Higher Education

Tuition-free College for Oklahomans?

September 2, 2014

Vance H. Fried

Do we want to make college tuition-free for Oklahomans and simultaneously reduce government spending?

Amazingly, this option is possible today because of the emergence of high-quality, low-cost college.

In 1997 Oklahoma Gov. Frank Keating joined a bipartisan group of 19 western states’ governors to create Western Governors University (WGU). “The 21st century has just arrived in Oklahoma,” Keating said at the time. “This 21st century approach to post-secondary education combines the best and the brightest from all western states, along with today’s technology, to provide an affordable and broad range of higher education opportunities for Oklahomans whether they are at home, on the job, or in class.”

Today WGU is an independent, non-profit university offering fully accredited, online, competency-based education to students from all 50 states. WGU has more than 45,000 students in bachelor’s and master’s programs in business, education, information technology, and nursing.

WGU’s programs are recognized for their quality. For example, last month the National Council on Teacher Quality ranked WGU’s secondary education program as the best in the country. The University of Oklahoma (tied for 57th) and Northwestern Oklahoma State University (tied for 87th) were the Oklahoma schools in the top 100.

While WGU’s educational quality is high, its tuition is low. WGU does not receive any state government subsidy and is totally dependent on student tuition for funding. Yet WGU’s tuition is substantially lower than in-state tuition at Oklahoma’s public regional colleges.

How does WGU do it? First, it only provides education. WGU does not conduct research or provide students with “college life.”

Second, WGU uses a non-traditional faculty model that dramatically cuts cost yet provides students with more personal guidance and deeper feedback than the traditional model. Other schools are starting to copy the WGU model.

As I explained in a recent report published by The Heritage Foundation, in the not-too-distant future schools will offer blended undergraduate programs combining the WGU approach with “college life” at a cost of $3,000 to $5,000 a year.

All this means great savings to students and taxpayers compared to our current model. WGU’s annual tuition is $4,000. WGU charges flat-rate tuition for six months with students able to take as many courses as they want; $4,000 is for 8 months of tuition. And remember, WGU does not receive any state subsidy.

Compare this to the University of Central Oklahoma, for example, where in-state tuition is $7,230 (tuition and mandatory fees for a business undergraduate taking 30 hours in a year). In addition, the state gives UCO about $8,460 to subsidize each in-state student.

So a student saves $3,230 (7,230-4,000) by going to WGU, and Oklahoma taxpayers save $8,460. Indeed, WGU is so much cheaper that the state could pay the student’s full tuition and still save $4,460 (8,460-4,000).

Rather than pick up 100 percent of the cost, Oklahoma has traditionally picked up 60 percent and required the student to pay 40 percent. Using this cost-sharing ratio, the student would pay $1,600 and the state $2,400, for a savings of $5,630 and $6,060 respectively. However the cost is split, WGU is a major win/win for both student and taxpayer.

What should the State of Oklahoma do to encourage the spread of high-quality/low-cost education?

Policymakers could copy Wisconsin, forcing change on the state system by creating a new WGU-style public college. Or they could keep it simpler and cheaper by using vouchers to encourage students to attend WGU and similar schools.

Perhaps the first step is to copy the low-cost approach taken by Indiana. In 2010 Indiana created WGU-Indiana—what then-Governor Mitch Daniels referred to as the “eighth state university.” It isn’t really a part of the Indiana state system and does not receive a state subsidy. Rather, it is a private, non-profit institution formally established by the state in partnership with WGU.

WGU-Indiana has a chancellor and advisory board who reside in Indiana and provide guidance on the most effective ways the university can meet the needs of Indiana residents. Academically it is run by WGU. The curriculum is a slightly customized version of WGU’s standard curriculum. WGU has a formal articulation agreement with the Indiana state system that defines how WGU credits can be easily transferred into the state system.

This approach has achieved bipartisan acclaim. In fact, the 2013 WGU-Indiana Annual Report features glowing endorsements from both President Barack Obama and Indiana Governor Mike Pence.

Texas, Washington, Tennessee, and Missouri have all followed Indiana’s lead and created similar partnerships with WGU. Why not Oklahoma?

OCPA research fellow Vance H. Fried is Riata Professor of Entrepreneurship at Oklahoma State University. He is an expert on entrepreneurship in the education industry, entrepreneurship and public policy, and venture finance. He is the author of Better/Cheaper College: An Entrepreneur’s Guide to Rescuing Undergraduate Education. Prior to joining the faculty at Oklahoma State, Fried worked as an attorney in private practice, an executive of an independent oil company, and an investment banker working with small and mid-cap companies.