The Impact of Online Shopping on Higher Education
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The following interview is with Andrew Kelly, a research fellow in education policy studies at the American Enterprise Institute. As the cost of earning a post-secondary degree comes under increasing scrutiny, there is pressure on higher education institutions to create alternate routes for students to earn credentials. In this interview, Kelly discusses the $10K BA option in a little more detail, provides some examples of how it is being practiced in different states across the United States and shares his thoughts on what it will take for action on college affordability to become widespread.
1. The concept of the $10K BA has been receiving a great deal of attention as the costs of higher education fall under increasing amounts of scrutiny. Can you briefly explain the $10K BA?
The $10K BA was born in . Rick Perry, the governor of Texas, he gave a State of the State speech – which is sort of like the State of Union for the state of Texas – … and in that speech he challenged Texas’ higher education system to create a pathway to a bachelor’s degree that costs the student no more than $10,000 in tuition. And from there, Perry’s challenge spawned a bunch of activity in Texas and it has since also led other state leaders to get into this game of challenging their own systems to create these low-cost pathways. So, the governor of Florida is now thinking about this, there was a bill in the California statehouse to do something similar. Scott Walker in Wisconsin – although he hasn’t called it a $10,000 bachelor’s degree – is moving in a similar direction with the competency-based degree that he is helping to build and asking the University of Wisconsin System to build. So, it’s kind of taken on a life of its own and it’s precisely because people are getting increasingly disillusioned by the high tuition price of college, especially when they look out at recent college grads and see that the labor market hasn’t been necessarily all that kind to recent college grads. So, that’s sort of the perfect storm for this kind of entrepreneurial activity.
2. When we’re looking at the $10K BAs in general, are they usually delivered by one institution or are they series of courses that are delivered by different institutions within a single system to move students towards a particular end?
The scene so far in Texas has been mostly using lots of different pieces of the system to cobble together a lower-cost pathway. So, a lot of the programs in Texas that have been developed rely heavily on students earning at least some credits, and sometimes a lot of credits, at either the local community college — before they move on to the four-year college — or even while still in high school as a dual-enrollment program. … Because the emphasis has been on the price to the consumer, it hasn’t necessarily been the case that the institutions themselves are working to lower the cost of delivery, if that makes any sense. Instead, what they are trying to do is actually give people access to lower-cost credits, to lower-price credits, and then having those count directly towards this bachelor’s degree. …
You’re seeing a lot of cooperation between the local community college and the local four-year to create this pathway. Some of the Texas schools are doing it a little differently, where they are offering credits for prior learning and some online delivery and such, but … by and large they’ve been mostly relying on lower-priced and lower-cost institutions to provide a good deal of the credits.
3. On the topic of employers — and looking at how college graduates have been doing in the workforce, leading to a lot of scrutiny about the cost of a college degree — when we look at students who earned a $10K BA, do they receive more or less attention in the workforce or is it just considered a standard baccalaureate?
I think it’s far too early to tell. …
These programs are only a couple years old; most may even only be a year, in most places. So, it’s far too early to tell. I think, in general, though, … I don’t know that the diplomas from a University of Texas system that somebody gets by the $10K pathway, I’m not sure that they’ll look any different, frankly. So, I wouldn’t expect there to be any difference. There may be, but this is an important question for research and I frankly am really interested to see how the labor market responds, because I think that’s going to be a great test of whether employers respect in the same way and seek out these lower-cost pathways. It’s an open question. I don’t think we know enough yet to say yes or no.
I would just say that Western Governors University — which, of course, is competency-based, low-cost pathway for folks to earn credit and a bachelor’s degree — they tend to have very high levels of satisfaction among employers who hire their graduates. So, if that’s any indication, I would imagine that some of these low-cost pathways will perform well as far as their labor market outcomes.
4. Are you finding that it’s more common for students to pursue their higher education credentials in this manner?
Again, I think it’s hard to tell in some sense because some of these programs are more like niche programs, and what I mean by that is that they are limited by how many students they can actually enroll at that price. So, some of the Texas programs bring the price down for students by giving them scholarships, so if you apply for the $10K path, then you are specifically sort of a $10K pathway student who gets a scholarship to bring that price down. And, as a result, there’s a finite number of students that they can serve in that program. So in some sense, it’s not necessarily the case that these programs are at a huge scale just yet. Some of them are much more niche programs for either, sometimes, either adult students or sometimes even high-performing high school students who want to move quickly through a degree for very low cost.
So I think we don’t quite know yet what the demand is. I think, though, that we have a general sense from the growth in non-traditional options for adult students and working learners that there is [more] demand out here for new options than lower cost options, and options that you move more quickly if you’re academically qualified. … But, again, I think it’s too early to tell.
I think these things … will pick up steam as they mature and become validated by employers and by the state itself and they continue to be supported. …
I think that it’s still generally unknown, though I would imagine as they mature that they will only tend to pick up more speed as far as attracting students.
5. Is it in the best interests of higher education institutions to support students pursuing this approach to a credential?
Well, I think it’s challenging higher education to think a little bit differently about the way they normally do things because, often times, price and cost are not directly related in higher ed. …The price you sell your education at is not equal to the cost of what it costs you to deliver it. And, so, to ask somebody to deliver an education for a price tag of $10,000 total is asking higher education to rethink some of its cost structure.
Whether it’s good or bad for higher education, I think it certainly challenges the old traditional cost structure which is, for public universities anyway, “We charge modest tuition because we get a big chunk of state subsidy.” But even that modest tuition is more than $10,000 for a bachelor’s degree. It’s challenging the way that they have to think about the cost structure and their pricing.
Generally, I think that the way that things are going, particularly for colleges that are outside of the elite and outside of the top 200 most selective places, I think that there’s going to be a first-mover advantage here to those places that can figure out a way to at least contain their costs, if not lower them, but maintain quality and still give people a credential that has labor market value. I think the campuses that can do that and that do it first are going to have a big advantage because people are reaching something of a tipping point where they simply can’t afford the tuition prices the way they are going. So, I think it could be bad, growing demand for a $10,000 bachelor’s degree; it could very well be troubling for the traditional institution, but I think it could open a huge opportunity for institutions that are more forward thinking and want to capture some of that demand.
6. What can state and federal government bodies do to help facilitate this approach to higher education?
… Public challenges to state universities can sometimes be very potent in that they draw attention to the question. The public starts to potentially say, “Hey, yeah, that’s a good idea! What are universities going to do to answer this call?”
So even just using the bully pulpit … which is what the governor of Texas and the governor in Florida have done. … The other side of it is, thinking about not just using the bully pulpit but coupling that with a self-conscious effort to fund and develop a new pathway — and that’s what I think is going on in Wisconsin with the UW Flex. So, generally, I think that’s one way to do this.
Another way to think about the state level is to think about how regulatory barriers to entry for potential low-cost competitors may actually hamper citizens’ ability to access lower-cost pathways. What I mean by that is, there is a tendency within states to have … authorization processes and they vary a lot across states as to how open a given state is to new providers. So, part of the key here is to make sure that citizens actually can access providers and institutions that might cost less; online providers, or course-level providers, maybe not providers of degrees.
Point being that one of the ways to think about lowering the cost of a credential and the cost of delivery is to encourage more competition from folks who come in from outside of the existing system and say, “We can do what you’re doing but we can do it for cheaper, so you’re going to have to compete with us in order to maintain your student enrollments.”
At the federal level, I think that it’s a similar issue and I think accreditation reform is one way to think about it. And what I mean by reform is actually not to take accreditation head-on, but to think about ways to create a parallel route to being a federally-accredited provider so that you can access a small pot of Title IV money or, even, let’s say, a Demonstration Grant pot of money, to prove that certain models like competency-based models and online and direct assessment versions of academic programs — to prove that they actually have some merit.
So I think those are two ways to think about it. It’s sort of a deregulatory approach. I think you can think about doing this as central planning, where you tell people what to do and they generate programs and that will serve some students better and will be beneficial. But I’m not sure that it’s going to drive the systemic change in the cost structure and the price of higher ed that we need.
I think that a conscious, deregulatory approach can be more effective on that front.
7. Anything you’d like to add about this move toward the $10K BA and the responsibilities of institutions and of governments to help support this move?
… This is an emerging field and all of this needs to be submitted to rigorous research. So we need to think about this as a program of research and development for the next era of higher ed innovation. Nobody is saying that there is one solution or one right way to do it, but it is an effort to say, “Let’s think of doing things differently, and let’s measure how we’re doing and let’s see what the outcomes are. And if one particular approach doesn’t work as well as another, we can leave that one to the side and shift our research to the other.”
There is too much paralysis to do anything differently in higher ed because often times people say, “Oh, well, we don’t have the research to tell us if that’s going to work or not.”
But part of the process here is to actually self-consciously experiment with new ways of doing things. So I think that’s what this fits into. I don’t think this is a systemic threat to traditional higher ed. I think it’s just an experiment on how to do things differently and I think we should welcome that as a country. We’ve always been an innovative country when it comes to higher ed.
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Author Perspective: Association
Higher education has simply become unaffordable for the average American family. The $10,000 degree is a creative way to temporarily address this issue, but it’s also a gimmicky, band-aid solution for a much deeper problem. How will institutions sustain this in the long term? I’ve given this quite a bit of thought but cannot wrap my head around a business model that would support the $10,000 degree. What this means is that institutions have to push harder than ever for their state and federal governments to take an active role in supporting their important work of educating the next generation.
It’s unfortunate that this new option is, at present, only available to certain students. My hope is that, if this proves to be an effective way of educating people and increasing enrollment, more institutions will offer the $10,000 option. At the same time, I recognize the challenges this could create in institution’s funding models — something that would have to be considered before moving forward.
The $10K degree sounds like a great idea. However, the real measure of success will be whether students holding these degrees are able to successfully enter the labor market. Perhaps institutions offering the $10K option should start proactively engaging employers and industry leaders on the benefits of this option and dispelling any myths that a cheaper education is somehow lower in quality.