Class Struggles

It seemed a suitable setting for the delegates representing one of greater Boston's most important industries: a French manor-style mansion on a secluded 25-acre Dedham estate. Oriental carpets covered the floors, and expensive antiques filled the “gun room,” where informal discussions were to take place. Over one of the two marble fireplaces in the long, high-ceilinged room hung a portrait of the mogul who had built the house, the heir to a Massachusetts shoe- manufacturing fortune.

But the luxury of these surroundings proved little comfort to the board members who gathered there one
day this past spring. Figures set before them showed that New England's longtime lead in their multibillion-dollar business had eroded for the 10th year in a row. As it had in shoe manufacturing, the region was unquestionably losing its historic dominance in their industry, at least by several important measures.

New England's problem, one board member groused, was that it was stuck firmly in the past and failing to change with the times. A “crisis of reputation,” another called it. “We're looking at a weakening condition.” Later, recounting the discussion, this delegate paraphrased the British statesman Sir Edmund Burke: “Any enterprise that has not the capacity to reform itself has not the capacity to survive.”

Frank words from people who felt cause to be worried. The object of their apprehension? An industry synonymous with the region for three centuries, whose holdings in cash and real estate total in the tens of billions of dollars, and whose economic impact is too vast to even be reliably determined: the higher-education sector — New England's vaunted universities and colleges.

“We kept hoping this year that the numbers would turn up. We really did,” says John “Jack” Hoy, former president of the New England Board of Higher Education, the group that met that day in Dedham at the Wendell Endicott estate, which was given to MIT by the shoe tycoon's children in the happier 1950s. “It's been far too long that we've seen a steady decline in our national share.”

Quietly, with almost no public notice, New England's statistical dominance of U.S. university enrollment has ended.

While the region had always laid claim to a disproportionately high percentage of the country's university students, its slice of the pie has shrunk in the last 10 years to about the same as its share of the national population. The amount of vital research and development dollars earmarked for New England has also fallen, from more than 10 percent to less than 8 percent of the national total, for an estimated loss of about $1 billion in just the last three years.

The effect of all this is by no means academic. Along with financial services, health care, and technology, higher education is one of the four biggest industries in greater Boston. New England universities and colleges spend about $15 billion a year on payroll, supplies, and services alone; their broader economic impact by way of such things as high-technology corporate spinoffs is incalculable. “Boston has only two natural resources: cranberries and colleges,” says Daniel Cheever, president of Simmons College, who worries about these downward trends. “Which do you want to put your money on?”

The odds are clearly shifting. The New England Council, a business alliance that promotes economic growth, will release a report this month concluding that the area has been hemorrhaging high-tech talent, in part because of the decline of its market share in higher education. “We're having a hard time being competitive with other regions of the country in attracting young professionals,” says Richard Freeland, president of Northeastern University and cochair of the council's Commission on High Technology Workforce Development. “We can no longer take for granted the fact that we used to, that people flocked to New England from all over the country to go to school and then stayed. We can't take that for granted at all.”


Boston clearly remains the capital of higher education, the hub of a region with 270 colleges and universities collectively employing 28,000 faculty and enrolling nearly 800,000 students. Boston alone has 42 universities and colleges, with 136,900 students; neighboring Cambridge has six schools with 46,930. That means greater Boston has 43 students for every 1,000 residents, the highest ratio in the nation. It also leads the nation in university research and development expenditures per capita.

But the area's historic statistical leadership relative to other regions has been declining. From 1985 to 1995, college enrollment nationally grew by 21 percent but in parts of New England by only 8 percent. The number of students in the region has dropped steadily by nearly 30,000 from a peak of more than 827,000 in 1992. Most New England campuses still were considering freshman applications for this fall as late as May 1, a month after the traditional acceptance date. “Boston continues to be the Athens of American higher education,” says James Samels, an attorney and management consultant who works exclusively with colleges and universities. “But there's a real question about whether it will be able to sustain itself.”

One problem is that New England is producing too few traditional college-age students. Nationally, there has been a 4.3 percent increase in the number of 18- to 21-year-olds during the last 10 years, while New England has seen a nearly 12 percent decrease. This is a trend that shows no sign of reversing. By 2012, the number of high school graduates is expected to grow by 31 percent in the West and 23 percent in the South, but by just 17 percent in the Northeast. In some New England states, the number of students graduating from high school will actually decline. Half of all new students in the next decade will come from California, Texas, and Florida. “The question is, how many of those folks are going to be willing to come up for a cold winter?” asks Joseph Cronin, former Massachusetts secretary of education and onetime president of Bentley College.

Another liability: New England's universities are the most expensive in the country, with tuitions 30 percent higher than the national average. Tuition and fees at private New England universities — not including room and board — average $21,215; at public universities, $4,748. Six New England private colleges and universities are among the nation's 10 most expensive: Amherst, Brandeis, Brown, Hampshire, Wesleyan, and the Massachusetts Institute of Technology. Two of its public universities — the universities of New Hampshire and Vermont — are among the 10 priciest publics. Once the cost of residence halls and food is added, the tab for attending some New England private colleges is about $1,000 a week. This at a time when Americans are becoming increasingly price-conscious about higher education. In a survey by the American Council on Education, 86 percent of families said they worry about the cost of college, and two-thirds doubt that colleges and universities are doing much of anything to stay affordable.

More than a third of New England high school graduates now go out of state for college, a higher rate than in any region other than the university-poor northwest central states. And more of those who stay near home are opting for less-costly public education. At the public University of Massachusetts at Amherst, which has frozen its tuition since 1995, one-third of all freshmen accepted for this fall enrolled, a significant increase; officials speculate that many chose UMass over more expensive private schools. “The middle class is beginning to feel the effects of what looks like a recession to me, and people begin to think about cost at that point,” says David Knapp, retired president of the UMass system.

There is also increasing competition from universities in other sections of the country whose prestige is on the rise but whose tuition is lower, including the public universities of Michigan, Wisconsin, and North Carolina. “The fact is that institutions across the country that 10 years ago New Englanders had never heard of have emerged as very strong, nationally competitive institutions,” says Hoy, who stepped down this summer after 23 years as head of the New England education board. “It's a good thing that California has built however many new university campuses,” says Cheever, the president at Simmons. “It's a good thing that more kids in Tennessee are able to go to college there who may not have previously gone to college. But it's not a good thing for Boston.” Cronin, who is now a higher-education consultant, went to Illinois to recruit for Harvard. There, he says, “they told me, 'The University of Illinois has gotten so good, why would we pay three or four times that much to go East?' That was very disconcerting.” Even foreign enrollment, worth nearly $1.3 billion a year to the New England economy — more than half of it in Massachusetts — is growing more slowly here than in the rest of the United States.

Increasingly, place doesn't matter anymore anyway. The fastest-growing component of the higher-education industry is the for-profit sector, including distance-learning programs that teach over the Internet or in classes held at convenient times in classrooms close to where students work or live. The most successful, the University of Phoenix, now has the largest enrollment of any U.S. private institution of higher education. “People want their university in the shopping mall, where they can park, and Phoenix is doing that,” says Gordon Winston, director of Williams College's Project on the Economics of Higher Education.

This, too, presents a growing threat to New England's bricks-and-mortar schools. The University of Phoenix began operating a Massachusetts campus out of a Sheraton Hotel in Braintree this year, attracting little attention from the public — it still has fewer than 50 students here — but a lot of angst from local universities and colleges. Resistance from the higher-ed establishment helped delay the school's required state approvals for two years. “We did experience a normal reticence about our coming into the area,” says Jacquelyn Armitage, Phoenix's campus director. “But we are able to deliver educational programs to working adults in ways that meet their needs. And there does appear to be a need.”

This development has begun to persuade officials at some U.S. universities of the truth of the onetime heresy that higher education is, in fact, a commodity that responds to differences among schools in such variables as cost and convenience. “We've got a new market dynamic, and that is free enterprise,” says Samels, the higher-education management consultant. That's a new idea for many Boston-area universities, which long took for granted that students would show up and pay whatever it cost for a degree. “The concepts of higher education as an 'industry' and students as 'customers' are relatively recent developments,” says Robert Newton, special assistant to the president at Boston College, who has studied this trend.

Some nonprofit U.S. universities are responding by launching for-profit subsidiaries. The University of Maryland created the for-profit University College. New York University launched NYUonline. And Columbia University formed the Fathom Knowledge Network, a for-profit division in collaboration with 12 other institutions. “Traditional education feels it has to compete for what had traditionally been a pretty stable customer base,” says Peter Stokes, executive vice president of Eduventures, a Boston-based research firm that also provides consulting services to universities.

New England, Stokes says, has been slow to pick up on this trend. “If you look at the growth of the for-profits, none of them are based in New England,” he says. “NYUonline is the closest. The more innovative activities are just not happening in New England. There is that sort of knee-jerk academic hostility to change, with Boston in particular being almost higher education incarnate, where there's an exceptionally strong resistance to these new ways of doing things.”

Area universities and colleges “have done very well up to the last 10 years,” Stokes says. “Since then, they've been kind of asleep at the wheel.”

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