By Scott Johnston | A new world for higher ed
Know what a run-of-the-mill college costs these days? About $60,000 a year. This number has been skyrocketing for decades. Why? Growing demand, fixed supply.
Now that’s all about to change. For many colleges, it could be a death knell. It also could be good news for students and their families.
Think about it: Historically, supply has been fixed for obvious reasons — universities don’t just pop into existence.
Demand has soared, driven by some major trends:
* Demographics: Children of the echo boom have been applying to college in droves.
* Internationalization: Applicants from newly wealthy countries like Korea increasingly have also sought seats at US schools.
Hold on to your hats: Colleges are about to face big changes that could starve them of money. But that’s good news for American students.
* Student loans: Low interest rates have been making college more affordable.
All three of these trends are peaking or reversing themselves. Growing endowments? Gone. Demographics? Now on a declining curve. Cheap student loans? With the feds essentially broke, this game won’t last either.
And unless our colleges want to fill their dorms entirely with the children of Russian oligarchs and Chinese billionaires, the internationalization game has largely been played out.
On top of this, the multi-decade bull market that bolstered endowments ended emphatically in 2008.
The wind has been at higher ed’s back for a long time. In the business world, such fortune invariably breeds lazy and inefficient practices that get exposed when the weather changes. Not so much for universities.
Well, it’s about to change drastically for the higher-education industry. Many won’t survive.
But here’s the kicker: The supply part of the equation is heading into new waters, too. Ever hear of Khan Academy? Coursera? How about iTunes U? These are all free, online options that offer best-practices education — many taught by some of our finest educators. In other words, you don’t have to go to college to learn anymore. Knowledge has been liberated from the ivy-tower oligopoly.
The undergraduate model, in particular, is highly threatened, because frankly, most schools just don’t do a very good job anymore. They are four-year summer camps for kids who got trophies during their childhood just for showing up. Now, they get degrees for showing up. Gone are many course requirements and core curricula — and in their place, useless exercises in things like race and gender studies. Studies show that the amount of homework the average college kid does has been cut in half over the last couple of decades.
So, what selling points are colleges left with? Two things. Many remain desirable “brands.” Google and Goldman Sachs do not yet hire the self-taught. But soon, one of these companies will discover that it can find good employees who have excelled at, say, Coursera, and this fact will get a lot of publicity, causing parents to start questioning why they are mortgaging their houses to pay for tuition.
Second, there is socialization. You make friends in college, and these friends are a lifelong asset, in both an emotional and practical sense. This advantage will be a bit stickier, but I suspect society will find a solution as well. Perhaps some daring college will toss out some of its expensive, tenured professors and throw open its doors for students to pursue collaborative learning experiences. There will be ways to make friends that don’t cost $60K a year.
All this is going to go down very hard. Any institution that has thrived under a successful model for generations doesn’t just sit down and reinvent itself overnight, particularly if the new model requires destroying the old. Well, actually, some businesses do — but let’s face it, universities are not run like businesses. They think it’s beneath them.
The small, expensive, liberal-arts colleges will get hit first and hardest. But almost all of them are vulnerable. And sooner than anyone thinks.
Bad news for colleges, perhaps. But good news for everyone else.
For this third party post in its full context, please go to: