Internet Could be Solution to Tuition Costs

By Steve Forbes

The Internet is about to do to America’s universities and colleges what it’s done to media and entertainment — profoundly upend them. And improve them. To get a flavor of what’s coming, take a look at Louis Lataif’s piece, "Universities on the Brink" (Feb. 1). Lataif, dean emeritus of Boston University School of Management and a former president of Ford Europe, bluntly calls the rapid rise in tuitions a bubble resembling those that hit housing in the last decade and Silicon Valley in the late 1990s.

During the past 30 years, overall inflation in the United States was 106 percent; health care costs went up 251 percent. College tuitions and fees? They soared 439 percent. The basic business model of higher education in the United States is broken, Lataif observes. College graduates might earn higher incomes, but, Lataif asks, how can the cost of tuition and room and board continue to increase at a rate six times greater than the increase in the average earnings of college graduates, as has happened over the past two decades? Indeed, in recent years incomes have flattened or fallen — and this at a time when student debt loads are going up. Total student indebtedness now surpasses all credit card debt in the United States. “If the salaries of college graduates are not rising but student debt is, can the tuition increases continue?”

These skyrocketing tuitions can’t be blamed on “corporate greed” as traditional universities and colleges are not-for-profits.

Lataif examines some of the reasons — not least, the federal government. Higher ed is an example of how government perverts markets: The more aid government gives students, the faster tuitions rise. “The significant year-over-year tuition increases, irrespective of the economic environment … (are just) too good to be true.” The tuition bubble is about to burst. Too many parents and young scholars aren’t getting their money’s worth these days.

While our most prestigious institutions will continue to have countless more applicants than places, other colleges and universities will face increasingly more difficult times. Many won’t make it. As the late Peter Drucker presciently said before the end of the last century: “Thirty years from now, the big university campuses will be relics.”

The new, for-profit college industry is rapidly growing. “Nearly 30 percent of all higher education students” are “enrolled in at least one online class,” Lataif says. Thanks to recruiting scandals and rip-offs of the federal government’s student loan program, the industry is in the crosshairs of regulators, prosecutors and personal injury lawyers. But more growth is coming, even if reforms are enacted, such as overhauling the student loan program and allowing students to receive a full refund if, after a few weeks or a semester, they are not happy with what they have signed up for. And any new regs on for-profits should be applied to not-for-profits as well. That’s only fair.

But the challenge to traditional higher education doesn’t stop there. How we educate people is beginning to undergo enormous changes. Parents will be demanding to know how much their kids actually learn and retain. Lataif points out: “Digital technology offers fascinating approaches to improve cognition. If you can buy a self-paced calculus course on DVD for $67, is it worth spending $5,000 to take the same course at a private university? Of course, the mutual learning that occurs in college is of value. But is it worth spending 75 times more for the same body of knowledge?”

There’s the startling fact that people retain more information via the Internet or DVDs than they do when sitting in a classroom. “Many four-year college degrees will inevitably be delivered in three years,” Lataif predicts. “With two-thirds of private-university students going on for a master’s degree, those students could earn their two college degrees in four years — for the price of one today.” The academic year will certainly be lengthened.

Numerous new institutions are cropping up in India, China and elsewhere around the globe, and many will eventually be aggressively recruiting American students by offering more for less.

All this is why Lataif says colleges must focus on becoming more productive by embracing these disruptive technologies.

Such disruptions might also upend the political correctness that stifles the genuine free flow of discussion and debate in so many higher-ed institutions. There will certainly be fewer ridiculous basket-weaving-like courses. And who knows? Perhaps all college graduates — unlike many of those today — will actually leave school having learned how to write.


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