02 July 2015

50% Higher Education Institutes to Close down.

Dr. Clay Christensen and Dr. Richard Lyons have predicted that half of the colleges and business schools could cease to exist within a few short years.

Christensen is an eminent scholar at the HBS whose research on disruptive innovation is finding application in the higher education arena.

Lyons is the Dean of the University of California at Berkeley Haas School of Business. Christensen states that up to half of the colleges in America might fail within 15 years. Lyons is predicting an even faster demise in the number of business schools – predicting half will fail within 5-10 years (referring mainly to MBA programs).

What are the drivers behind the predictions of high institutional failure rates by Christensen and Lyons?

The current tenuous financial situation of many colleges and universities already suggests that failure is imminent for some. Moody’s has an overall negative outlook on higher education with 10% of institutions already considered to be in severe financial distress.

The key disruptive force that threatens the financial viability of colleges and universities is technology. And the greatest threat is to those institutions of less than elite status that have invested heavily in bricks and mortar and rely on enrollment growth to cover the debt expenses incurred to finance their infrastructure.

Looks like USA is following the footsteps of INDIA in this regard.

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