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Not Really Friday Odds and Ends
Updates on regulations, enrollment vs finance crisis, and generative AI resources
Phil Hill
September 18, 2023
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Welcome to the new week. Morgan and I are working to establish a more consistent newsletter schedule, but in the meantime I’ll share some various updates on topics of interest even though it is not Friday.
Regulation Timing Unknown
In late July I shared an update on the timing of revised third-party servier (TPS) guidance.
Well, I have good news for you. I’ve heard from two independent sources (including this mention) recently that the revised TPS guidance to likely to come out in August or early September. As a reminder, the TPS Dear Colleague Letter (DCL) came out in February and would have effective added regulations and reporting requirements on nearly all of the EdTech industry. After massive pushback, the Department of Education (ED) promised to change the guidance to remove the foreign-ownership clause and changed the effective date to be at least six months after the release of revised guidance.
That revised guidance is likely to occur this summer, meaning that it (in whatever form it comes) will be effective as soon as March 2024. I would expect the new guidance to have a similar approach but focus on recruitment and marketing services.
We are past early September and that guidance has not been released. I strongly suspect that we’re seeing the problem that several members of the Arnold Ventures-funded coalition pointed out, that by continuing its quest towards mass forgiveness of student loans despite the Supreme Court ruling, the US Department of Education (ED) is biting off much more than it can chew. In this update I shared the admonition from Arnold Ventures’ president and CEO Kelli Rhee [emphasis added]:
Unfortunately, what’s likely to follow is a repeat of last year’s legal back-and-forth: a lawsuit, a protracted court battle and persistent uncertainty for borrowers. And even if this new gambit is successful, it won’t solve the underlying problem. America’s student loan debt will likely again reach $1.6 trillion — today’s staggering total — within just a few short years. In the meantime, the rest of the administration’s important higher education agenda will almost certainly shift to the backburner as attention is placed instead on regulating debt cancellation.
See the second half of that post for more of an explanation on the impacts of the student debt relief work by ED. It takes staff hours - a lot of them - for ED to revise regulations and guidance while also preparing for the resumption of lawsuits. Hours that now are harder to allocate.
We don’t know when the renewed TPS guidance (or a decision on the OPM-related bundled services exception guidance) will be released, but we’ll keep watching.
Fall 2023 More of a Financial Than Enrollment Crisis
I have described an enrollment-driven financial crisis that is becoming the primary issue of concern to US postsecondary leaders.
You can think of this as a simplified version of Maslow’s Hierarchy of Needs as applied to institutions (or systems of institutions). At the base physiological and safety needs, institutions need reliable revenue to continue to survive, largely driven by enrollment - either directly through tuition or indirectly through state funding formulas. Needs at these lower levels must be satisfied before institutions can attend to higher needs, to paraphrase and adapt the model. If a college or university is facing a structural budget deficit driven by declining enrollments, it’s not that nothing else matters, but the primary focus must be on these base issues.
Enrollment declines are one of the factors affecting institutional finances, and the two topics are closely linked but not completely. We should find out with the expected October release from the National Student Clearinghouse (NSC) enrollment estimates, but it’s looking like the short term (read that as Fall 2023 through Spring 2024) may show a temporary split, with neutral or positive enrollment gains but deepening financial losses.
Beyond the Community College anecdotes of positive enrollment news, there is the new Inside Higher Ed survey of Admissions Officers released today. In that survey, 56% reported that their institution had not met enrollment goals by May 1st (with that total dropping to roughly 50% by July 1st)