The Sconi

The University of Wisconsin system recently recommended downsizing its two-year branch campuses. Concurrently, Concordia University announced it is considering downsizing or shutting down its Ann Arbor campus following recent reductions at its Mequon campus. This follows the closure of Cardinal Stritch University last year and Marquette University's announcement of a $31 million budget cut by 2031. Alverno College has also revealed plans to cut 37 faculty and staff, while Northland College, Marian College, and St. Norbert have faced financial challenges.

There is a crisis in higher education driven by costs and demographic changes. However, there are ways for colleges to adapt and improve by leveraging technology and internal resources.

The "demographic cliff" contributing to this issue was highlighted by Nathan Grawe at Carleton College in his book “Demographics and the Demand for Higher Education.” A decline in the number of college-aged students by as much as 15% is expected over the next five to ten years. Many potential students are questioning the value of a four-year or graduate degree, with one report estimating that 45% of companies plan to eliminate bachelor’s degree requirements for some positions. Nonetheless, data confirms that college graduates earn on average 75% more than high school graduates.

Some universities are already capitalizing on internal expertise to commercialize inventions. The Wisconsin Alumni Research Foundation (WARF) at the University of Wisconsin-Madison has earned substantial royalties from innovations such as Warfarin and vitamin D-related drugs developed by faculty research. Similarly, Michigan State University profited from the cancer drug cisplatin discovered by its faculty, while Northwestern University benefited from Richard Silverman’s research that led to Lyrica.

Mid-sized universities could expand this alternative revenue source without needing large technology transfer infrastructures like those at larger research-intensive institutions. CU Ventures, affiliated with Concordia University and led by Daniel Sem, has assembled an angel investor group comprising alumni and friends who invest in startups connected to the university or its partners. Over $1 million has been invested in eight spinout companies within two years, supporting scholarships and grants.

This model aims to create a third revenue source for universities by leveraging faculty brainpower collaboratively while providing applied learning experiences for students. It has shown enough early success that efforts are underway to franchise it through a nonprofit called University Venture Affiliates (UVA), formed with Walsh College in Michigan. UVA seeks to help Midwest universities establish angel investor groups supporting innovation commercialization from their communities.

Universities can also enhance efficiency in delivering education through technological advancements such as AI teacher assistants that automate routine tasks, allowing teachers more time for complex interactions with students.

The demographic cliff and rising college costs have led to decreased enrollment and revenue declines or closures. Universities that innovate will be better positioned in market competition for students and funding. While Ivy League schools, large public universities, and institutions with significant endowments may survive with adjustments, others must adapt quickly or face potential closure.

Daniel Sem, Ph.D., MBA, JD is a visiting fellow at the Badger Institute.