Trouble, Trouble, Toil, and Bubble

The January 2013 issue of PS: Political Science and Politics contains an interesting symposium on the “The Troubled Future of Colleges and Universities.” All of the contributors come from the elite universities that are the best insulated from having to adapt to a changing higher education environment, so it’s easy to dismiss what they say as the typical incessant and irrelevant hand-wringing of Ivory Tower intellectuals. But the simple fact that they are all commenting on the same subject in the same way (even if they don’t realize it) deserves attention.

Virginia Sapiro (Boston U) claims that even the most academically-talented college students find it difficult to successfully graduate without an expensive “array of advisors, high-touch academic experiences, support services, residential programs, [and] efforts aimed at stimulating engagement and a sense of place and community.” She then states that universities are now seeking ways to earn “alternative sources of revenue from learners whom they have had little or no interest in serving on campus” (p. 108). This would seem to be a situation of universities wanting to simultaneously have the cake and eat it too — let’s take what has become an inordinately expensive system of higher education that neither taxpayers, legislators, nor most borrowers still want to pay for, and tack on some peripheral profit centers in an attempt to remain financially viable. My guess is that such a strategy won’t work, at least for most universities that are forced to attempt it.

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Gary King (Harvard) and Maya Sen (U Rochester) identify four “external economic threats” to traditional universities: the Internet, distance learning, for-profits, and online start-ups — this last being from my perspective simply a logical symbiosis of the first three.

To the above four, Nannerl Keohane (Princeton) adds “migration of loyalties of some faculty and students to different modes of learning and away from their campus base.”* Universities were built at a time when the most economically viable method of creating and disseminating highly-specialized knowledge was to concentrate information (books) and smart people (instructors and students) in the same physical location. The tremendous start-up costs in land, buildings, equipment, and faculty, coupled with society’s constantly growing demand for knowledge, created monopolistic market conditions for higher education. A natural outgrowth of such a geographically-fixed system was student and faculty loyalty to a single institution. Alumni weekends, anyone?

These conditions no longer exist and we can see this in the data (the graph on p. 84 of the King and Sen contribution). The number of public and private four-year institutions in the USA has been level since 2000, after several decades of steady growth (college enrollment of Baby Boomer and GI Bill students in combination with Cold War policy priorities). Over the same period, private two-year colleges have declined precipitously and the number for-profits has skyrocketed. I don’t think it’s too far-fetched to assume that the four-year institutions have hit an inflection point and the curve will bend downward over the next few decades. Many state university systems have already seen majors and departments eliminated on certain campuses as part of an effort at consolidation.

So we are left with the perfect crunch — a need for revenue, an inability to cost-effectively enroll additional students on physical campuses, and fading loyalties to all but the most prestigiously-branded institutions. The hoped-for solution to this impending nightmare is The Next Big Technological Thing, even though no one really knows what that Thing is going to be.

I have some other ideas:

  • Post-secondary education is openly biased in favor of and reliant upon the socioeconomically and educationally advantaged. As King and Sen point out (p. 86), U.S. universities currently only serve the approximately 30 percent of the country’s population that gets college degrees — making most of the Ivory Tower prognostications an exercise in survivorship bias. Ignoring the 70 percent of the population that can’t afford college or isn’t academically prepared for it is a stupid business model. Focus your energies on serving that market, in a pay-as-you go manner similar to what Udemy is already doing, and you might find yourself in a much better position.
  • In a similar vein, push college instruction down into high schools, where the physical educational infrastructure already exists. This is what much of Europe does already. There is no fundamental law of the universe that requires the most talented students to sit through four years of high school and four years of college.
  • Take the chains off faculty and let them experiment, a la Tyler Cowen, Alex Tabarrok and their creation Marginal Revolution University. Yes, many of these experiments will fail. But not all of them will, and some will help market the universities these faculty are affiliated with — in some cases, by functioning as a portal through which that 70 percent of the population that is currently under-served can gain access to a high quality college education at a price that is much lower than it is now.

Meanwhile, this recent New York Times story helps confirm my belief that CourseraUdacity, and perhaps even edX — or operations like them — will become the providers of low-cost content to medium- and low-tier institutions that are looking to cut the price of attendance. Want to offer computer programming courses but don’t want to hire a department’s worth of faculty? Sign a license agreement with Udacity. Want to outsource the content of your liberal arts core? Your students can enroll in Coursera’s poetry and mythology offerings and at one price point they can meet once a week on campus with an instructor for discussions and collaborative projects; at another price point, students who pass a test (from which the MOOC provider and the student’s university of choice get revenue) earn two credit hours on their transcripts instead of three.

Perhaps the most telling statement in the article about these MOOC providers is from UPenn’s Edward Rock, a law professor: “it makes more sense to build your user base first and then figure out later how to monetize it, than to worry too much at the beginning about how to monetize it.” People tend to forget that Amazon didn’t become profitable until four years after its initial public offering, and it did so by building its customer base.

*In the interest of full disclosure, I should mention that Dr. Keohane was president of Wellesley College when I took two courses there. I shall forever be grateful to her and other administrators at Wellesley for the campus meal plan that enabled me to get free ice cream from the meal tickets that the full-time students were (and presumably still are) required to purchase.

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