Forward Focus

Insights for our times

Roger W. Ferguson, Jr., President and CEO of TIAA, reflects on leadership lessons learned in earlier crises, considerations for navigating our current challenging times—and what to think about as we look toward the future.

Forward Focus: The future of higher education

Episode 3

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Forward Focus Episode 3: The Future of Higher Education

I'm Roger Ferguson. I'm the President and CEO of TIAA. There are two reasons why I'm focused on the future of higher education.

One of them is personal: I've been the beneficiary of many years of education, and I think of education in my life as being the great equalizer.

As the CEO of TIAA, we are focused on higher education and the future of higher education for a couple of reasons, as well. First, we've been associated with and been supportive of the American higher education system since our very founding 102 years ago.

And in more recent times, we have done some surveys, we've been listening closely to our institutional customers and clients to understand how higher education might be impacted by the COVID-19 crisis and the other challenges that are emerging in 2020.

Our current assessment of the impact of COVID-19 is that it has been unprecedented in many ways. There've been a number of crises that hit the higher ed sector in its history. Sometimes those crises have been primarily on the revenue side of the income statement, sometimes primarily on the expense side.

This one has been unusual in that it impacted both revenue and expenses. There was a survey done by the American Council of Education that indicates that higher ed sector, colleges and universities, might need as much as $120 billion to cope with the combination of lost revenue and increased expenses.

I think as we look at the longer-term impact, if we go past the next academic year or two, I think things are a little more uncertain. The reason they're uncertain is that there are many different types of institutions in higher education, it's not one monolith.

So for the larger brand name institutions, they may find revenue comes back more quickly and they can manage the expense challenge. They tend to have sort of larger endowments and more access to fundraising, for example.

Smaller liberal arts schools, on the other hand, may find that the tuition challenges continue for quite a while. They may not have the draw of those big brand name institutions, and they may not have the endowments to fall back on. I think when we talk about reshaping and re-imagining what higher ed is gonna be, there are a couple of factors that come into my mind.

One is we should recognize that some things are not gonna change. I think there's quite a bit of evidence that the desire for in-person education still remains very, very strong. We must recognize that higher education and the higher education experience goes beyond what's in the classroom.

It goes into the social aspects, it goes into the informal aspects, it goes into looking at and working with libraries. On the other hand, we've also seen a number of schools re-imagining how they might use the online capability, not instead of their basic education, but as an addition to, as an adjunct to.

And so making those investments in online capability I think will also be an element that continues. That was a trend that existed before, and I think this focus in on COVID-19 has this simply sped up that trend. The first part of navigation, frankly, is being quite flexible.

We've seen as schools have opened and reopened that they've had to adjust to online, maybe going onto campus, moving back and forth. So flexibility, I think has to be called for by both students and their families. The second thing I think that's important for the students in particular is to recognize as challenging as it is, it is still very important to complete education.

All the economic results for those who have completed their four-year degree, completed their associate degree, have stayed in school, are much better than for those who have not done that.

And so, even though it's a challenging time, students and families should be prepared to try to finish their educational journey as best as they possibly can. While doing that, students and families also have to be mindful of the economics associated with education, recognizing that you shouldn't take on more debt than your degree and your likely job can allow you to service.

We at TIAA have done some work with Savi, and we've seen that managing the debt load and the ability to get forgiveness can make a big difference in people's financial outcomes. In that regard, we've also done a number of surveys and it's shown that this question of financial literacy and managing debt is particularly important for the more vulnerable populations.

As part of that effort, we at TIAA co-hosted a financial literacy day with the AARP on the campus of Howard University, at one of our great HBCUs, to try to bring to life for that community the importance of both finishing education, but also doing it in a smart way and being financially literate as well as being more broadly educated.

We are firm believers that the higher ed sector will continue to be an engine of growth for the American economy, will continue to be a place for individuals to find their opportunities and to create their own futures. And finally, and most importantly, we at TIAA are committed to partnering with our higher ed institutions for the next long period of time as we have for the last 102 years.

[END]

This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.

We strongly recommend that you consult with a financial, tax, or legal advisor before taking any action based on an opinion or other information you obtain from this video series so that all of your personal circumstances can be taken into consideration. The TIAA group of companies does not provide legal or tax advice. Certain products and services may not be available to all entities or persons.

The views expressed in this material may change in response to changing economic and market conditions. Past performance is not indicative of future returns.

Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.

TIAA is not affiliated with Savi or AARP.

©2020 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.

We strongly recommend that you consult with a financial, tax, or legal advisor before taking any action based on an opinion or other information you obtain from this video series so that all of your personal circumstances can be taken into consideration. The TIAA group of companies does not provide legal or tax advice. Certain products and services may not be available to all entities or persons.

The views expressed in this material may change in response to changing economic and market conditions. Past performance is not indicative of future returns.
 
Any guarantees under annuities issued by TIAA are subject to TIAA’s claims-paying ability.
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