Is More Competition Really Good for Higher Education?

In many industries, competition lowers prices, promotes innovation, and often leads to product differentiation. But even with 4,500 colleges and universities, American higher education seems to defy those rules. Prices rise faster than inflation, colleges are seen as resistant to change, and there is a sameness to many institutions, despite all the rhetoric about the diversity of our higher-education system.

Few colleges want to be seen as “stepping away from the herd in meaningful ways” because they are so obsessed with moving to the next level, maintains the late J. Douglas Toma in a recent book, The Organization of Higher Education.

“Prestige is to higher education as profit is to corporations,” writes Toma, who was a professor of higher education at the University of Georgia. (He died of cancer in May 2011 at age 47.)

To reduce the cost of higher education to students and families, improve learning, and ultimately the value of the degree, colleges and universities need to abandon this prestige race that encourages a one-size-fits-all model. It no longer works for the one-third of students who transfer at least once before earning a degree, or for the coming wave of students who have fundamentally different learning styles shaped largely by technology. And the current model—handcuffed by regulations and propped up by subsidies—discourages innovative thinking.

Finding ways to break free of that restrictive model was the topic of conversation at a gathering this week in Washington of more than 150 leading researchers, educators, accreditors, and those trying to disrupt the current system. The guest list at the off-the-record meeting, hosted by the U.S. Education Department, was a who’s who of education innovation, including Sebastian Thrun of Udacity, Jose Ferreira of Knewton, Candace Thille of Carnegie Mellon’s Open Learning Initiative, plus a half-dozen college presidents and the leaders from many of the major foundations that support higher-education causes.

Much of the talk about higher-education disruption these days, of course, centers on MOOC’s (or massive open online courses). But surprisingly, the innovation that was most appealing to this group for its impact on quality was course redesign, which uses a variety of technologies to reduce costs. That was cited by 95 percent of participants in a preconference survey as having a positive effect on quality; only 37 percent said the same of MOOC’s. Technologies that facilitate students’ social interactions and personalized data that predict student success also scored high (above 80 percent).

In the survey, participants said that institutional leadership and faculty attitudes were most likely to influence whether a campus adopted innovations. It was a point underlined throughout the day as several people said that governance and academic culture were the biggest hurdles to change in higher education.

No one I heard mentioned how the power of prestige—driven largely by the rankings—is a barrier to change. Until we have a balance wheel to the rankings that recognizes institutions for more than just input factors like SAT scores, fund raising, and faculty salaries, it’s going to be difficult for colleges to go out on a limb and be different. Those institutions and presidents that dare to buck the trends, like Paul LeBlanc of Southern New Hampshire University—who gave a presentation at the meeting—don’t seem to care about where they place in the rankings (although he is proud his campus was named one of the most innovative companies by Fast Company magazine).

If higher education does indeed defy the logic that more competition equals innovation and lower costs, perhaps we need a bit less competition in the sector. That was the case made to me by Lawrence S. Bacow, a former president of Tufts University, after the meeting. He speculated that increasing expenditures dedicated to smaller classes, more student contact with faculty members, more academic offerings, and of course, nicer facilities was being driven by competition.

Bacow suggested that if the government allowed colleges to collude in certain ways, it could drive down costs. As an example, he touched the third rail of American higher education, tenure and the aging of college faculties with the end of mandatory retirement. What if, he asked, tenure wasn’t a lifetime guarantee, but a 35-year commitment followed by one-year contracts? Under such a system, colleges could have more flexibility with their faculty ranks, reducing costs. But no college president in his or her right mind would propose something individually, without other institutions’ joining in.

It was noted during the meeting that some 500 new colleges have opened in the past several years. What’s more, the government and accreditors work hard to save existing colleges from failing. It has been suggested by some during the economic downturn of the past few years that maybe it wouldn’t be such a bad thing if the government and accreditors just let the institutions close. That suggestion might be right. Then we could test whether competition is good or bad for higher education.

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