University Fuses and Pricing

If you care about strategic and policy planning in higher education, you may want to read two recent articles and play them off against each other.

Both articles appeared in the April 3rd (2009) issue of the Chronicle of Higher Education. Start by reading Kevin Carey’s piece called What Colleges Should Learn from Newspapers’ Decline. Carey is the policy director of a nonprofit, nonpartisan organization in Washington, DC whose mission is “to promote changes in policy and practice that lead to improved student opportunities and outcomes.” Here’s a taste of his argument.

As of today, there’s no Craigslist busily destroying the financial foundations of the modern university. Teaching is a lot more complicated than advertising, and universities have the advantage of sitting behind government-backed barriers to competition, in the form of accreditation. … [But] it would be a grave mistake to assume that the regulatory walls of accreditation will protect traditional universities forever. … Perhaps the higher-education fuse is 25 years long, perhaps 40. But it ends someday, in our lifetimes.

Then read Obama’s Plans for Higher Education: a Good Beginning, but More is Needed. This article was written by Sandy Baum and Michael S. McPherson, both thoughtful and longtime advocates for reform of higher education pricing and, in particular, student financial assistance.

Sadly the Baum and McPherson article sits behind the Chronicle’s subscription firewall. But here are the principles that the authors believe should define a student aid system that “works well for students and families.”

The system, we argue, should be simple, clear, and predictable. Money should be appropriately directed toward increasing opportunities for students with limited resources. The focus should be on students – not institutions, lenders, or governments. Student aid programs should encourage students not only to enroll in college but also to graduate. Taxpayer money should be used efficiently.

There is an abundance of common decency and common sense in these principles. But the undercurrent in the Baum and McPherson article indicates that decency and sense are anything but common in the U.S. higher education industry.

Ossified. That’s the one  word that best describes for me the condition of higher education when viewed from a macro level. Deceptively solid, primed for fracture under the appropriate stress.

The stressor will almost certainly be revenue erosion. Not because of the current economic recession. But rather because the business of teaching and learning, which most colleges and universities perceive as their core function, will no longer be confined by ivy walls and institutional gates.

There is no mystery in this. It’s happening all around us and in broad daylight for everyone to see. Digital networks, not institutions, increasingly provide access to learning. And both the digital content and the access are largely free to learners.

YouTube EDU is only the most recent major initiative with obvious heritage through courses, faculty, and curricula to traditional colleges and universities. Others include iTunes University and the OpenCourseWare Consortium. Educational entrepreneurs abound. Examples most similar to traditional higher education include P2P University, University of the People, and Academic Earth. Beyond these there is a large, exciting, chaotic jumble of innovation that may portend bigger changes for colleges and universities.

Ossified. That’s the macro view. But at ground level, things are different. Colleges and universities come in every flavor and hue imaginable. That diversity is reflected in their business models. See, for example, the research (pdf) I conducted last year on more than 1,100 private institutions of higher education in the United States. Some business models simply provide more buffering to revenue erosion than others.

I agree with Carey about the sea swell of change facing higher education. But I also agree in part with Baum and McPherson when they focus on pricing. They did not frame the pricing issue in terms of macro-level change, but nonetheless pricing at the institutional level does provide colleges and universities a mechanism to confront an uncertain future in a controlled manner. However, pricing requires answers to tough questions about what, why, and how a college or university does what it does. If not teaching and learning, then what?