I started my higher education career at Georgetown University Law Center in the late 1990s. Within a few months I found myself witness to a campus protest that taught me a great deal about how universities work.
In April 1998, the president of Georgetown, Leo O’Donovan, announced that he would not be renewing the contract of Law Center dean Judy Areen. This decision baffled many, given that Dean Areen had an extraordinary record as a fundraiser and enjoyed enormous popularity among students, faculty, and alumni. It quickly became clear to those of us on campus—as well as to The Washington Post, which followed the story closely that month—that the decision had been made largely because O’Donovan and University Vice President Michael Kelly wanted Dean Areen to contribute more of the law school’s revenue back to the mother ship. The medical school was struggling, having lost almost $60 million in the last fiscal year, so they needed the law school to help keep it afloat. The result was an outcry by powerful alumni, who withheld millions of dollars in pledges, some unfortunate PR for Georgetown, a new five year contract for Dean Areen, and the resignation of Michael Kelly—all within a three week period.
What I took away from this experience was not just a lesson in campus politics, but also how dependent large universities can be on their cash cow programs. Law and business schools traditionally have lower overhead relative to, say, medical schools, but can still command high tuition with the promise that their graduates can command high salaries after graduation. Law and business students fund their education in part with federal grants, and their tuition helps subsidize other programs on campus that are less lucrative.
The thing is, this model only works if you have steady enrollment of willing and able law and business students. And they have become much more discerning consumers since the recession began. They are no longer easily convinced that a JD or MBA is a golden ticket—and their decreasing numbers may be one sign of the bubble bursting in higher education.
This is the first in a series of posts in which I will discuss the so-called “bubble” in higher education and how employment outcome reporting is likely to become more important across all university programs given the threat of a burst.