In recent months, discussions on the escalating cost of college — and subsequent debt passed onto students and taxpayers — have illuminated an affordability crisis that is hindering the ability of individuals to get ahead in life. Paired with underwhelming and uneven student outcomes, the reality is that colleges in America have a spending problem. Only by increasing affordability and value for students can we reinvigorate the promise of higher education for all.
Higher education has long been on an unsustainable cost trajectory. Since 1970, spending from public colleges and universities rose from nearly $104 billion in today’s dollars to $420 billion by 2020. Altogether, post-secondary institutions now spend more than $670 billion per year — and for what?
Completion rates remain stagnant, significant equity gaps persist, and 650 institutions serving approximately 1.5 million students do not provide their students with a minimum economic return after accounting for the cost of attendance, according to the Postsecondary Value Commission..
Though the institutions comprising our higher education system undoubtedly have good intentions, we must recognize that organizations will ultimately do what they are incentivized to do. Unlike other industries, colleges and universities aren’t incentivized to keep costs low nor accountable for ensuring those they serve gain real value. Whereas market forces typically cause providers to seek efficiencies and reveal the true value of a given product or service, lack of transparency around higher education’s costs and outcomes coupled with government subsidies offer protections of which other industries can only dream.
Many institutions are instead incentivized to compete on superficial metrics that boost their reputations and perceptions of quality despite having very little to do with how well they deliver value to students. It’s why too many colleges and universities prioritize state-of-the-art research facilities, athletic programs, campus life and endless spending on administrative supports, all of which increase organizational complexity and drive spending. Indeed, many institutions operate more like cities than centers of learning.
As faith in higher education continues to decline, it’s time to flip this paradigm on its head. And bright spots exist that demonstrate what’s possible when programs are purposefully designed to provide value.
The lack of transparency around higher education’s costs and outcomes coupled with government subsidies offer protections of which other industries can only dream.
Western Governors University, for example, was one of the pioneers of online learning and competency-based education. Coupled with a financial model that charges students a flat rate per six-month term regardless of how many courses they take, WGU saves students time and money, with the average cost for a bachelor’s degree less than $18,000. Critically, the university doesn’t boast a campus or feature other amenities typically found at traditional institutions.
Although BYU-Idaho boasts a campus, similar to WGU, it focuses its assets relentlessly on lowering costs and improving student outcomes. Whereas many campus-based institutions mix teaching and research, BYU-Idaho focuses exclusively on improving teaching. That reduces its administrative overhead, as it can optimize on one value proposition: improving its students’ learning.
Southern New Hampshire University, which has both online and on-campus offerings, has worked to rethink the business model underlying higher education for years. To take just one example, its online team partners with physical, third-party campuses around the country in cities like Boston, Los Angeles and San Francisco to offer an affordable hybrid college experience. The result is a competency-based model similar to WGU — in which students move on to the next learning experience upon demonstrating mastery — and students are allowed to take as many credits as they want per semester.
These aren’t the only accredited higher education institutions seeking to lower costs and deliver a more valuable educational experience, of course. The American College of Education, for example, offers master’s degrees for under $9,500. The Quantic School of Business and Technology offers an MBA for just $950 a month over 14 months. Georgia Tech offers an online master’s of computer science for less than $7,000. And the University of Illinois’ MBA program is less than $25,000 total. Innovative institutions like these offer hope for what’s possible.
It’s time to rethink the incentives underlying American higher education. And it’s time to reject outdated mindsets that associate spending and other superficial metrics as part and parcel of delivering a higher-quality education.
Although the recent focus on student loans has elevated the cost crisis to that of a national imperative, we must recognize that the debt passed onto students is merely a symptom of the larger problem: Our colleges are addicted to spending, and it’s time to shake things up.
Scott Pulsipher is the President of Western Governor’s University. Michael B. Horn is the author of “Choosing College.”
This story appears in the September issue of Deseret Magazine. Learn more about how to subscribe.