In
1636, the Massachusetts Bay Colony established New College – the
first institute of higher education in the Western Hemisphere. A
Boston minister named John Harvard donated 320 books and £800
to the new institution, which was promptly renamed Harvard College in
his honor, thus beginning the modern university system in the United
States. For most of the time since then, universities were the
province of the elite. Since most Americans were farmers prior to the
20th
century, they had little use for even a high school diploma, much
less a bachelor's degree. Following World War II, the paradigm
shifted dramatically. As the need for college-educated labor
dramatically increased, universities became much more commonplace.
The university system has grown to immense scales that John Harvard
could scarcely have imagined – there are now over 2,600
universities in the United States, and more than half of all
Americans have completed at least some college education.
For
the past 60 or so years, the university system has served a dual
role: Professors both conduct academic research and instruct students.
High tuition price tags are, in large part, used to subsidize
academic research rather than pay for student education. Although
this arrangement worked reasonably well for several decades, it began
to show cracks in the early 2000s and is now near the breaking point.
This paradigm for higher education is no longer sustainable.
The
most obvious reason is the soaring cost of tuition. The average
college graduate has accumulated $26,000 in student debt when he or
she graduates. In 2010, student loans became the largest source of
unsecured debt in the United States, surpassing credit card debt for
the first time. This wouldn't necessarily be a problem if
accumulating so much debt was a worthwhile long-term investment, but
recently many people have started to question this longstanding
assumption. They are right to be worried. Student debt is an
albatross around the necks of many recent graduates which hinders
social mobility. One definition of an economic bubble is the trade in
a product or service at a price that far exceeds its intrinsic value;
another definition is a widespread public consensus of the high value
of the product or service, that is at odds with a realistic
examination of the facts. By these definitions, university tuition
prices are most definitely in a bubble, and it's only a matter of
time until the bubble pops.
But
the tuition bubble masks another looming problem that most
universities barely acknowledge today, but poses an even greater
threat to them: The prominence and quality of free online education
is poised to improve dramatically in the next few years. Today, most online
universities are for-profit institutions with horrible brand
images, but that will soon change. MIT and Stanford now offer
many of their courses online for free, to anyone who wants them.
Additionally, a slew of free websites have popped up in the last
couple years to teach specific skills such as computer programming,
mathematics, history, biology, foreign languages, and business.
As
the course offerings proliferate and quality improves, more and more
students will begin to question why they are paying tens of thousands
of dollars to attend a university, when they can learn the same
material online for free (or at least very cheaply). This will, in
turn, encourage employers to accept “alternative” certifications
to a traditional bachelor's degree, such as educational websites
vouching for the student's knowledge. This will badly damage the
credibility of universities and undermine their role as the
gatekeepers to white-collar careers. With the exception of certain
professions for which formal credentials are absolutely required
for employment (e.g. law and medicine), the necessity of acquiring a
formal degree will fall by the wayside as more alternatives present
themselves, causing a mass exodus from universities.
As
this happens, universities will need to sharply reduce their tuitions
in order to stay competitive with their free counterparts...and
eventually, even the sharpest reductions will be insufficient. As the
cost of a good education drops to nearly zero, universities will need
to completely rethink their business model.
This
will cause major funding problems for scholarly research, if nothing
is done. The dual responsibilities of universities, instruction and
research, will separate from one another. As universities earn less
money from tuition – and have fewer alumni to provide large
donations – academia could suffer unless steps are taken to find
another stream of revenue. The research that professors conduct
benefits society as a whole, but is usually not profitable. As
tuition money dries up, I suspect that universities – both public
and private – will rely more on government largesse to support
their research.
Ultimately
there is another role that universities might serve. Although the
tuition model is doomed in the long term, many students crave the
“college experience” that only being on a campus can provide.
Universities might still serve as places for young people to come
together and live, join clubs, and play sports and music
together...despite getting their actual education online from many
different sources. In this way, perhaps universities can earn a bit
of money from their “students” and retain some loyalty from their
“alumni,” although they will never again be centers of education.
The
coming crash in tuition prices will be bad for universities and
potentially bad for academic research if nothing changes...but it
will be great for students. In a certain sense, the ability to
acquire a college education for free or nearly free will be a
throwback to the “old days” in which young people started out
their careers without any debt. Many of the most dynamic companies
are started by young people, but student debt provides a significant
drag on this economic engine. Eliminating this problem for future
generations could potentially create a large economic boom, as more
dynamic companies are born to solve the world's challenges.
PREDICTIONS:
By
2021 – The average cost of tuition at the 100 top-ranked
brick-and-mortar universities is lower than it was in 2011, after
adjusting for inflation.
