Why would a university provide housing? Part 1

Cam Bestwick
Jun 1, 2023
4 min read

Updated: Nov 3

There is nothing quite like a high-stakes elevator pitch to crystallise your thoughts on a topic — especially when it is sprung upon you at short notice!

Last year, I found myself in precisely this situation. I was asked to prepare a single slide for the senior leadership of the institution I was working with — an older, state flagship, world top 50 university — justifying why it should bother undergoing significant change to improve its residential system.

Despite only having a few hours to prepare, I managed to complete the assignment to their satisfaction. However, this experience forced me to confront a painful truth:

I didn't have a clear, ready-made answer to this question. I needed every minute of the lead time I was given to formulate a decent response.

Naturally, it shocked me to realise that, despite 13 years in the field (at that point), I hadn't already created or even seen a compelling and concise justification for the importance of university housing.

Perhaps I had assumed the value of university residences was so self-evident that it didn't require hard thinking. This attitude, it seems, was shared by most others as well. In my entire career, I had never been asked for this before, nor had I seen any publications make a decent case. The closest ones did list out some benefits of residential communities, but none seemed to have addressed the fundamental question 'should we bother with them, or should we allocate our resources elsewhere?"

The absence of this may partially explain why, in my view, university halls and colleges have such haphazard approaches to evaluating and justifying their value-add. Rather than being anchored in a clear framework, the rationales are too often a grab-bag of mottos, mission statements, student sentiments, self-reported gains, anecdotes, and, sometimes, mere photographs of happy students. If you have been the executive audience of these self-evaluations, you would know that reading them feels like marking a poorly written essay, where every possible argument has been crammed in, hoping that that one of them will win out.

Nevertheless, I still had an assignment to complete, so what did I come up with?

How student residences benefit their parent universities

I won't share the exact slide, I can provide the essence of it here:

One significant realisation I had was that the benefits of a residential system extend far beyond fostering happy, persistent, and learning students. This was a question of resource allocation after all and there are various financial rewards to the institution for investing in residential communities, such as expanding its stock of productive assets, lower attrition, and improved fundraising outcomes, to name a few.

To ensure it had coherence, I categorised all the benefits of residential communities into just three 'parent' categories. [1] These were:

Housing helps students solve painful problems and grow throughout their education journey.

Housing improves return on invested capital and generates positive cash flows.

Housing creates conditions that enable the institution to self-strengthen and grow.

I feel the categories are quite balanced — one is about the direct impact on students, one is about money, and one is about institutional improvement.

Then, with those categories acting as the pillars of this 'framework', all that remained was to list out the intuitive, wide-ranging and widely understood benefits that a residential system produces, and attach them to the most appropriate category. It wasn't possible to include every conceivable benefit on a single slide, so it looked something like this:

Housing helps students solve painful problems and grow throughout their education journey:

Housing is a decisive factor for prospective students from other geographies.
Residents enjoy, on average, greater levels of student development and success.
Residents feel, on average, a stronger sense of connection and belonging to the institution.

Housing improves return on invested capital and generates positive cash flow for the institution:

Housing operations are generally profit centres, not cost centres.
Housing assets are usually cash flow positive, even with debt, once operational.
Housing is a productive use of land with high yields per square metre.
Having residents enlarges the retail, services, and night economy of the campus.

Housing creates conditions that enable the institution to self-strengthen and grow:

Housing creates fanatical alumni who are more likely to advocate for, and give to, the institution.
Housing can reduce the cost of acquiring students by raising offer conversion/yield and improving student retention.
Residences have a captive and engaged audience, which can be used as a testing ground for innovative new programs and ideas.

And there you have it: an explicit justification for a residential system that is both clear and versatile.

Clarifications:

If I were to anticipate the first objection to this from colleagues who provide day-to-day leadership of residences, it would be that they may find this assessment to be overly cold, business-like and utilitarian. I'm not blind to the many other wonderful benefits of student housing not mentioned above. But I offer the following brief defence for not including them:

The intended audience of this was senior executives whose interest in this topic was through the lens of resource allocation.
This was an exercise in developing an elevator pitch for housing, not an exhaustive account of all possible benefits.
Nearly every benefit not mentioned here can be subsumed by one of mine anyway. If we ever got down to a truly hard-nosed analysis of where the university benefits (not the resident), all those benefits would need to be, by definition, experienced outside the housing system. Benefits to the housing system itself or benefits to the resident are not benefits to the auspicing institution. Only the knock-on effects can be counted in an exercise like this one.

Notes:

[1] Some will recognise this explanation is well and truly anchored in Charan's fundamentals of business framework from his book What The CEO Wants You To Know, which I had read earlier the same year. I found that model a useful way to stay objective and focused on benefits back to the overall organisation.