It appears that the cull of pathway operations in the US has further to go. The Navitas website suggests that Global Student Success Programs at UMass Lowell, UMass Dartmouth and Florida Atlantic University have been discontinued. All of them throw up the message, “The Global Student Success Program is no longer accepting new applications..” * It’s the same story for Virginia Commonwealth University and the University of Idaho links.
Looking more deeply, the figures from UMass Lowell show a precipitous drop in Navitas enrollments from 187 in Fall 2016 to just 81 in Fall 2018. The numbers for 2019 aren’t available on the university site but a further dip seems likely. If these are permanent closures it brings Navitas down to three pathways in US from eight at its peak. Overall, the number of on-campus pathways in the US may have fallen to around 40 and its little wonder some are making a “pandemic sales pitch” that they are really masters of online technology.
With the pressure on US international enrollments growing year by year it’s difficult to see that there is a lot of good news to come. Rumours abound and are difficult to verify but in recent weeks I’ve been told of a pathway run by one of the big two operators at a top 200 east coast university that is looking at a 70% decline in enrollments year on year. It’s a very long way from the suggestion made in 2014 by Parthenon Group partner Karan Khemka, that “We anticipate that growth will be constrained only by the pace at which private providers can develop the market.”
We are seeing a wholesale realignment of the pathway sector but alongside that there may also be a double whammy as universities seek to renegotiate commercial terms in the light of changing market conditions. For example, the University of South Carolina Board of Trustee minutes from April 2019 make for interesting reading as they reflect on the changing nature of the university’s deal with Shorelight. The initial deal had been signed for seven years in 2015 and the proposal was to re-sign for another seven but with “better financial terms for the University”.
One big shift indicated was that USC would be allowed to keep 90% of the tuition paid by students in years following the pathway and pay Shorelight 10% of the tuition. Under the initial agreement the split was 83% to USC and 17% to Shorelight, so on an out of state, undergraduate student fee of $16,700 that’s a cut of just over $1,100 a year per student. It’s worth remembering that Shorelight noted early in their history that, “not only does the university not contribute anything upfront to get the program off the ground…but Shorelight reimburses the university for any expenses as it’s getting off the ground.”
The obvious question for traditional pathways is how they remain sustainable when the university is bearing none of the start up costs, and if the provider’s revenue share from students going into the university is being reduced. In a recent blog I looked at the growing inter-company debt between INTO University Partnerships and its US pathways where, the collective debt owed by five joint ventures open for at least five years, had from under $5m to nearly $15m. The closure of the pathway at INTO’s partner Marshall University came as enrollments fell and inter-company debt rose sharply.
While $1100 a student doesn’t sound very much the real point is that this becomes a loss of $110,000 a year if you have 100 students progressing and $330,000 over the lifetime of the cohort. Add to that the increasing cost of acquisition of each student as global competition increases and the basic economics of a pathway come under serious pressure.
It also raises the question as to how sustainable are the remaining pathway operations as the US faces another bleak year for international enrollment. A recent Open Doors survey reported 52% of US universities indicating a decline in enrollments for 2020. Navitas research with agents recently suggested that declining student mobility and growing unpopularity could see the US lose between 160,000 and 350,000 international students.
Alongside the well-known and longer-term internal issues facing students who might previously have seen the US as their preferred option there is little doubt that competition is playing an increasingly important role. The UK has made good headway and become a more popular destination this year which has led to an increase in undergraduate enrollment from China of 14% this year. Canada continues to provide an attractive option with clear routes to citizenship that have been particularly successful in attracting Indian students in recent years.
Supply and demand are powerful and remorseless market disciplinarians. The dash for growth in the US pathways came supported by over $1bn of private money flowing into the sector, but the economics of creating more and more supply at a point when demand was slowing have become evident. With global competition for students increasing, student mobility threatened and universities finding alternative means of reaching the market – particularly online – it’s probably a hard road ahead.
*As always I am happy to have authoritative corrections or clarifications and will record them.
Image by Gerd Altmann from Pixabay