| May 8, 2013

OCPA Research Fellow Says College Soon Will Look Very Different

In spite of all the alarm over rising costs and excessive borrowing for college, one Oklahoman is confident that college will be far less expensive in just a few years.

In the vision outlined by OCPA research fellow Vance H. Fried, there will be little need for federally subsidized loans. Many parents will be able to pay for college for their children out of current income.

Fried is no utopian. He is a professor of entrepreneurship at Oklahoma State University who earlier wrote a paper explaining how a full-fledged residential college could operate with tuition less than $8,000 a year.

His new paper, “College 2020,” forecasts what he thinks will happen as online education increases its competitive impact. The paper is published by the Heritage Foundation’s Center for Policy Innovation and is available at

Some commentators worry that tuition-dependent colleges will have to go out of business because they can’t control their costs and low-priced suppliers are going to take away their students. But Fried thinks that colleges and universities can survive, if they act soon.

Education will become “radically cheaper in stages,” says Fried, with the result that “existing colleges and universities will have to change or risk losing large numbers of students.”

Those colleges and universities can survive because many people want “the college experience”—that is, living on campus, making friends, interacting personally with professors, and enjoying campus activities such as football games.

All costs won’t go down. Just the education costs.

Fried believes that the fame of MOOCs (massively open online courses) offered by major universities is obscuring the more-disruptive changes that are beginning to occur. He describes them as follows.

Most universities have adopted some form of online education, reaching a level that he calls Online 1.3. That is, online content is not simply written lectures or PowerPoints, but includes videos, discussion boards, and online exams. But the classes follow a set schedule, through which all members of the class move at the same time, and the courses do not generally tap into the rich media that the Internet can provide.

Technology now is improving on these features, beginning to create what Fried calls Online 2.0. Not only are these courses full of varied content, they are adaptive—that is, they can test the student while he or she is working and, depending on the student’s responses, provide customized material to enhance learning. This enables the student to master the fundamentals before moving to higher-level work.

This adaptive technology opens up vast possibilities, including a curriculum based on a “coordinated set of competencies” rather than a “hodge-podge of courses,” says Fried.

The “competency” approach can be illustrated by the “College for America” program of the University of Southern New Hampshire (USNH), a private school. Its plan to eliminate the credit hour for this experimental program has just received U.S. Department of Education approval. It is the first school to do such a thing. The curriculum is designed around 120 competencies that students learn as they move toward an associate’s degree; they get badges for each competency achieved. In this setting, a competency becomes the unit of learning, rather than credit hours.

As explained by Cathrael Kazin, chief academic officer at USNH, a competency is a “can do” statement such as “can use a spreadsheet to perform calculations” or “can synthesize material from multiple sources.” The 120 competencies are organized into nine clusters, which are components of three larger “domains”: content knowledge, foundational skills, and personal and social skills. Students move forward by doing “tasks,” which at higher levels combine numerous competencies.

You may be wondering where the professors are. They are largely absent in these courses. And the price illustrates that. Beginning next fall, students can study at College for America for $2,500 a year.

While USNH has gone further than other schools in eliminating the credit hour, Western Governors University (WGU) has already used online education to enable students to move forward rapidly at low cost. Fried says that the cost (and price) of an academic year at WGU is $4,020.

StraighterLine, a private company, is not far behind. It provides courses that, while still based on the credit hour, can be taken for as little as $49 per course and $99 per month. The credits are used to help earn degrees at other schools. Again, there are no instructors, but there are mentors.

If these changes are indicative of the future, as Vance Fried believes, what will happen to the residential campus? It can continue, because many students want the personal contact—the discussion, coaching, and mentoring—not to mention sports and other activities. But it will be different.

While not all colleges will replace their courses with “competencies,” there will be more emphasis on taking courses from a variety of universities, says Fried. With courses available at low cost from many institutions, “the college experience can be unbundled from instruction.” Churches and other organizations could create “experience communities,” he says. People who are getting credits from self-paced online courses could come together in these communities for discussion and other kinds of learning. (His vision looks a little like homeschooling today at the K-12 level.)

“Unbundled college is analogous to putting together your own vacation to Europe or asking a travel agent to do it for you rather than buying an all-inclusive, prepackaged tour,” writes Fried. There is no reason why students can’t combine evidence of their competence into portfolios that will interest employers and no reason why entrepreneurs won’t become the packagers of those portfolios, possibly without any degrees at all.

It isn’t completely clear what will happen to the professors in Fried’s scenario. Undoubtedly, some will create online content, and some will retire, but others may find that the system suits them. With introductory classes taught online, students will come for the campus experience expecting small classes and likely to be better prepared. Teaching them may be attractive for professors—most professors dislike teaching introductory courses anyway.

Even though College 2020 will be much cheaper, Fried doesn’t recommend cutting states’ subsidies of public universities right now. Subsidies for higher education have “broad political support,” he says, and schools simply aren’t ready to adopt this kind of education en masse. Rather, he recommends a competitive approach—what one might call a stealth approach.

He recommends that state governments make College 2020 available to more and more students. Wisconsin is starting a separate, entirely online college under the aegis of its university extension service. Several states (Indiana, Texas, and Washington) have welcomed Western Governors University, not subsidizing it but allowing its courses to feed into the existing state system. Such new educational opportunities will have a growing impact as they become more effective and popular.

The best thing about these changes, in my view, is that the federal government will no longer be needed to support most college education. Fried offers several hypothetical estimates showing that many students and parents will be able to pay for degrees out of current income.

Fried does envision Pell grants for low-income students, but federal student loans will decline as the price of education goes down. And with fewer federal loans, the power of regional accreditors such as the Southern Association of Colleges and Schools will fall.

That could be very important. Today these organizations are essentially cartels (they are representatives of the colleges that they regulate) that force universities to engage in busy-work, make expensive investments, and avoid innovation—all of which raise costs. For decades, they have been the gatekeepers for federal funds, with the power to decide whether schools can accept students who carry federal loans.

As college becomes cheaper and those loans gradually disappear, that control will fade away and universities will be freer to adapt to the marketplace. Thus, every step toward unbundling is also a step toward more freedom to serve students.

College 2020 is going to open the door to major change. According to Fried, it will achieve the goal that many have always expected of higher education—”upward economic mobility for all Americans.”

Jane S. Shaw is president of the John W. Pope Center for Higher Education Policy. A former associate economics editor of Business Week, Shaw is a past president of the Association of Private Enterprise Education, a national organization that promotes a better understanding of markets.

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