specially consolidating classes with lower number of them because of lower re-enrolment

    4) Could we cancel classes with very low number of students, that would make those classes unprofitable?

  • Aleksei Shkurin Jul 10, 2020, 2:23 pm

    That’s a really interesting and timely case! My attempt to solve the issue is below:

    What we are dealing with is a 25% decline in student attendance in 3,000 colleges across the US, induced by the closure of in-person on-campus classes and introduction of video-conference classes.

    Therefore, I formed the objective of the case as: Identifying the root cause(s) of the 25% decline in student enrolment (i.e. volume) and providing ways to mitigate that problem.

    My initial hypothesis was that the decline in attendance is caused by tuition and essential fee costs having a significant burden on low-income students.

    To test this hypothesis, I want to understand the size and composition of the existing tuition costs (is it possible students are asked to pay for services they won’t be using?), as well as understanding the proportion of students who come from low-income families and how many of them take student loans to pay for their studies.

    Let’s start with the breakdown of tuition and essential fees.

    In the US, the average tuition costs are ~$2.5k (in-state) and ~$8k (out-of-state) per year, according to ValuePenguin (https://www.valuepenguin.com/student-loans/average-cost-of-college).

    The tuition and essential fee costs are comprised of multiple components, including: orientation fees, campus fees, lab fees, athletic fees, transportation fees, health and wellness fees etc.

    We can see that some of those compulsory fees aren’t going to be paying for services that benefit students who work from home.

    Now, let’s look at the available data on low-income students.

    Back in 1996, 12% of undergraduate students in the US colleges lived in poverty, that number grew to 20% in 2016, according to the Pew Research Centre (PRC) (https://www.pewsocialtrends.org/2019/05/22/a-rising-share-of-undergraduates-are-from-poor-families-especially-at-less-selective-colleges/)

    If we assume the same trend continuing into 2020, we would have around 21-22% of undergraduate students living in poverty. According to the same PRC article, about 40% of all students take student loans, suggesting that for almost half of those students, the tuition fee is a significant financial burden.

    However, we can also see that even if all of those students dropped out, that would only account for roughly 10% decrease in attendance, suggesting that tuition fees are not the only factor.

    Given that data, my revised hypothesis was that the remaining part of the decline in participation could be caused by lack of access to reliable computers and internet connection.

    To test this hypothesis, and understand how many students could be affected by this issue, I searched for data on digital “homework gap”.

    According to another article by PRC, on average around 17% of students say that they are unable to complete their homework due to the lack of a reliable computer or internet connection (https://www.pewresearch.org/fact-tank/2020/03/16/as-schools-close-due-to-the-coronavirus-some-u-s-students-face-a-digital-homework-gap/)

    This number is particularly high among low-income students (24%) and black students (25%).

    We can see that the costs of tuition and lack of access to computers and the internet could account for up to 27% of the decline in the enrollment, which is not factoring other possible causes that students might be dealing with (such as having to babby-sit, care of elderly family members etc.)

    Therefore, my recommendation to the universities based on the data I found are:

    1) Look for ways to reduce some of the essential fees that do not pay for services students will be using from home.

    That’s particularly true for services such as orientation fees, lab fees, and some of the campus fees.

    2) Look for ways to help students without access to reliable computers and internet.

    That might include lending them laptops with an internet connection or covering their costs of using public library computers (if that’s an option).

    There are risks associated with these decisions that need to be considered, for example:

    1) Reducing fees for non-essential services might result in a decrease in the funding of student clubs. It is essential to work together with those clubs to ensure the financing they will be receiving is enough to maintain their operations throughout the year.

    2) Providing students in need with laptops will create an additional financial burden on the universities, that risk could be avoided by reallocating funds within given universities or by looking for government subsidies to support the initiative.

    This is obviously a very brief analysis that did not take into consideration other reasons students might be dropping out and how to help those students.

    Thank you for reading, I’d love to hear your feedback on this analysis, folks!

    • Jakub Hojsan Jul 10, 2020, 6:18 pm

      I liked your analysis! Do you know of any universities that are already implementing the laptop initiative? I have heard of a few.

  • Jeannette Jul 10, 2020, 2:21 pm

    The Problem: Member universities appear to be about to lose 25% of their customers. Can they modify their product to retain customers?

    The solution: Re-survey the students asking why they would not re-enroll.

    First: presumably 25% of students do not re-enroll every year because they graduate. Does this capture the “no” responses?

    If not, then:

    Do they have financial difficulties that could be mitigated by financial aid?

    Is their intended career path less attractive given the current climate, and would they stay enrolled with additional career counseling services?

    Is the current remote learning structure unsuitable to them, and would they prefer a different format (e.g., more project-based, more one-on-one Zoom time with professors, etc)?

    I would also take additional demographic information to see what patterns emerge in the “no” category:

    Prior to the pandemic, were these students living on campus? If not, would they have access to appropriate conditions to study and take classes (desk, computer, quiet space, reliable internet)? Could campus facilities (e.g., library) be set up to accommodate socially-distant studying?

    What is the age range? Are there childcare constraints on these students?

    Are the “no” students within a similar major or field?

  • Daniel Ojinaka Jul 10, 2020, 1:34 pm

    What should the association’s member universities do regarding this finding?
    1. Segment the responses by universities.
    They need to segment the 25% by universities to understanding if there are certain universities with a high concentration of students with responses of “NO”.
    2. Carry out a second survey to understand the reasons for their responses.

    How would you structure this problem?
    This depends on what the problem is. Is the association looking to keep the 25% enrolled or is the association major concern not to lose profits for the universities? It could be both.
    If the association is looking to keep the 25% enrolled,
    then access alternative options to remote learning to keep the 25% enrolled next session.
    If the association is looking to avoid losing profits for the next session then we can look at ways to cut down the cost or increase other revenue streams.

    What are the possible implications of this finding?
    – 25% decline in the revenue from students for the next academic session.
    – There will be profit loss if the cost of running the next academic session is not cut down.

  • Annie Jul 10, 2020, 1:28 pm

    I would further segment the student population and find out why 25% ( 700) of the students said No. We can find out if the unwillingness to enroll is due to lack of interest in online classes or the lack of networking opportunities. Knowing this will allow us to cater to their needs as much as we can.
    I would also find out why 75% of the students say yes. This can give us insights on what is motivating them to stay with the program. Here, we can find out if they like the classes that they are taking or the different zoom events held.

    Next, I would look into the industry and examine possible the long term impact and implications of COVID. Safety is our first priority, even if it means having online classes for a very long time. Looking to see what competitors are doing is also vital.

    Last, I’d like to look at the university’s capabilities. Is there something they can do that can make the learning experience more interactive? They can look into having zoom happy hours, or virtual club meetings where they play virtual board games. Finding low cost ways to mimic the in classroom setting learning is important.

    Despite this, most people do prefer in classroom learning and it may hard to give students the full experience. However, having an open dialogue is important between the school and the students is important and will help foster a community.

  • William P Jul 10, 2020, 1:28 pm

    Given the data, the member universities should first dig deeper on who’s taking the survey. If it’s taken during the last month preceding seniors graduation, the 25% might just represent the graduating class of these universities (they will have to not take any classes in the following year anyway) with might give a false sense of information.

    Upon doing this cerification, and if indeed we find out that significant portion of the 25% does not come from the graduating class, I would examine on possible causes of not re-enrolling from the survey or other available data (financials vs non-financials eg due to recent ICE restrictions to international students), avenues that these non-enrolling students are taking (what they will do if not continuing to enroll), and from there identify opportunities presented that can be filled by the member universities. This will then enable an actionable acts that the member universities can perform, again if the data proven to be free from false negative (eg graduating students filling out the survey).

    Possible implications can be split into financials (eg. lower tuition & fee income, necessity to obtain other fundings to support new academic year operations) and non-financials (eg. less attendance in classes, potential to simplify offerings to cater for reduced number of students; and opportunities to reallocate campus resources for other things given the lower attendance).

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