Sixteen nonprofit colleges closed last year. One consulting firm projects up to 370 more could close or merge within the next decade.
It’s tempting to read this as a story about weak schools failing. The real story is about position. Higher education is bifurcating into two camps, and the middle is collapsing.
On one end sit the elite brands. Harvard, Princeton, Stanford. They hold pricing power, deep endowments, and draw far more applicants than they can admit.
On the other end sit the low-cost providers. Community colleges and large online universities compete on price and job relevance, and demand there is holding steady.
The schools in trouble sit between those two ends. They charge close to elite prices without an elite brand, while carrying costs the value providers never took on: dorms, cafeterias, facilities, extracurricular programs.
For years that middle position felt safe, propped up by easy student loans. Now three forces are hitting it at once. A demographic cliff is shrinking the pool of traditional students. New federal loan caps limit how much families can borrow. And only 35 percent of Americans now call a college degree very important, a 15-year low.
Michael Porter named this position decades ago: stuck in the middle. He warned it’s the weakest place to compete, because you own neither a premium customers will pay for nor a cost position rivals can’t match.
Southern New Hampshire University avoided the trap. Twenty years ago it was a small regional college with a few thousand students. It bet everything on low-cost online education for working adults, and it now enrolls roughly 184,000 online students, up from about 500 in 2010. It picked an end of the barbell and built scale there.
Here’s what that means for you:
- Pick an end: decide whether you’ll win on premium value or on cost and access.
- Manage your discounts, since relying on them to close deals can quietly become an Achilles heel.
- And fund tomorrow’s model by routing resources toward the end of the barbell your customers are moving to, not the one they’re leaving.
This Week
Find the barbell in your own industry. Name the premium end and the value end, then decide honestly where you sit. If the answer is somewhere in the middle, pick a direction and start moving before a downturn decides your fate for you.
Where does your business actually sit right now, and does that answer make you comfortable or nervous? Reply and let me know.
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