Setting Strategic Objectives that Balance Risk and Reward

In higher education, student housing projects can be a powerful tool to advance an institution’s mission. But to a school making its first foray into residential life, it is important to ask crucial questions up front. What does success look like? What institutional strategic objective(s) will this important project help to satisfy? It is only by answering these questions that decision-makers can identify the potential risks and rewards that lie before them.

For some schools, campus housing may attract students outside their usual territory, fueling exciting new growth or simply allowing them to maintain enrollment at a steady, sustainable level. For others, it may mean creating a safe, full-time learning environment that helps local students to graduate more consistently. While a college can construct the most desirable, cutting-edge facility imaginable, housing space that does not help achieve the underlying mission is not a success.

What drives student housing projects?

Today’s new financing models can mitigate many of the risks associated with new campus housing (see Chapter 3), emboldening more colleges to invest in first-time housing projects. A growing portfolio of success stories offers insights into how institutions can use student housing to further their mission. We explore four potential strategic objectives here, which can fuel a college’s desire to add housing to their campus.

Key Driver 1: Improve Access and Outcomes. In Fall 2008, Orange Coast College announced that it would be the first community college in southern California to add campus housing. High housing costs and traffic challenges had limited the pool of students who could attend this commuter school. Administrators recognized that affordable on-campus student housing offered a solution.

Today, Orange Coast College is home to The Harbour, an 823-bed student housing project that will help the institution better fulfill its mission to provide a two-year education to area students and prepare many of them to transfer into one of California’s four-year public institutions. Although opening during the COVID-19 pandemic and amidst a full campus closure, the project is pre-leased near 100% for the second consecutive year and is helping OCC serve a more diverse population.

Key Driver 2: Combatting Housing Insecurity. Much of today’s student body is part of the cost-sensitive Generation Z. Affordable on-campus housing is an appealing option for budget-minded students who want to experience a traditional college environment. But this goes beyond a mere preference for some. Rising rent and low supply housing in many markets have created a population of homeless and housing-insecure students previously unseen. For example, in California, one study found that 19% of community college students had experienced homelessness within the prior year, and over 60% had experienced some form of housing insecurity.

Community colleges and others have a sense of responsibility in providing opportunities for students to improve their lives. Becoming a small part of the solution for today’s housing crisis is one way they can accomplish this mission-critical goal.

California to Fund Affordable Student Housing

In September 2021, California legislation SB 169 paved the way for the delivery of $500 million in grants in support of developing affordable, low-cost student housing for students enrolled in the state’s public postsecondary institutions. The grants support planning as well as the construction, or acquisition and renovation, of commercial properties to house students. The Higher Education Capacity Expansion Grant Program emphasizes that grants for capacity expansion projects are meant to support an increase in California resident enrollment.

Key Driver 3: Reverse declining enrollment. San Juan College in Farmington, New Mexico, was shrinking. The college knew it had to widen its reach just to maintain current enrollment levels. To combat declining enrollment, it committed to develop enough housing to accommodate 380 students. By offering campus housing, the college can now appeal to students from virtually anywhere.

According to the National Student Clearinghouse Research Center, 2019 marked the eighth consecutive year of declining aggregate college enrollment in the United States. The COVID-19 pandemic accelerated this trend. As a result, we expect more schools to do what it takes to reach a broader student base.

Key Driver 4: Boost retention rates. Retaining students is an important indicator of institutional health and mission attainment. Campus housing provides a support system that can boost both retention and graduation rates. Research by Academica Group, in conjunction with five Canadian universities, indicates that students who live on campus are approximately 50% less likely to drop out compared to those who live off campus. Research also indicates that campus residents have a 79.3% overall graduation rate, compared to a 72.6% graduation rate for those who live off campus.

Key Driver 5: Create a safe environment for learning. Many students live in environments that are either unsafe or not conducive to intensive study. On-campus housing can provide a sanctuary for these students, a safe place where they can live, study and collaborate with others.

Campus housing can also be a second chance. At Santa Rosa Junior College, student housing projects now under construction will replace local housing options devastated by wildfires in 2017. More than 200 students and employees lost their homes in those fires, as a piece of the already tight local housing market disappeared overnight. In the immediate aftermath, nearly 125 students quit school. Three hundred more lowered their class load. Campus housing became a necessity for the college’s continued survival—and will give many students renewed hope.

Quantify your objectives

Before diving into the financing for a new student housing project, schools embarking on a housing journey need to do the due diligence, articulate their strategic objectives, and set programmatic goals. Leaders must be able to articulate how the new project will enhance the ability to deliver on the core mission and establish measures that can quantify its success.

The next step is to conduct a formal market demand assessment. This study will lay the foundation upon which many of the most important programmatic and financial decisions will be made.


For more, download our full research on Starter Home: Preparing for Your First Campus Housing or register for our upcoming webinar.

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