Where Higher Education Went Wrong
A forum on the failures and future of the American university
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In October 2012 my George Mason colleague Tyler Cowen and I launched MRUniversity (short for Marginal Revolution University, named after our blog), with a full-length academic course on development economics. Today we have many thousands of registered students from all over the world, and are launching new courses. Inspired by Salman Khan and the YouTube tutorials he offers through his Khan Academy, we wanted to see what two individuals who enjoy teaching could accomplish without major financial backing.
Our experience has shown us many advantages of online lectures: They allow the best professors to teach many more students. They offer large time savings, since students can repeat sections of the lecture without slowing down other students or consuming instruction time. They offer lower fixed costs, since students no longer need to drive to and from campus. Lectures can be shorter, and consumed at any time, which means online universities are effectively open 24 hours a day.
A number of online course providers now exist, including Coursera, Udacity, and the Harvard-MIT project edX. These “massively open online courses,” or MOOCs, have sought and received millions of dollars of venture capital and/or university funding.
The biggest hurdle for MOOCs is credentialing, which usually requires a business model and a partnership with a name-brand institution. The challenges here are not technical but bureaucratic. We have, however, seen universities move into this space at a pace unheard of for such normally slow-moving institutions. Antioch University, for example, is offering credit for some Coursera offerings and San Jose State University has recently partnered with Udacity to offer online mathematics classes for credit. Most worryingly for the traditionals, the San Jose online price will be less than half the price of an on-campus course.
It’s not just the MOOCs that are competing with traditional universities. Online lectures are behind the astonishing rise of for-profit universities. Enrollment at the for-profits was less than 500,000 students nationwide in 2000, but that number doubled to 1 million by 2005, and doubled again to 2 million by 2010. Why? The for-profits pioneered online education, a product that appealed to non-traditional students who could not afford or did not want the five-year “edu-vacation” produced by more traditional universities.
The education establishment tends to dismiss the MOOCs and the for-profits as low-quality. There are legitimate complaints about for-profits, mostly stemming from the fact that the final customer is often not the student but the federal government, which supplies the bulk of loan money that students spend there. But it’s inarguable that the sector has demonstrated a strong demand for online education. Low-quality entrants that disrupt established industries often improve their offerings over time. MP3s didn’t sound as good as CDs, and audiophiles objected. But compressed digital sound is improving, and has already overtaken physical CDs in income generated for the recording industry.
Traditional universities should not assume that the quality of education at the MOOCs or the for-profits is or will remain low. In a 2011 interview with The Next Web, business guru Clayton Christensen, author of The Innovator’s Dilemma, reports that the University of Phoenix invests $200 million annually on research to improve the quality of teaching. “That’s $200 million every year just on making their teaching better,” Christensen says. “Do you know how much money Harvard spends every year to make its teaching better? Zero.”
Take those figures with a grain of salt, but the lesson about quality improvement is sound. When each teacher teaches only tens or hundreds of students, no teacher will invest millions of dollars in improving education. But when a single online course can reach tens or hundreds of thousands of students, it pays to invest in quality.
The real competitors to traditional universities may end up being neither the MOOCs nor the for-profits but entirely new educational startups. Online education replaces labor with capital, in the form of software. Online pioneer Marc Andreessen has argued that software is eating the world—if so, education is the appetizer. As software replaces labor we will see greater possibilities for productivity improvements in education. Incentives to invest in such improvements will expand with the size of the market.
What will a future “course” look like? One model is a super-textbook: lectures, exercises, quizzes, and grading all available on a tablet. The textbook’s artificial intelligence routines could guide students to lectures and exercises designed specifically to address that student’s deficits, and could call on human intelligence—tutors—on an as-needed basis. (“Click here to connect with a tutor; $5 for the first five minutes and 50 cents a minute thereafter.”) A textbook of this kind would draw on content experts but also actors, animators, graphic designers, and experts in pedagogy.
Universities are not the natural producers of educational software. Instead think of video games. The process of developing the mega-hit video game Halo 3 provides a useful model: The development team at Bungie Studios analyzed 3,000 hours of Halo play by 600 gamers in order to suss out everything from preferences for weaponry to places where players are most likely to get killed. Then they did the same with their competitors. Wired sums it up this way: “It might seem like an awfully clinical approach to creating an epic space-war adventure. But Bungie’s designers aren’t just making a game: They’re trying to divine the golden mean of fun.”
A game like Halo must be difficult enough so that players feel challenged but not so difficult that they give up in frustration. Educators want a course with exactly the same characteristics. Game developers invest millions of dollars in producing and testing high-quality video games because the size of the market justifies such investment. Online technologies are bringing the same economics to the world of education. In the new world of online education, we will finally have courses that are as well designed and as awesome as video games.
Alex Tabarrok is a professor of economics at George Mason University and the co-founder with Tyler Cowen of MRUniversity.com. He writes regularly at the blog MarginalRevolution.com.
Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time.
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Where did the American higher education system go wrong?
I just happen to have a back issue of my alma mater's alumni bulletin in the mound of random papers on my desk. It features an announcement of a great academic coup; landing a new "Assistant Professor of Feminist and Gender Studies".
Elevating Grievance and Oppression Studies to department status definitely figures into that decline.
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Colleges have always been prone to come up with ridiculous titles for people they wanted to hire. In the 11th, 12th, and 13th centuries these titles tended to be vaguely theological. Now they are derived from the concerns of the dominant school of thought on campus; the Western Intellectual. It really isn't that different.
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"Assistant Professor of Feminist and Gender Studies"
What's so fantastic about getting a new 'assistant' anything?
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It's fantastic because you don't have to pay them as much as associates.
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"Assistant Professor" just means tenure-track. They aren't really "assistant" anything. If they gain tenure, then they become full Professors.
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In a previous issue not on my desk, they bray excitedly about a new multi-million dollar fitness center currently under construction which would make any Beverly Hills kept woman weep with envy.
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I remember one to that effect too. When I went the gym was on the bottom floor of one of the oldest buildings on campus. I don't remember ever walking in.
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a new multi-million dollar fitness center
And were students or faculty any more fit after this had been around for awhile? It would have been cheaper to give everyone memberships to the local gym. If there wasn't a local gym, I'm sure someone would have built one with the guaranteed memberships.
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When I graduated with an unadjusted 3.96, the top of my class, I knew something was wrong. I was still uneducated. All it meant was that I was capable of conformative regurgitation.
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Maybe major in something challenging then?
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You never had to write a paper or essay defending an original argument of your own? Where did you go to school? What was your major?
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the question posed by this article has so many answers it is hard to know where to begin:
--tuition increased because it could be, largely because the feds became the guarantor of loans
--treating grievance studies as legitimate scholarship
--pretending that every high school grad had to get a four-year degree immediately after that
--millions blown on student centers, health facilities, and other amenities that have nothing to do with learning
--inflated salaries for professors whose actual instruction time is a fraction of their responsibilities -
I think the "pretending that every high school grad had to get a four-year degree immediately" bullet is a symptom, not a cause. Government financing of tuitions creates a glut of degrees out in the market, and the market responds accordingly by discounting the value of education, including that of diplomas.
The other bullets are spot on though.
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--pretending that every high school grad had to get a four-year degree
I'd add another related item:
--pretending that every high school grad has the intellectual capacity to earning a four-year degree
(even if the HS grad is given enough support, however you want to define support) -
Then add the consequences of those two items:
--pretending that those without the intellectual capacity were actually passing their classes through grade inflation
which leads back to "discounting the value of education"
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which leads back to "discounting the value of education"
There is a difference between education and a credential claiming you are educated.
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Many of the extra amenities are in place due to student demand. At the university where I work, it was the students who demanded a state-of-the-art recreation center and voted to increase their student fees to fund it.
Colleges and universities are in active competition for students, and today's kids aren't willing to stay in dorms that don't have wi-fi. They won't eat the same slop we tolerated 30 years ago. They all have cars and want a place to park them. Offer them an outlying lot, and they demand a shuttle to drive them to their classes. Any university that doesn't offer these things will lose students to the schools that do, creating a conundrum for public institutions where state funds are allocated on the basis of FTE (full-time equivalent). Lose students, lose funding; gain students, gain expenses.
It's an arms race, and these sorts of things always end badly for all concerned.
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http://www.youtube.com/watch?v=SZHTFhrmyHk
If somebody comes to work for us, and has an MBA, we look them and say, "What's going on in your head that you allocated another $100,000 and two years of your time to get more theory when you should've been out there 'doing'?"
speaking of which, anyone remember the program Peter Theil setup to pay you $20,000 to drop out and do something entrepreneurial?
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speaking of which, anyone remember the program Peter Theil setup to pay you $20,000 to drop out and do something entrepreneurial?
Read the Michael Gibson piece on page 6.
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something entrepreneurial
This needs to be taught in all high schools. It would be great if there was a legitimate online program that would teach this kind of thing.
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If public high schools taught anything about entrepreneurship except how evil it is, that would be a good first step.
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Our public high school has Entrepreneurship 1 and Entrepreneurship 2 classes.
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Though people have been talking about a bubble in higher education for a while, one major indicator that the swelling is approaching its limit was found in last year’s Occupy protests. While the protesters represented a diverse array of grievances, one common thread was that many had run up huge student loan debts for degrees that weren’t capable of generating sufficient income to make the payments.
This kinda irritates me. Do these folks not even do the most rudimentary research before choosing a college major? There are exactly 3 things that you need to know about your major to not fall into this trap. 1) Cost of tuition, 2) median starting salary, 3) the GPA you need to shoot for to get a job.
Unless one has been actively misled and lied to by their college, I have a hard time feeling sorry for people who choose an expensive education in a major that is a glorified "Barista 101."
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The Occupier I remember the most was an idiot who had a good teaching job, but wanted to be a puppeteer, so spent two years and $xx,000 on a masters in puppetry, then found he couldn't get a job teaching elementary school kids about puppets. Naturally he blamed it on Wall Street.
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There are people who are good at getting a degree, but have absolutely no common sense. (The version of myself at age 20 was one of them.)
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"Unless one has been actively misled and lied to by their college..."
People ARE being lied to and misled by colleges. Lied to about the true costs - books, "fees", "surcharges" etc. - misled about future job prospects, and essentially lied to and misled about the value of this ever-more expensive education, one that is increasing several times the rate of inflation.
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College is a racket. Not an absolute racket. It does produce significant education and ultimate productivity. But it's also another cash cow promoted by liars and benefiting collectivists way beyond the benefits of their contribution.
The extension of this logic is the "public education for-all" lunacy. If college is a racket as described in the article and mentioned in these comments . . . isn't most of the mandated participation in "education" after 13 years old?
I had a grandmother who came to the US at 17 escaping genocide, and she spent the next 77 years working her ass off, making great business decisions and ended up with 2 million worth of savings, income properties and a house - ZERO debt. She had been educated up until the age of 12. We've become a culture that perpetuates the myth that every child should grow up to become a lawyer, doctor or politician. Do we need bus drivers, and store owners with BAs?
I doubt it has much to do with "education" making our society a better place when you consider the general state of ignorance in basic economic reality amongst the population as a whole - at least the 60 mil who voted for Obama. -
is it still true that college INCREASES human capital? My experience as a tuition paying parent is the opposite.
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Require your kid to get minimum grades or you don't pay the tuition. That's how many companies handle tuition reimbursements for employees. The most important thing is learning how to study, which is probably something that needs to be learned *before* college. If a kid is unable to buckle down and study in college, he should not be going yet.
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Nick, I think you're wrong about half. I don't have any problem with a classical liberal arts education, humanities, social sciences, etc, except when the degree is paid for by my taxes for a student who isn't there to learn. I've known too many students who purposely took the easiest courses, or ones their friends had taken the year before, because college was nothing more than a paid vacation between high school and settling down. They would have learned more by joining the navy or hiking around Europe.
You worked your way through college, so it had significant value to you. It's obvious these massive student loans are going to be paid off by taxpayers one way or the other, and I resent that. If those students had actually learned something other than how to binge drink, it might be arguable that society benefited from their four year frat party. But they didn't, society didn't, and that is why so many people sneer at liberal arts and humanities degrees.
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I read the first two pieces but had to stop because I became too angry to continue. I now have the overwhelming desire to punch someone in the face.
This is just education. Too many other public policy issues-like healthcare-are just as wasteful, nonsensical and corrupt.
The upside? We're doomed.
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"It’s not clear that such measures would do much to stem the tide of students pursuing useless degrees. After all, the market already sends strong signals to students that engineering is worthwhile. But kids are idealistic and impractical."
Well, yes, that's true, but you're missing the elephant in the room: Those useless degrees, generally in the social sciences, are quite simply far easier to complete. Degrees in science, technology, engineering and mathematics require solid work, and a lot of it. Students who lack the intellectual tools or the drive to compete in more difficult disciplines self-select into easier programs.
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Yep. I couldn't hack it as a Math major, so I switched to double majoring in English and Economics instead. But I wouldn't call either of those "useless" degrees. It's not like you can't get a job with a good GPA and an English degree. Or an Economics degree. Or both. Granted, the job may end up having nothing to do with English and Economics, but they like to see you have the B.A. when they hire you.
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Hmm. Maybe it wouldn't be such a mess if they just got some college graduates to run things.
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Interesting that only academics were asked to diagnose the problem, violating Hume's advice that one should proceed from experience when seeking good knowledge.
There are, in fact, non-academics who, proceeding from their firsthand experience as students (or more accurately-student borrowers) have done significant research,and exposed important critical elements of this problem. These laymen have, in fact, put forth rational explanations admitting simple solutions for the current crisis that have withstood serious, repeated criticism, and continue to gain credibility over the years.
But just as these citizens weren't at the design table as higher education finance policy was(evidently) so poorly crafted, so too is their presence at the failure analysis table not required. Funny that many of the same characters at the first are also, now, at the second.
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Speaking as someone who attended an online school, I can tell you that the world's hiring managers mostly attended brick and mortar colleges, and until that changes, don't bother wasting your time and resources unless you just need a credential for a guaranteed promotion within your company, or you are truly pursuing your education entirely for its own sake. On the bright side, you'll be no worse educated than somebody coming out of a typical state school and have accumulated significantly less debt. My entire degree, for example, cost the VA $21,000. I'm only out my time.
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But to more clearly state my point, do not believe what you read from the idealists about the coming online education revolution. There isn't one, and there probably isn't going to be one. At least not now or in the immediate future. Even if you really did get a good education from a school that isn't a diploma mill, the rest of the world thinks you attended Hamburger University. And that's really all that matters in terms of employment.
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Hmmm, I'm not sure about this. Thomas Edison- a state univeristy in NJ - is an all online degree issuing school. It also has a transfer agreement with all other state universities in NJ. So, one could get an associates from TE and then transfer (depending on major) all or most of their credits to Rutgers or The College of NJ to pursue a B.A or B.S. Much money and time can be saved if the student seeks out ways to play the system and is willing to take a nontraditional path.
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The article doesn't mention that students learn much less in K-12 than they used to learn, so a high school diploma is significantly devalued from what it once was. Because so many more students go on to a university or college degree (of dubious value in many cases), the value of an undergraduate degree is also devalued. So any kind of intellectual filtering now might only happen at a graduate degree level, and then only in the hard sciences or business. Fix K-12 and you have a good start on fixing the rest of the problem...
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Parents and students must do their research and recognize they have choice. No longer do we have to settle for what the educational system is offering. There has been dramatic change happening, and so much being offered outside of the traditional classroom. If a student's course choice is out of reach for them because of tuition costs, or the course they want is not offered in the area they want to study, they can access online options that will give them exactly what they require. All at much less cost and in many cases, much more effective.
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People need college degrees to get a job, because employers require them.
Employers require a college degree, because they are no longer allowed to test applicants to determine whether they can read/write/follow instructions. (3 guesses who has forbidden this)
In other words, the college degree serves as an extremely expensive employment test.
Just another example of government screwing up the system.
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Tussah - got a link to share to support your claim that interviewers aren't allowed to ask questions?
Must make it hard on employers if they can't test applicants' ability to follow instructions! Even scheduling an interview time & place would violate this law, eh?
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You mean there is no legitimate reason why I should have to take a Microbiology course to get a Business degree?
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Yes, please just view university baccalaureates as job training. There are no downsides to treating this as a pure revenue-optimization problem - trust the above economists on that.
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my roomate's ex-wife makes $62/hr on the internet. She has been without work for ten months but last month her pay was $20049 just working on the internet for a few hours. Read more on this web site http://www.jump30.com
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As economic reality evolves, undergraduate education should focus on developing the "love of learning" in students. Then they can take their technical training to earn a living and participate in "remote" (internet) learning in their leisure time. On-campus education will become a minor sector of higher education when the competition heats up in "remote" learning.
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Aaliyah. I can see what your saying... Joan`s story is inconceivable, on thursday I bought Mercedes from having made $4571 thiss month and-over, 10k last-munth. it's by-far the most-rewarding Ive had. I began this 5 months ago and pretty much straight away started to make at least $77 per/hr. I use the details on this web-site,, http://www.jump30.com
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my classmate's aunt makes $79/hr on the computer. She has been out of a job for seven months but last month her pay check was $15402 just working on the computer for a few hours. Read more here http://www.wow92.com
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I find it absolutely amazing how tuition has skyrocketed. Government grants and student loans is a good idea but what happened to students attending a college or university for knowledge and skills to be productive members of society? Instead we have French art majors studying for their future career at...Starbucks. A local Cal State university spent 214 MILLION dollars on a performing arts center while facing budget cutbacks on other departments like the sciences and engineering departments. Mind boggling!
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This article surely misses the point. I note that all of the commentators attended college and yet are not sufficiently well trained to study the true economics of public higher education. If they would have examined the state government disinvestment over the past two decades, they would know why tuition has gone up. It is a falsehood to claim that there is a higher education bubble. It is quite simply the fact that as state governments decrease their support of public education, students and their families will have to pick up the tab.
Consider the case of one regional university in Illinois. In 2010, the university received 60% of its budget from state appropriations. In 2014, it is expected that the university will only receive 40% of its budget from state appropriations. The university is not laying off faculty or staff. However, it is leaving many position unfilled. Maintenance is being deferred. Yes, there are shiny new buildings on some campuses. But this is cherry picking. Most universities in the state of Illinois have millions of dollars worth of deferred maintenance. This article is just so wrong. More facts please, less grandstanding. Where are the Reason Magazine editors?
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I have some concerns about a couple of Vedder's key numbers...
"This academic arms race is largely financed by taxpayers. In 1970, the federal government’s student financial assistance programs totaled..." ignores the very real and massive *decrease* in funding (by state and federal governments) directly to colleges. It's not that colleges suddenly have become massive drains on federal coffers; it's that the flow of money has shifted from direct support of the institution by (primarily) state governments, to individual *loans* to students. Surely, this is a non-negligible point. (How could government hold colleges accountable when it doesn't hold the purse strings anymore, and instead relies on students to do so? Do students have the same incentives for a robust and responsible academia, or might they busily be grazing the Commons bare by looking for the cheapest place to get their sheepskin?)
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In addition:
"Meanwhile, professors have been given reduced teaching loads—the proportion of instructors who teach four hours or less per week has more than doubled since 2000" apparently ignores the very great difference between tenured faculty and adjuncts. If Vedder is lumping all of them together, that's very deceptive: adjuncts typically will teach less than four hours a week (at any particular institution) because they typically only get hired for one course (hiring them for more than 2-3 usually means the university is on the hook for benefits.) Sure, adjuncts teach at more than one place, but no statistics currently aggregate that - they double or triple count an adjunct as teaching staff (with a light load!!) at multiple institutions. I wonder if a significant increase in the proportion of adjuncts since the 70's could explain Vedder's numbers... nah. (And, curiously, no accompanying data on the average salary for these slackers. Missed opportunity?)
These cavalier uses of numbers makes me suspicious of his conclusions in the extreme, though I do have some sympathy with them. You can do better, Prof. Vedder.
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We're living in an arms race. Employers have been requiring degrees for jobs that don't involve degreed work since the early 90s. Unless one is naturally suited to entrepreneurship or has a family business to move into, some form of higher ed is going to be required. However hard it may be to find a job with a BA in philosophy or something equally wishy-washy, the odds are still better than with only a HS diploma.
Where we do young people a disservice is in promoting the idea that the traditional 4-year degree is the only option. Electrician, HVAC tech, respiratory therapist and radiology tech are just a few of the jobs one can get with a community college degree. If one still hankers for a BA after that, it's much easier to pay for it on the $45K average salary of a respiratory tech than a barista's pay.
For most young people, going to college straight out of high school is a waste of time. Few have clear goals, and what they think they want to do in life is usually not where they want to be once they've got a little life experience under their belt.
Unless a young person is one of those rare birds who was born knowing his or her direction in life, we should be encouraging gap years and community college for our graduating high school seniors. Let them gain a little wisdom about the world and themselves before selling them on a four-year degree. Many universities are very accommodating of working adults, and the ones that aren't will change to suit the new market.
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The whole problem is system .
Today USA is not a normal capitalist coun try which I highly appreciate, but it is wild capitalism killing everything including education.
To American marketers the price is " whatever the customer is willing to pay "
To me " price is cost + a reasonable profit "
In USA education is priced like that. Since there is demand and Government loans wild capitalist educators will enjoy their profits.Loook up last MOOCs solutions.
Wild capitalists made it for money immediately.
Thanks to MIT + Harvar+ Berkeley
I support MIT+Harvard+berkeley -
This could be a multi-volume series. In 2001, I went back to the campus directories for 1985 and 2000 and broke down the employees is a Q&D which did not bother with openings where I taught econ. I also pulled the enrollment and budget books. I found student enrollment was up by 40%, with full-time having risen faster than part-time. Faculty increased by 15%, administrators and staff increased by 48%.
I proposed, based on my consulting MBA, that the budget be prioritized. The budget have two categories: the items in the top 80% as a block and the bottom 20% in prioitized line item. It should be made public, so anyone whose job or project was in the bottom 20% would know as simply being fare. When the money runs short by say 10%, start from the bottom and when 10% has been added up, draw a line. What is above the line stays, what is below the line is gone. It was met with shock.
I would add that those who have taken all or virutally all online courses most often lack social interaction skills compared to tradional with some seat time and agree with the line in this article that employers will look for deficiencies in all online graduates. -
There is a very simple problem with higher education in this country, and it's not just the cost of college. Employers typically use college degrees not as a "job training" qualification but rather as a proxy IQ test. If you have a college degree it's very likely that your IQ is 2 SDs above the norm (about 120 or so). Any employers who are recruiting for "brain work" know that higher IQ people do better in those positions. A BA/BS is a proxy, in many cases, for a simple IQ test. Why not just ask for IQ, or administer an IQ test you ask? Simple answer; it's illegal (for all employers with the exception of the military and a few other government positions).
Now, there's a fundamental problem here. If we really did send every high school student to college, the value of a college degree as an IQ proxy would disappear. The college degree would be nothing more than a high school degree (which, BTW, does have an IQ component as well, you're very unlikely to have a seriously low IQ if you graduate high school).
The other problem is that there are a shocking number of people who graduate college with a degree (thereby proving their 120 IQ) but with no useful job skills at all. Yes, they are better off than if they didn't go; but, why waste that much time?? Rick Scott was right to attach an immediate financial incentive to STEM majors; we need more "science" and less "navel gazing" coming out of college.
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another issue is the way in which colleges and universities are increasingly relying on a small percentage of parents to pay a disproportionate amount of the costs. at most of the private colleges that everyone focuses on, 2 out of 5 parents pay the full stated rate. The rest pay tens of thousands of dollars less, receiving discounts to the retail rape called "financial aid." The same issue exists with state schools where in-state students pay a tiny fraction of the total cost even considering the state aid that is provided and a subset of the minority of out of state parents pay the full rate. Leaving aside the fairness and perhaps illegality charging a minority of people $150,000 more over or years for the same educational service,the number of people who every year can pay tuition that increases at a greater rate than their income must someday become so small that the business model of those colleges becomes untenable.
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Meant "retail rate" of course. Tablet typo.