The New College Completion Site and Disruptive Change

The new Chronicle College Completion Site may be met with groans from people who think the wrong metrics have been chosen or that necessary detail has been omitted, but I think it’s wonderful.

Sure, I’m not sure that cost per degree should be the central figure in the debate. I think cost per degree probably does not account enough for selectivity issues (take only students you *know* will graduate, and your cost per degree will go down). But even with that caveat, it provides a fascinating example of what many people have been trying to communicate to the press and public for years, to no avail: there really is no single educational productivity crisis, and measures which lump Dartmouth in with Podunk State are dangerously deceptive.

To understand why that is, take a bookstore (bookstores, which have been hit by the End of Retail phenomenon, are often used as an analogy for higher education). Bookstores have a given cost of operation, and that cost gets put into the markup on the book. Borders has failed, Barnes and Noble has not — but essentially the economics of both are pretty similar. We wouldn’t expect Barnes and Noble to have a cost of 32 cents per book sold and Borders to have a cost of three dollars per book sold. We’d expect these prices to track pretty close.

Education does not work like that. Education is more like a hospital system that routes the most difficult cases to hospitals that operate on pennies a day, and routes hangnails to research centers. Yale University spends $500,000 per degree. And they do that while being highly selective (96% complete within six years, median SAT 1472), which should technically reduce the cost. Fort Hays State University spends $29,000 per degree, with only 40% completing in four years (median SAT score: 990).

Then we have places like UMW, which spends $46,000 per completion, with a high completion rate (6 years: 75%), but a mid-range selectivity (SAT: 1170). Or Keene State, which is less selective than UMW (median SAT score: 1000), and pays for that with lower completion (56%) that results in a a higher cost per degree ($64,000).

We could go further into the data, but that’s probably enough to get the point. The obvious point is that the distribution of spending in education makes the U.S. health care system look positively socialist.

The less obvious point is that is that, once you get away from the Dartmouths in the equation we are actually pretty close to a workable system.

Let’s start with some idealism. If Fort Hays could double its completion rate while keeping costs down, the cost for a four-year degree would be $15,000. That’s the full cost, not just the student-side or subsidy side. At that rate we could give 40% of today’s 18 year olds a chance to earn a degree at a cost of less than 40 billion. And that’s with us picking up the total tab. Have students pay $2,000 a year, and the tab is $9,000. Not per year, mind you. For the entire degree.

At $9,000 per degree the cost to the U.S. government is about 22 billion to graduate 40% of the population. Another 20% would be served by two-year technical colleges and trade schools at even lower cost.

To give you an idea of the scale of 22 billion in terms of federal spending, the current Pell program is over 30 billion dollars a year.

People will jump on, I’m sure — hey, I’ve seen Fort Hays, I don’t like it! Or, better, how would you double the graduation rate? Well, if you don’t like Fort Hays, pick somewhere else. If we can’t double graduation rates, then increase them by 50%, or 40% and redo the math.

Or work the other way. Pick a place like Keene State or UMW, keep graduation rates constant, but reduce cost through a hybrid online/face-to-face approach. This is what University of Central Florida has been doing at a huge scale. It can be done elsewhere too.

Change the numbers in any reasonable way, and you’re still in the same ballpark. We are not at the point where we have to pursue zero-marginal cost options as end-to-end solutions.

People talk a lot about disruptive technology, but then assume that the disruption will look like MITx giving certificates out. When I look at these figures, that’s not what disruption looks like to me. Change the reward structure of higher education, and disruption looks like the University of Central Florida, or a souped-up UMW. There are admittedly huge institutional and cultural barriers to this — read The Innovative University for a summary of why we all aspire to be non-productive Dartmouths instead of efficient state universities — but evolution does not require that all institutions evolve. Given the right reward structure we only need a few institutions to show the way. I continue to think that’s possible.



5 thoughts on “The New College Completion Site and Disruptive Change

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