The recent news that the University of California system is going to borrow millions of dollars to build new online degree programs points to some clear opportunities for federal policy.
What UC is doing makes perfect sense. In the long run higher education will be transformed by information technology and it’s best that prestigious public institutions with strong brands, intellectual capital, and egalitarian values lead the way. But doing it well costs money and the UC system is short on money these days. So it’s borrowing with the reasonable expectation of a positive long-run return in terms of revenue and enrollment.
It’s still only one system, though, and state attempts to build online universities have had mixed results. The federal government could catalyze this process by creating a large revolving loan fund for colleges to invest in technology-driven efforts to increase access, improve learning, and lower student costs. That’s hard to do in the current fiscal environment because colleges are struggling to hold on to what they have. So the feds should print some money and lend it to colleges to build either hybrid or fully online models that have proven to improve student learning and reduce the cost of education at the same time.
There would be conditions. First, colleges would have to pass some of the cost savings on to students in the form of lower prices than at equivalent courses in bricks-and-mortar colleges. There are currently no incentives for such price reductions, which is why they never happen. Second, colleges would have to report on how much students in the new courses are learning.
Preference would be given to consortia of colleges that collaborate to share development costs and measure learning in a public, comparable fashion. These groups would get financial subsidies–borrow a dollar, get a dollar, that kind of thing. Similar preferences could be created for courses developed in high-need STEM fields. And to really make it fun, the program could stipulate that whichever college or group of colleges delivers the greatest value to students, measured by the combination of reduced prices and highest-quality value-added learning outcomes, doesn’t have to pay the money back at all.
This seems preferable to the current approach, which involves pouring ever-growing billions of no-strings-attached dollars into financial aid programs and then wasting the leftover money on legislative pork projects.
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Great idea. I work for a for-profit university, and while I’m a defender of the for-profit model, I would much rather see healthy marketplace competition from public and not-for-profits than new, misguided regulations applied to only one sector. One of the competitive disadvantages of the public model is that access to capital is not commensurate with the opportunities for investment. Students often end up attending for-profits because their is a lack of convenient, timely capacity in the other sectors. Creating a new source of debt capital that could be tapped for investment in online/hybrid models would somewhat level the field. As for the attached strings, I would argue that disclosure and measurement of learning outcomes is a more important condition that lowering costs. All signs still point to high ROIs on successful higher education outcomes for the students, and taxpayers subsidies remain high relative to student debt in the public sector at least. True measurement of learning (and other) outcomes combined with disclosure would allow students to funnel their dollars appropriately.
The “conditions” would be the key. As of today, all the evidence still points to online/distance education actually costing more than in-classroom education. That judgment could be tested more rigorously with some conditions in place, including better (and standardized) accounting for postsecondary education (eliminate NACUBO), no cost shifting, and aggressive federal enforcement of classical “supplement, not supplant” requirements across a much wider range of programs.
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