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Changing the economics of education [Hennessy & Khan at 2012 All Things Digital Conference]

On 06/04/2012, in budgets, business side of he, changing business models, cost of getting a degree, dangers of the status quo, Daniel S. Christian, disruption, education technology, elearning, flipping -- inverted learning, future of higher education, New "Amazon.com" of Higher Education, new business models, online learning, by Daniel Christian

Changing the Economics of Education -- John Hennessy and Salman Khan at 2012 All Things Digitall

 

Excerpt:

Is there anything to be done about the rising price of higher education? That was the question posed to John Hennessy, president of Stanford University, and Salman Khan, founder of Khan Academy, a nonprofit online-learning organization. They sat down with The Wall Street Journal’s Walt Mossberg to discuss how technology might be part of the solution.

Here are edited excerpts of their conversation.

 

Addendum on 6/7/12:

  • D10: Stanford, Khan Academy, and the future of higher ed — from techhive.com by Jason Snell
    Excerpt:
    Though the crushing cost of college education wasn’t a major topic of Khan and Hennessy’s conversation with D10 co-host Walt Mossberg, it’s certainly a major cause of anxiety for parents. But most of the time, the conversation dwelled on the simple issue that technology is going to radically transform education—and right now everyone’s trying to figure out how to manage that change. “There’s a tsunami coming,” Hennessy said. “I don’t know how it’s going to break, but my goal is to try to surf it, not just stand there.” At its simplest form, technology needs to find ways to make education more efficient. That means serving more students, but also teaching them more effectively.

 

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Reflections on “A generation hobbled by the soaring cost of college” [Martin & Lehren]

On 05/14/2012, in cost of getting a degree, dangers of the status quo, Daniel S. Christian, reinvent, staying relevant, by Daniel Christian

A generation hobbled by the soaring cost of college

My thanks to Academic Impressions who sent out the above item and the interactive graphic below.

 

From DSC:
I am not posting these to put down liberal arts colleges/universities/programs.  In fact, I went through a liberal arts program in college and I’m currently working at a liberal arts college.  Rather, I’m posting them to say, “Houston, we have a problem.”  And to then prompt us all to ask, “What are we going to do about it?” 

Which reminds me again of a graphic I created a while back:

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Daniel S. Christian: My concerns with just maintaining the status quo

 

 

Addendum on 5/15/12:

 

Andrew Spear for The New York Times

E. Gordon Gee, the president of The Ohio State University, says that public colleges and universities need to devise a new business model to pay for the costs of education, beyond sticking students with higher tuition and greater debt.

COLUMBUS, Ohio — In a wood-paneled office lined with books, sports memorabilia and framed posters (including John Belushi in “Animal House”), E. Gordon Gee, the president of Ohio State University, keeps a framed quotation that reads, “If you don’t like change, you’re going to like irrelevance even less.”

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New tool helps students predict their student loan debt [Dwyer]

On 05/07/2012, in colleges, community colleges, cost of getting a degree, higher education, universities, by Daniel Christian

New tool helps students predict their student loan debt — from good.is by Liz Dwyer

Excerpt:

As part of the recently launched Know Before You Owe project, the Consumer Financial Protection Bureau and the Department of Education have developed a new interactive cost comparison tool to help students evaluate the costs and risks involved in paying for school. The tool, which is still in beta, lets students enter up to three schools they’re interested in and whether they’re going for an associate’s degree or a bachelor’s degree.

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Everybody’s worried now [Kiley]

On 04/11/2012, in changing business models, cost of getting a degree, dangers of the status quo, Daniel S. Christian, future of higher education, game-changing environment, higher education, Learning from the Living [Class] Room, New "Amazon.com" of Higher Education, reinvent, staying relevant, strategy, surviving, by Daniel Christian
Everybody’s worried now — from InsideHigherEd.com by Kevin Kiley
Excerpts:

EASTON, PA. — A year ago, the notion that Smith College — with a $1 billion endowment, high student demand, and frequently cited educational quality — was raising existential questions, particularly about its economic model, seemed a fairly radical notion.

But an idea that seemed striking in the past  — that elite liberal arts colleges might have to make significant changes in the next few years if they are to remain relevant (or present) in the current educational market — is now the hottest topic in the sector.

A conference this week here at Lafayette College entitled “The Future of the Liberal Arts College in America and Its Leadership Role in Education Around the World,” drew more than 200 college administrators, including about 50 college presidents, out of an invite list of U.S. News and World Report’s list of top national liberal arts colleges. Judging by the turnout, the discussion, and the fact that several other conferences addressing these questions are scheduled over the next few months, it’s clear that the questions are on everybody’s mind.

…

In his opening talk Monday night, Lafayette President Daniel H. Weiss laid out four major challenges facing liberal arts colleges — affordability, public skepticism about the value of a liberal arts degree and college in general, decline in the share of U.S population who fit the demographic patterns of students who traditionally attend liberal arts colleges, and questions about how to incorporate technology into the college and serve a generation of students that is increasingly networked — most of which was addressed in various forms throughout the day Tuesday.

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From DSC:
Many people haven’t liked the messages that I’ve been trying to get across these last several years:

  • That the price of higher education is too high.
  • These high prices have changed — and continue to change — the dynamics of our classrooms across America (and inside our students’ heads/thinking).
  • The predominant business models are not sustainable.
  • We are in a game-changing environment and the perfect storm continues to develop.
  • We must reinvent ourselves to stay relevant and helpful to future generations. The costs of not doing so are enormous and truly have life-long impact.
  • We need to experiment with new business models.
  • There is danger in the status quo.
  • That far more affordable means of obtaining an education are going to continue to materialize (and then asking, what do we want to do about this? How can we ride this wave and not get crushed by it?)
  • The future will have team-based content with extensive analytics — being enabled by a growing set of powerful technologies.

I am encouraged by this conference — and the turnout of 200 college admins and 50 college presidents — because it appears that this perfect storm within higher ed is now being taken more seriously.

Also relevant:

  • The world changed, colleges missed it — from The Huffington Post by Tom Vander Ark
    Excerpt:
    A bunch of colleges are going out of business, only they don’t know it. They pretend that trimming costs and jacking tuition is a solution. They haven’t come to terms with a world where anyone can learn anything almost anywhere for free or cheap.
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In U.S., while the real median household incomes continue to decrease, tuitions continue to increase.

On 04/10/2012, in cost of getting a degree, dangers of the status quo, Daniel S. Christian, economics, higher education, New "Amazon.com" of Higher Education, staying relevant, United States, by Daniel Christian

 

"The American Dream: Fraying of the Folklore" San Francisco Chapter of the National Association of Business Economics. February 29, 2012

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From DSC:

Note the troubling picture here for higher ed — the real median household income continues to decrease in the last several years, yet in those same years, there have still been increases in the cost of tuition.  That is, I’ll bet the going rates of higher ed degrees in California are not at their 1998 prices/levels.

 

Staying Relevant

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Also see:

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Items re: changing business models within higher ed & the “disruptive innovation” theory

On 04/03/2012, in business side of he, change, changing business models, dangers of the status quo, Daniel S. Christian, future of higher education, game-changing environment, higher education, innovation, leadership, reinvent, staying relevant, strategy, surviving, by Daniel Christian

Rethinking higher education business models — from americanprogress.org by Robert Sheets, Stephen Crawford, Louis Soares

Excerpt:

The theory of “disruptive innovation“—the notion that certain innovation can improve a product or service in such a way that it creates new markets that displace existing ones—was developed and advanced by Christensen in the 1990s. According to Christensen, who has studied the evolution of many industries, disruptive innovation occurs when sophisticated technologies are used to create more simplified and more accessible solutions to customers’ problems—solutions that are often less high performing than previous technologies but whose price and convenience attract whole new categories of consumers. The first generations of transistor radios, desktop computers, and MP3 players are examples. These new solutions—innovations to existing technologies deployed through new business models—gradually improved to the point where they displaced the previously dominant solutions. Christensen’s key point, however, is that new technologies like these cannot achieve their transformative potential without compatible changes in their industry’s business models and value networks, which in turn may require shifts in the standards and regulatory environment.

From DSC:
Given the current rumblings of massive changes that are about to take place (if they haven’t already) within the higher education landscape, each person within higher education that has key strategic and leadership responsibilities should be required to read the two books mentioned below. I assert this because these world-class researchers and authors have discovered and documented phenomenon that is affecting all of higher education at this point in time. Understanding the concepts in these books will help your college or university not only survive — but thrive — in the future.

  • The Innovator’s Dilemma — by Clayton M. Christensen
    Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School. Christensen is also co-founder of Innosight, a management consultancy; Rose Park Advisors, an investment firm; and Innosight Institute, a non-profit think tank. He is the author or coauthor of five books including the New York Times bestsellers The Innovator’s Dilemma, The Innovator’s Solution and most recently, Disrupting Class.
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  • Disrupting class, expanded edition: How disruptive innovation will change the way the world learns — by Clayton Christensen, Curtis W. Johnson, Michael B. Horn.

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Also:

From DSC:
That article reminds me of a posting on my archived site from 4/11/09:

Let’s reallocate funds towards course development, and then let’s leverage those learning materials throughout the world!

 

Reallocate funds to course development, and bring costs WAAAAYYYY down and ACCESS WAAAYYY UP!

For students: Bring costs waaaayyyyy down and access waaayyy up!
Plus, no more defaulted loans, students could experience richer content, students wouldn’t have to wait as much on financial aid decisions. There would be fewer financial aid headaches; and the resources devoted to figuring out & processing financial aid could be reduced. The issue will be how an institution can differentiate itself in such a new world…but that issue will have to be dealt with in the future anyway.

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Wait, isn’t this the old normal? [Kiley]

On 03/21/2012, in budgets, business side of he, cost of getting a degree, dangers of the status quo, Daniel S. Christian, New "Amazon.com" of Higher Education, United States, by Daniel Christian
Wait, isn’t this the old normal? — from InsideHigherEd.com by Kevin Kiley
Big tuition hikes at elite private institutions contradict the notion that colleges are focusing on reining in sticker price to make education affordable.
Excerpt:

The justification for the large increases at publics has been the need to maintain quality in the face of state appropriations cuts, an excuse private universities don’t have. For many privates, other revenue sources, including endowment returns and private giving, are back to where they were before the recession. And almost half the presidents of private doctoral universities surveyed recently by Inside Higher Ed said their institutions could make additional spending cuts without hurting quality, meaning there is little imperative for increases.

For this reason, the presidents of several private institutions have taken some measures to control costs. “Somewhere out there is a line, on the other side of which we become unaffordable. We haven’t crossed it yet, but we know we’re getting closer to it,” McCardell said. Total cost of attendance at some liberal arts colleges, including tuition, room, and board, is more than $50,000 a year.

Also see:
  • No diploma, no GED, no aid — from by Libby A. Nelson
    Excerpt:
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    WASHINGTON — Students who wanted to attend college, but didn’t have a high school diploma or GED, used to be able to get federal grants and loans through a back door: either take a basic skills test to prove their “ability to benefit” from a college education, or successfully complete six credits.
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    This year’s federal budget, in an effort to trim spending on Pell Grants, shut off both routes. As of July 1, newly enrolled students are required to have a high school diploma or GED in order to receive federal financial aid. College administrators say they worry the new policy will shut out older students seeking training to find a new job, immigrants, and students in states where money for basic adult education has been cut in budget crises.
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    Either those students will turn to riskier private loans, they say, or — more likely — they’ll just give up on pursuing higher education.

 

Staying Relevant

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Items re: “Learning from the Living Room”

On 03/09/2012, in 21st century, 24x7x365 access, A/V -- audio/visual, cloud-based computing / apps / other cloud-related, cost of getting a degree, dangers of the status quo, Daniel S. Christian, future of higher education, game-changing environment, homeschooling/homeschoolers, human-computer interaction (HCI), Learning from the Living [Class] Room, marketplaces, New "Amazon.com" of Higher Education, online learning, online media, online tutoring, smart/connected TV, social learning / networks, student-related, technologies for your home, transmedia, trends, using teams, videoconferencing, virtual field trips, virtual K-12 schools, Virtual Reality (VR) / worlds / learning, virtual tutoring, web-based collaboration, by Daniel Christian

From DSC:
Here are some items related to what I call “Learning from the Living Room” — a trend that continues to develop that involves:

  • Using high-end, personalized, multimedia-based, interactive, team-created content — packed with new reporting tools for better diagnostics/learning analytics — available via a cloud-based “education store”/marketplace/exchange
  • Web-accessible content that’s available 24x7x365
  • The power of social networks/learning
  • Riding the wave of the massive convergence of the computer, the telephone, and the television.

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Smarter TV: Living room as digital hub from Samsung and Microsoft to Apple and Google — from wired.com by Tim Carmody
Excerpt (emphasis DSC):
  • In the future, the living room will replace the home office as most households’ home for the stationary personal computer. Instead of printers and mice and other corded accessories, networked appliances and post-PC machines share data with one another and with the cloud. Play and productivity both become decentered; gaming and entertainment might be on a tablet or a television, with recipes at the refrigerator, a shopping list for the smartphone, and an instructional video on the television set. All of these experiences will be coherent, continuous and contextual. And like the personal computer at the height of Pax Wintel, the living room will be a platform characterized by triumphant pluralism.“The thing about the living room is that it’s universal; everyone in the household uses it,” Samsung VP Eric Anderson told me at today’s event. “We know that we’re not going to capture every single member of the household. In my family, my wife and my daughter are Apple, me and my sons are Android,” he noted, pointing out that the majority of devices introduced today can interact with either mobile platform.

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The modern mechanics of app stores: today, tomorrow and connected TV — from guardian.co.uk by Dean Johnson

Excerpt:

What’s next for app stores?
It’s time for each platform to up its game – smart TVs are coming. The small and medium screen experience will shortly be translated to the bigger screen as connectivity and discoverability takes on even greater importance.

Google and Apple will further interweave themselves into our daily lives as iOS and Android seamlessly combine our smartphones and tablets with our new smartTVs. Electronic Program Guides (EPGs) and the programmes themselves will suggest related content, from apps to music to film to books. This must all be presented in an approachable, then browsable manner to encourage additional discovery.

The quest for the perfect meta-data will become increasingly important and voice commands will need to deliver the best search results with the minimum of fuss. This time next year, the battle of the app stores will be fought on the move, on the desktop and on the living room wall.

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Samsung Launches Smart TVs With Gestures, Voice Control — from by Douglas Perry

Excerpt:

A Kinect-like feature is made possible via camera and microphone integration that comes standard with the LED ES7500, LED ES8000 and Plasma E8000 models. According to Samsung, consumers can launch apps such as Facebook or YouTube, or search the web via voice commands. Waving the hand will move the cursor and select links. The TVs integrate a Samsung dual-core processor as well as a new Webkit-based web browser to improve overall performance. The high-end 7500 and 8000 TVs ship with a remote with an integrated touchscreen. A wireless keyboard that is compatible with Samsung’s TVs as well as the Galaxy Tab tablet is sold as an option.

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New TV experiences through companion apps — from moxie pulse

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When Ivory Towers Fall: The Emerging Education Marketplace [Frey]

On 03/08/2012, in cost of getting a degree, dangers of the status quo, Daniel S. Christian, future of higher education, game-changing environment, innovation, marketplaces, New "Amazon.com" of Higher Education, online learning, reinvent, staying relevant, by Daniel Christian

When Ivory Towers Fall: The Emerging Education Marketplace — from The World Future Society by Thomas Frey

Excerpt:

Throughout history, education has been formed around the concept of “place.”  Build fancy buildings, attract world-renowned scholars, and you have a college or university.  This model works well in a culture based on teaching. Over the coming years, with our hyper-connected world, we will be shifting to a learning model.  While “place” will still matter, it will matter differently. Teaching requires experts; learning only requires coaches.  The two primary variables of time and money will drive the new education marketplace, and the four primary trend lines will involve…

Addendum 3/9/12:

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College presidents say $10,000 degrees available now [Hamilton]

On 03/07/2012, in change, changing business models, community colleges, cost of getting a degree, dangers of the status quo, Daniel S. Christian, future of higher education, higher education, innovation, New "Amazon.com" of Higher Education, student-related, United States, universities, by Daniel Christian

College presidents say $10,000 degrees available now — from texastribune.org by Reeve Hamilton

Excerpt:

Called “The Evolving Role of University Systems in Higher Education,” today’s panel mostly focused on efforts to lower the cost of college. It was moderated by Texas A&M System Chancellor John Sharp and featured Heldenfels, Texas Higher Education Commissioner Raymund Paredes, and two pairs of university and community college leaders actively collaborating: Texas A&M-San Antonio President Maria Ferrar and Alamo Colleges Chancellor Bruce Leslie, and Texas A&M-Commerce President Dan Jones and South Texas College’s Chief Academic Officer Juan Mejia.

Leslie said that Perry’s push has led to an increased emphasis on cooperation between community colleges and four-year universities. The result, he said, is a degree that meets Perry’s target — and is even less expensive. At Texas A&M-San Antonio, Ferrar said, a bachelor’s in information technology with an emphasis on cyber security will cost about $9,700.

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Rafter™ launches to revolutionize the entire course materials process…making education more affordable, accessible and effective — from Rafter

On 03/05/2012, in business side of he, cloud-based computing / apps / other cloud-related, cost of getting a degree, new business models, publishing, by Daniel Christian

Rafter™ launches to revolutionize the entire course materials process for students, educators, and administrators, making education more affordable, accessible and effective — from Rafter
Rafter Delivers First-of-its-Kind Technology to Manage Textbooks and Digital Content On Campus and Online

 Excerpt:

SAN MATEO, CA–(Marketwire – Feb 28, 2012) – Rafter today launched as a new education technology company offering a network of software services that enable administrators and educators to better control costs and manage course materials for their students. Addressing higher education course materials management at an enterprise level, the Rafter Course Materials Network™ is the first suite of cloud-based software services that helps reduce costs for students and stores, helps educators discover and adopt the best materials, and provides college administrators with unprecedented power to control the complexities and reduce the costs of the entire course materials management process.

Rafter evolved out of one of the fastest growing education technology companies, textbook rental company BookRenter, which has saved millions of students more than $175 million across more than 5,000 campuses nationwide. In 2010, the company began to partner directly with schools to co-develop services to reduce the cost of and improve the experience associated with textbooks. Today, more than 500 schools have adopted BookRenter’s solution.

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See also:.

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rafter.com

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Also see:

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[From DSC: Is this a piece of the future?] Unified opens an online university for social media marketers [Anthony Ha]

On 03/02/2012, in accreditation, career development, corporate / business world, corporate universities / corporate training, cost of getting a degree, dangers of the status quo, Daniel S. Christian, future of higher education, game-changing environment, innovation, marketing/social marketing, New "Amazon.com" of Higher Education, online learning, professional development, real-world assignments, reinvent, social media, staying relevant, strategy, by Daniel Christian

Unified opens an online university for social media marketers — from TechCruch.com by Anthony Ha

 

unifiedsocial.com

Services > Unified University

The social media landscape is complex and constantly evolving, leaving top global brands and agencies with the challenge of staying on top of the latest trends and best practices. Unified University is a first of its kind – an all-encompassing training, continuing education and certification program, complete with access to the industry leading best practices knowledge base. Unified University is designed to help marketing and agency executives become experts and internal thought leaders on social strategies, platform insights, earned media measurement, and more.

Through Unified University’s comprehensive training program, a social team can get certified on the Unified Social Operating Platform and learn about the latest advances in social advertising. Certification ensures that a team is up to date on the latest options within the social web, including the benefits of advertising across social ecosystems including Facebook, Twitter, LinkedIn, Google+, StumbleUpon and more.

Teams learn that brands may require very different strategies to ultimately achieve similar results. Unified University assures that teams know how to strategically represent brands across all social options while delivering high quality results and maximum ROI.

From DSC:
Is this a part of the future? If higher ed doesn’t respond more forcefully, I’d say so.

Along these lines, from page 408 of the Steve Jobs book:

One of Job’s business rules was to never be afraid of cannibalizing yourself. “If you can’t cannibalize yourself, someone else will,” he said.

Innovate. Reinvent. Staying relevant. This goes for the accreditation agencies as well.

 Also see:

 

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Staying Relevant

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This is exactly what I was getting at with “The Forthcoming Walmart of Education”

On 02/29/2012, in 21st century, 24x7x365 access, cost of getting a degree, dangers of the status quo, Daniel S. Christian, digital learning, disruption, education technology, emerging technologies, engagement / engaging students, face-to-face, future of higher education, game-changing environment, global / globalization, higher education, innovation, interactivity, learner profiles, learning agents, learning ecosystem, Learning from the Living [Class] Room, lifelong learning, mobile learning, multimedia, New "Amazon.com" of Higher Education, open courseware and systems, personalized/customized learning, reinvent, staying relevant, teaching & learning, using teams, by Daniel Christian

From DSC:
This is exactly what I was getting at with The Forthcoming Walmart of Education (2008) and it points out, again, that innovation is much faster and stronger in the online world than it is in the face-to-face world. The tools being developed to engage, track, diagnose, and adapt continue to be developed. What may have once been poo-pooed continues to pick up steam. (Christensen, Johnson, & Horn are right on track.) The trend will be towards more team-based endeavors that can be made available at a greatly reduced price. They will be multimedia-based, highly-interactive, and state-of-the-art (technically and pedagogically).

Treating Higher Ed’s ‘Cost Disease’ With Supersize Online Courses — from The Chronicle by Marc Parry

Excerpt (with emphasis from DSC):

Professors should move away from designing foundational courses in statistics, biology, or other core subjects on the basis of “intuition,” she argues. Instead, she wants faculty to work with her team to put out the education equivalent of Super Bowl ads: expensively built online course materials, cheaply available to the masses.

“We’re seeing failure rates in these large introductory courses that are not acceptable to anybody,” Ms. Thille says. “There has to be a better way to get more students—irrespective of where they start—to be able to successfully complete.”

Her approach brings together faculty subject experts, learning researchers, and software engineers [from DSC — a TEAM-based approach] to build open online courses grounded in the science of how people learn. The resulting systems provide immediate feedback to students and tailor content to their skills. As students work through online modules outside class, the software builds profiles on them, just as Netflix does for customers. Faculty consult that data to figure out how to spend in-person class time.

From DSC:
Such learner profiles will most likely reside in the cloud and eventually standards will be established to insert new data into these profiles. The access to view/edit these profiles will be controlled by the individual learners (hopefully!).  What if learners could selectively grant corporations access to this type of profile as their new resume?

For items concerning team-based approaches, see this recording (June 2009) as well as this collection of items.

For items concerning consortia and pooling resources, see here and here.

 

 

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Different tuition rates based on your major? An item relating to new business models in higher ed

On 02/24/2012, in business side of he, cost of getting a degree, game-changing environment, higher education, innovation, strategy, by Daniel Christian

2011 Survey on Differential Tuition at Public Academic Institutions — from the Cornell Higher Education Research Institute

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— Originally saw this at
Should Engineering students pay more than English majors for their degrees?
by Liz Dwyer

 

Also see:

Excerpt:

The Administration is planning to add a new tool to the College Affordability and Transparency Center that would assist prospective students and their families in comparing colleges before they choose using key measures of college affordability and value. The purpose of the tool is to make it easier for students and their families to identify and choose high-quality, affordable colleges that provide good value.

Below is a sample screenshot of the College Scorecard.  Using the form on the right, tell us what you think of it. (Note: The sample below would apply to 4-year colleges and universities and be made available using our Smart Disclosure principles. Download the PDF to see a larger version.)

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Addendum on 3/1/12:

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chart-college-rethink.gif

 

From DSC:
The problem I have with some of this is that I’d rather students identify and pursue their passions — following their hearts and developing their gifts — and not just chasing the almighty $.

 

 

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Introducing Bennett Hypothesis 2.0 [Gillen; Center for College Affordability and Productivity]

On 02/22/2012, in budgets, business side of he, cost of getting a degree, funding / grants, leadership, legislatures / government / legal, by Daniel Christian

Below are the concluding paragraphs of Introducing Bennett Hypothesis 2.0 [by Andrew Gillen, Center for College Affordability and Productivity, with emphasis below from DSC)

Original Bennett Hypothesis + a couple refinements + Bowen’s Rule = Bennett Hypothesis 2.0.

The original Bennett Hypothesis held that increases in financial aid will lead to higher tuition, but the empirical evidence testing the hypothesis is inconclusive. The next generation of the concept, Bennett Hypothesis 2.0, adds three refinements.

1.  All Aid is Not Created Equal
2.  Selectivity, Tuition Caps, and Price Discrimination are Important
3.  Don’t Ignore the Dynamic Story

These three refinements not only help explain the mixed empirical evidence, but also provide a better understanding of the relationship between financial aid and tuition. While the first two refinements weaken the link between the two (lessening our concern about Bennett Hypothesis 2.0), the third refinement strengthens the link, implying that we should almost always be concerned about financial aid leading to higher tuition.

Given the current structure of the higher education system, Bennett Hypothesis 2.0 implies that the government will always be fighting a losing battle to increase access to college or improve college affordability since “additional government [financial aid] funds keep providing revenues that, under the current incentive system, increase costs.”54  As higher financial aid pushes costs higher, it inevitably puts upward pressure on tuition. Higher tuition, of course, reduces college affordability, leading to calls for more financial aid, setting the vicious cycle in motion all over again.

Bennett Hypothesis 2.0 exacerbates rather than causes out of control spending by colleges, the ultimate cause of which is Bowen’s Rule. Nevertheless, that is no excuse for ill-designed financial aid programs to pour fuel the fire.  As Bennett noted:

“Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”55

Those words remain just as true today as they were a quarter century ago.

From DSC:
This report seems to show that the current system is only serving to expand the higher ed bubble even further; surely a pop will be heard in the future (if it hasn’t already at some individual colleges and universities).  Such a financial aid system seems to be causing one of the elements of the perfect storm — the cost of higher ed — to mount its waves to an even higher level.  (Keep in mind I created the image below in September 2010, but many of these forces are still with us today.)

The perfect storm in higher ed

 

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