Social Econ Blog

This article takes a look at the potential for internet competitors to draw students away from traditional colleges and universities. The economic story it tells is fairly compelling. If college is essentially about learning material in courses (and demonstrating some mastery of that material), there really is no logical reason that a cheap, "mass produced" online education (consisting of lecture videos, independent study, and 24/7 interactive on-line tutor access) shouldn't work (at least for a non-trivial fraction of students). The main challenge is whether or not on-line schools can overcome the accreditation and stigma hurdles that may reduce the value of student's investments in online classes (by preventing other schools or employers from recognizing the work completed online).

Of course, online education is not a clear substitute for all aspects of a college education (e.g., peer effects, social activities, etc.), but online schools are, in theory, sufficiently substitutable that it is not hard to imagine a very different higher education sector emerging. E.g., one where high school students apply to a college rating agency which rates students based on their "applications" providing students with external validation of their high school performance that they can use to impress employers (this is essentially what the Harvard admissions committee does). Meanwhile, they complete some basic foundational courses online (perhaps while still in high school). Then, is desired, they apply to spend a few years (depending on their field of interest) at a "college" where they participate in college social activities, get away from home while still living in a semi-structured setting, and participate in seminar classes (and labs for the sciences) on the topics of greatest interest to them. Maybe not everyone would choose this path, but I can imagine that variants on this path would appeal to many people.

Here's a small piece of the article:

In recent years, Americans have grown accustomed to living amid the smoking wreckage of various once-proud industries—automakers bankrupt, brand-name Wall Street banks in ruins, newspapers dying by the dozen. It’s tempting in such circumstances to take comfort in the seeming permanency of our colleges and universities, in the notion that our world-beating higher education system will reliably produce research and knowledge workers for decades to come. But this is an illusion. Colleges are caught in the same kind of debt-fueled price spiral that just blew up the real estate market. They’re also in the information business in a time when technology is driving down the cost of selling information to record, destabilizing lows.

In combination, these two trends threaten to shake the foundation of the modern university, in much the same way that other seemingly impregnable institutions have been torn apart. In some ways, the upheaval will be a welcome one. Students will benefit enormously from radically lower prices—particularly people like Solvig who lack disposable income and need higher learning to compete in an ever-more treacherous economy. But these huge changes will also seriously threaten the ability of universities to provide all the things beyond teaching on which society depends: science, culture, the transmission of our civilization from one generation to the next.