The $10K Degree – Reduce Instructional Costs?

Post #2 in a series. ===>>  At the SREB scenario-based planning exercise (see 1st post in series) for the $10,000 baccalaureate degree, the attendees were tasked with reducing tuition, fees, and books from $28K to $10K. They tossed around many ideas at the seven different tables (four tables with this exercise for 4-yr university students, and three with a similar exercise for JR/SR transfer students), and most of their proposals had to do with lowering instructional costs.

It’s not easy to get a handle on which costs are purely instructional and which aren’t. That’s always a problem when trying image of professor from Life of David Galeto determine direct and indirect costs. There’s no such thing as the one correct answer when performing a cost analysis. What some people call a direct cost of instruction, others may call an indirect cost, while still others may call it a non-instructional cost (and none of those can be proven absolutely right or wrong). Having said that, I think that no more than 40% of the total annual costs of a campus can be considered to be direct instructional costs. YMMV.
(Note: 38% was found in a study in the Delta Cost Study using the State University of Florida System – see Table 3 on pg.9)

While the discussion was unfolding, I got the distinct impression that the attendees were only looking for ways to reduce the cost of delivering instruction – sort of like they were operating under the assumption that tuition pays for instructional costs and state allocation (we were only talking about state-supported schools) pays for the other costs. With that rationale, reducing the tuition collected means reducing the instructional costs by a corresponding amount. That’s a bad idea.

cost and revenue brakdowns

One reason that they focused on instructional costs is because that was the data that had been provided for them. They knew about average (different) faculty salaries for 4-yr professors, instructors, and adjuncts as well as the salaries for similar instructional staff at 2-yr schools. It was assumed that 4-yr faculty teach 8 courses per year (that’s way overstated for most universities that I’m familiar with) and 10 courses per year at 2-yr schools (that’s about right). They were working with an average class size of 25 students per class. Additionally, the cost of textbooks and other course materials was estimated at $4,540 for the four years, which comes down to an average of $114 for a 3-credit course.

As you can imagine, many of the suggestions came along the following lines:

  • Reduce textbook costs by going with Open Educational resources (OER) – possibly averaging only $25-30 per 3-credit course for a reduction of $3,340 (from $4,540 to $1,200)
  • Increase class sizes on average from 25 students to 30 students, which would reduce the number of needed sections by 20% (no it wouldn’t, because you can’t just slice these up like that across all disciplines) and thereby reduce the faculty salaries and benefits by 20% (this assumes many things that don’t match reality).
  • Increase teaching loads for tenured and tenure-track faculty by 1 or 2 class periods per year, thereby reducing the number of faculty needed overall.
  • Hire more adjuncts at lower salaries and fewer tenure-track faculty at higher salaries.
  • Offer more classes via online delivery under the assumption that you would reduce your costs (a highly questionable assumption, especially in the short run of the next 3 to 5 years – it takes a long time before you start saving on facilities costs that are basically fixed and already committed).
  • Greatly increase the number of courses that students will get credit for under non-traditional means – such as college in the schools (college credits earned while in high school at no cost to the student), credit for prior learning (CPL), and test-outs of courses where the student is already proficient.
  • Use competency-based instruction rather than butts-in-seats credit hours to reduce the time to completion for most students. Possibly a payment system by the month or by the competency, rather than traditional credits and semesters.

One team came up with a scenario where they reduced the cost of a bachelor degree to about $2,000. They relied very heavily on the alternative means of transcripting credits (CPL, etc.) and had almost no F2F instruction with real faculty members. Their school was dubbed DMU (for Diploma Mill University).

Most of the other scenarios ended up in reduced costs, but didn’t reach the $10K level by saving less than the needed $18K reduction per student over the 4 year period. During a recap of the different possible solutions, I offered three basic ideas that they need to consider:

1) As discussed in post 1 – they had to know if they were cutting down to a $10K sticker price for the students, or a $10K per student cost for the school. They seemed to be mixing those two ideas together as if they were one.

2) Almost all of the suggestions were related to cutting the amount spent on instruction. Reducing salaries via adjuncts, increasing class sizes, and increasing teaching loads resulted in fairly big chunks of cost savings – but would further reduce the instructional costs while leaving the non-instructional costs untouched. That sounds totally backwards to me. Most cuts should come from the non-instructional side of things – and I’m the poster child for those kinds of cuts.

3) There is a huge difference between adding a new program area with a $10K price tag for students at an existing school, and turning a complete institution into $10K degrees. Which are they proposing? Adding a new program (sort of a loss leader – or maybe call it a “pilot project”) would be a way of slowly turning the university around without trying to put on the brakes in the middle of the ocean. One is doable, the other is not very likely at any existing institutions that I know of.

Future posts will take up some of the following ideas/questions (not necessarily in this order):

  1. Does this need to be a new institution, or can we retrofit an existing one?
  2. How deep can we look into the non-instructional cost side of the house when making cuts? Is it possible that all of the needed savings could come from these non-instructional areas? Maybe research and athletics should be set up as external profit centers where they live or die on their own value, just like the bookstore and foundation at many colleges. And that’s only the tip of the iceberg.
  3. What is the market for $10K degrees? Who wants them? Who will be attracted to them and will they actually enroll? How will they be viewed by employers and others?
  4. How do non-retained students (those who don’t graduate) fit into this puzzle? We’re looking at the cost to graduate someone in four years, what about the costs of those we fail?
  5. When do we bring some reality into the scenario? What are the odds of graduating in 4 years? What about the costs of remediation or will all these students just magically show up ready to do college-level work?
  6. How might the role of the faculty change in a revolutionary way that might lead to a lower cost per student?
  7. What impact does technology have in these scenarios and can it be used to both reduce costs and maintain/improve quality?
  8. What are the quality concerns for a $10K degree? Is the piece of paper more important than actually learning something?
  9. What role does the K-12 system play in making this a reality? What is their incentive to help make this happen?
  10. How does a $10K degree play out when looking at graduate education? Will these graduates be just as well prepared for grad school as people are now (regardless of whether the current level of preparation is high, low, or in-between)?
  11. Are applied bachelor’s degree in technical/vocational areas the only shot for this to really happen? Are they really needed? Even then, these programs tend to be expensive to run because of high-cost equipment, etc. Or are we talking about a completely online liberal arts degree with no facilities/equipment/etc except that needed to teach and learn over the Internet?
  12. Since we’re trying to predict the future – what about the future of state support? Since it used to be more like 70/30 or 65/35 as the breakdown between state$/tuition, but now it’s more like 50/50, how can any of this happen if state funding continues to dry up and blow away?

All this and more in the next installment of “A $10,000 Pipe Dream.”

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