In some of our recent posts, we’ve discussed the relative lack of price competition in the world of higher education. That is to say, the cost of attending Harvard is largely the same as attending Ursinus — and may be even cheaper taking financial aid packages into consideration.
To address the question, Fried creates “a value-designed model for a hypothetical college.” In other words, he asks the question ‘How can I provide a high quality education to above-average students while keeping educational costs as low as possible?’
Keeping costs down requires separating necessary from unnecessary expenses, and some of the things that Fried chooses to eliminate are extraneous technology, large numbers of administrators, and specialized elements of college curricula. But surprisingly, keeping tuition low doesn’t require cutting as many corners as you might think. As he says, his value-designed school “doesn’t use many adjuncts, faculty salaries are competitive with those at research universities’ [sic], a laptop is included in tuition, the Division III football stadium has a Jumbotron, etc.”
So what’s Fried’s conclusion? At first glance, it’s pretty startling:
I found that value-designed models of undergraduate education can radically reduce costs AND increase quality…
A [value-designed college] with 3200 students would have a total operating cost (without room and board) of under $8,000 per student… [The school’s] cost of under $8,000 is drastically below the cost of “top” liberal arts schools ($25,000 to $62,000) that cater to prestige-oriented customers. But it is also well below the $12,000 cost of public regional colleges who have many price driven customers and a less academically selective student body.
With a value-designed model, a college can deliver a prestige quality product to its target market at a fraction of current cost.
Regardless of whether you agree with Fried on which areas of higher education are expendable, he at least has shown that it is possible to provide a reasonably rigorous education at a reasonable price. So let’s put aside our original question and consider another: how do we get to the world he describes?
Fried has a few thoughts:
…value-designed models should be pioneered by: 1) the social or for-profit entrepreneur interested in starting up a new independent college, 2) the successful multi-college university that wants to pursue radical innovation through a new college without disrupting their existing colleges, and 3) the existing small college that is willing to make major disruptive changes internally in order to drastically improve its value externally.
…in order to reap widespread benefits from innovation in the future, there must be pioneer innovators today.
As you know, we believe there is a fourth option that Fried overlooks: pioneering third-party organizations like DiscoverScholars.org that separate financial aid decisions from individual colleges. By “outsourcing” student financial aid to such organizations, schools will be better incentivized to focus on keeping costs low, just like Fried describes.
Next week, we’ll talk about a value-designed school that already exists — Berea College — and we’ll discuss why organizations like DiscoverScholars.org are likely to be more effective than intrusive legislative solutions to the issue of college affordability.