Can Online Learning Bend the Cost Curve for Higher Education?

The New York Times recently reported that between 1999 and 2009 tuition at public four-year colleges rose 73 percent on average and 34 percent at their private counterparts, all while family incomes fell 7%.  The rising cost of college has become the center of national debate.  It has made college an unattainable dream for some and, more commonly, has burdened those students who do attend with crushing debt.  At least 2 in 3 bachelor’s degree recipients’ graduate with debt and many are then forced to put off major purchases such as a car or house with broader effects for the national economy at-large.

The Wall Street Journal recently sat down at the All Things Digital conference in California with Stanford University president John Hennessy and Salman Khan, founder of the Khan Academy, a non-profit online-learning organization, to discuss how online learning efforts offered by both traditional four-year universities and organizations such as Khan Academy might help bend the cost curve for colleges.

Mr. Khan points out that universities usually justify rising costs by pointing to the need to hire top rate faculty, expand facilities, and have top flight students services while, somewhat conversely, students say they are willing to take on $60,000 of debt only because they “need the credential” to get a job.  Universities are raising tuition to create an immersive educational experience while many students are paying higher and higher tuition because they need the diploma to be competitive in the job market.  Mr. Khan argues that an online educational experience could essentially deliver that “credential” without the high costs on both school and student of providing a holistic experience.  This would require a paradigm shifts of sorts, where credentials could be earned based on what you know and what you have learned and not where you acquired the knowledge.

Similarly, under Mr. Hennessy, Stanford has begun putting lectures online that would otherwise be delivered in large lecture halls and using classrooms for courses that inherently require person to person interaction.  Obviously, the more universities can relegate classes to the internet without sacrificing quality, the less need there is to continually build and upgrade physical learning facilities and to recruit more and more faculty to staff the classes.  Mr. Hennessy predicts that there may eventually be a hybrid type model at major universities, where students take a major portion of their classes online and go into the classroom only occasionally.  This will be useful especially for associate degrees or degrees that lend themselves to cyber learning, such as Internet programming.  While the outcomes of such efforts are too recent to be evaluated, technology will no doubt continue to play a role in the growing debate about how to cut down college costs.

Posted by: Sean Norris

Sources: The Wall Street Journal, The New York Times, The Chronicle of Higher Education

Photo Credit: Asa Mathat of All Things Digital

Is a 4-year college degree still the answer?

In a recent article from the Washington Post, more and more students are finding alternative means of getting an education preferable to going to college. It’s been long since the post-World War II era, where college enrollment spiked from 2.3 million to 12.1 million students. Now, fewer than 60% of college freshman now graduate within six-years. In a recent survey by Public Agenda, 50% of college dropouts cited working as a major factor in their decision, which makes sense seeing that the debt of college dropouts has now topped $1 trillion according to the Consumer Financial Protection Bureau. And this amount could increase as more and more students find occupational advantages to dropping out and not taking on the massive amounts of debt needed to complete a four-year degree.

The U.S. Department of Education recently found that college dropout rates have increased by 38% in the last decade, and that dropout rates amongst for-profit, four-year institutions have spiked from 34% to 54% since 2001. So how can a nation with increased dropout rates still compete in today’s global economy? Professor Robert Lerman of American University proposes instituting apprenticeship programs for college students that would pay them to participate in classroom trainings that would give them the skills needed to matriculate into occupation they want to take on. In 2008, 0.3% of the total U.S. workforce participated in apprenticeship programs registered with the Department of Labor. But Berman argues that in the EU, countries like Germany, Austria and Switzerland, with much greater reading, writing and math literacy than in the United States enroll nearly 50-70% of their young people in apprenticeship programs.

Although, the Obama Administration has made increasing graduate rates a focal point of his 2012 campaign, today’s “college-crazed” culture, as Robert Samuelson puts it, “cheapens the value of a college degree and spawns the delusion that only the degree — not the skills and knowledge behind it — matters.”

 

Posted By: Jonathan Sherman

Sources: The Washington Post, U.S. Department of Education, U.S. Department of Labor, CNN Online

Photo credit: Harvard University courtesy of flickr user Omer Kabir

Is higher education the next financial bubble?

Rumors have been circulating over the past few months that higher education is the next financial bubble, and now it looks like it could be bursting. Student and institutional debt has soared into the trillions of dollars, making student debt the number one consumer debt in the nation.  President Obama has called on state governments to invest more in public higher education since state support of public universities is at its lowest (per student) in 25 years. Although public institutions are facing the challenges of slashed budgets, is public high ed too big and too important to fail?

The federal student loans of today are very different from what they used to be. According to The Project on Student Debt, 37 million current and former students owed upwards of $25,000 each in student debt in 2010. And interest is set to double on federally subsidized student loans from 3.4% to 6.8%. And finally, to make matters worse, most students cannot free themselves from excessive debt through bankruptcy thanks to the almost impossible to fulfill “undue hardship” clause of the Bankruptcy Code.

For financial experts, the higher education debt situation looks like a textbook financial bubble: “easy credit, the accumulation of excessive debt, the bubble stops growing, borrowing becomes harder.” And it seems that the nation’s lenders are moving colleges and universities into the second half of the timeline. US Bank recently announced that it “will no longer be offering private student loans” and JPMorgan Chase has stated that it will only continue its lending to established customers. Financial experts are saying that this shift in lending policies is “an early warning that the party is almost over.”

In response to this looming crisis, the Chancellor of UCLA has suggested that “instead of more cuts, we need an emergency plan to rescue and revitalize our public higher education system.”

Posted by: Devon Thorsell

Sources: Huffington Post, Richmond Times- Dispatch, Benzinga

Photo credit Harvard University Building courtesy of flickr user Lori SR