November 5, 2012

We Must Embrace Higher Ed Reform

The History Channel's popular series "The Men Who Built America" portrays an incredibly wealthy - yet worried - John D. Rockefeller. Rockefeller, who earned much of his vast fortune by producing and refining kerosene, was facing competition not from rival magnates - the Carnegies or Vanderbilts - but from the likes of Thomas Edison and Nikolas Tesla, who sought to harness electric light to affordably power the homes of millions of Americans. 

Rockefeller quickly realized he had to find another market for his kerosene, or risk losing his wealth, standing, and influence. Rather than trying to stop it, Rockefeller had the entrepreneurial skill to recognize that his industry had to change when confronted with a fundamentally new and transformative form of competition.  It's evident that many of today's colleges are trying to block inevitable change, through barriers such as accreditation, while others realize they have to redefine their industry.

America's colleges and universities stand on the same precipice. A disruption of the higher education market through online learning and more specifically, through Massively Open Online Courses or MOOCs, is underway, precipitated by untenable college costs. And unless Traditional U rethinks its business model, and for that matter, its raison d'ĂȘtre, it will face an uphill battle to stay competitive in a rapidly changing higher ed market. As Stuart Butler and I write in a recent paper we published:

"Traditional higher education, however, may no longer be able to ignore the revolution at its doorstep. Dramatic changes are on the horizon as entrepreneurial educators experiment with radically different business models and approaches to learning."

Students, parents, and taxpayers will be the beneficiaries of those dramatic changes. Innovative start-ups such as Coursera, edX, and Straighterline offer courses for a fraction of what they cost at traditional universities, or, offer courses that are altogether free. Given this new environment of open access to high quality content, one can imagine a day when students pursue a menu approach to higher education, piecing together their degree from a variety of sources instead of spending four years and thousands of dollars obtaining a bachelor's degree at a single institution.

Such a menu approach would allow students to home in on the courses they need to be marketable and to succeed in the workplace. Their course selection could be guided by independent third parties- businesses or non-profits for example - who lend their "seal of approval" to a given course. Such an approach could radically reduce costs, improve access, and provide valuable information to employers.

But there is a significant barrier to the much-needed transformation of higher education: accreditation. Accreditation has become a poor gauge of college quality. Schools rarely lose accreditation once it is granted, despite widespread recognition that the quality of higher education has been on the decline for decades.

At the same time, colleges and universities must toil through the bureaucratic and time-consuming accreditation process in order for students to be eligible for federal loans. Such a system hinders innovation, creates an inflexible college experience for students, and results in accredited courses of questionable academic value.

The first step toward reforming higher education is reconfiguring accreditation and unleashing a new higher education business model. To do that, federal policymakers should end government sanctioning of accrediting agencies, making accreditation voluntary; reputations dependant on market forces, not government approval. At the same time, federal financing should be unbundled from accreditation.

Traditional universities face a dilemma: Americans are coming to the realization that too often a bachelor's degree just isn't worth the average $25,000 in student loan debt it costs. Employers realize that that pricey piece of paper is a poor indication of the skills and knowledge of a prospective employee.

Rockefeller ultimately lost the battle to light America's homes, but he remained a powerful player in American industry. He shifted his focus to oil, using what was once a byproduct - gasoline - to fuel the "horseless carriages" mass produced by Henry Ford. Colleges need to likewise shift their focus and recognize that in a time when the acquisition of basic knowledge is cheaper than ever, degrees cannot remain historically expensive.

By embracing the budding online revolution, they can do just that. Federal policymakers can aid that transformation by removing barriers such as the current government-driven accreditation system, and allowing the market to determine quality.


Lindsey M. Burke is the Will Skillman Fellow in Education at The Heritage Foundation

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Published by the Manhattan Institute
The Manhattan Insitute's Center for the American University.