Monday, September 21, 2009

Newspapers today, higher education tomorrow?

So when [Barbara Solvig] was laid off from a human resources position at a Chicago-area hospital in January, she knew the time had come to finally get her own credential. ...

She went online looking for something that fit her wallet and her time horizon, and an ad caught her eye: a company called StraighterLine was offering online courses in subjects like accounting, statistics, and math. This was hardly unusual—hundreds of institutions are online hawking degrees. But one thing about StraighterLine stood out: it offered as many courses as she wanted for a flat rate of $99 a month. ...

Economics tells us that prices fall to marginal cost in the long run. [StraighterLine founder] Burck Smith simply decided to get there first. ...

Traditional universities are complex and expensive, providing a range of services from scientific research and graduate training to mass entertainment via loosely affiliated professional sports franchises. To fund these things, universities tap numerous streams of revenue: tuition, government funding, research grants, alumni and charitable donations. But the biggest cash cow is lower-division undergraduate education. Because introductory courses are cheap to offer, they’re enormously profitable. The math is simple: Add standard tuition rates and any government subsidies, and multiply that by several hundred freshmen in a big lecture hall. Subtract the cost of paying a beleaguered adjunct lecturer or graduate student to teach the course. There’s a lot left over. That money is used to subsidize everything else. ...

Consider the fate of the newspaper industry over the last five years. Like universities, newspapers relied on financial cross-subsidization to stay afloat, using fat profits from local advertising and classifieds to prop up money-losing news bureaus. This worked perfectly well until two things happened: the Internet made opinion and news content from around the world available for nothing, and the free online classified clearinghouse. ...

The consequences will be profound. Ivy League and other elite institutions will be relatively unaffected, because they’re selling a product that’s always scarce and never cheap: prestige. Small liberal arts colleges will also endure, because the traditional model—teachers and students learning together in a four-year idyll—is still the best, and some people will always be willing and able to pay for it. ...

But that terrifically expensive model is not what most of today’s college students are getting. Instead, they tend to enroll in relatively anonymous two- or four-year public institutions and major in a job-oriented field like business, teaching, nursing, or engineering. They all take the same introductory courses: statistics, accounting, Econ 101. ...

Just as the world needs the foreign bureaus that newspapers are rapidly shutting down, it needs quirky small university presses, Mughal textile historians, and people who are paid to think deep, economically unproductive thoughts. Rather than hiding within the conglomerate, each unbundled part of the university will have to find new ways to stand alone.
--Kevin Carey, Washington Monthly, on uncomfortable thoughts for my industry

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