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The $10K Degree – Build a Completely New Ship?

This is the fourth post in a series of undetermined length. All posts are categorized as $10K Degree.

Regarding change in higher ed, it’s often said that “it’s like trying to turn a cruise ship around.” Trying to get people to stop using that phrase is like pulling teeth (and everyone knows how hard that is, right?).

So if bringing the price of baccalaureate degrees down to $10,000 is like trying to turn the ship around after it has a full head of steam – maybe we need to build a new ship. To successfully pull off the $10K degree, will we need to create a new university from scratch?

I sorta, kinda, maybe think the answer is yes.

The group at the SREB meeting summarily dismissed this idea before the meetings ever started. Most of the attendees completed a very long survey prior to the meeting that asked their opinions about 39 different factors that had been selected as being relevant to the question of how to create a $10K degree. Respondents rated each of those factors for both  importance and uncertainty from high to low.

Factor #5 was stated as: “Establish a new institution to offer $10K degrees.”

Factor #5 was rated as the lowest in importance of all 39 factors – by a wide margin.

Furthermore, none of the planning groups proposed a new institution as part of their solution for reducing tuition through major cost savings. Instead, the proposed changes were mainly aimed at reducing instructional costs (see previous post for more details) by having more online classes, more alternative means of earning credits, less expensive faculty, getting more teaching out of the faculty through more sections taught and larger class sizes, and the like. Most of those ideas are extremely hard to implement when the ship is already sailing around the world. They’re not as hard to implement when creating something from scratch. Hiring people to work under a given set of parameters is much easier (and successful) than trying to change the parameters for those already hired. Want to have a university with a minor research component instead of a major one? Then don’t start with a current research university.

Case in point would be Western Governor’s University. When it was created, it was designed for a different learning assessment paradigm. They jettisoned the credit hour for competency-based learning, an idea that I think has a great deal of merit. However, can you imagine how much harder it would have been to change an existing university, say the University of Minnesota into a competency-based system? Harder by a magnitude of – well, it just wouldn’t have happened.

In the last post, I posed the scenario of Pitt adding a new degree program with a sticker price of $10,000. All their other programs would stay at their current pricing which ranges from about $61K to $77K for a baccalaureate degree (assuming in-state tuition for only four years and no wasted credits). Having different prices at one university is not at all unusual – but of course having such a wide spread (from $10K to $77K) would be very unusual.

It wouldn’t be so unusual though for a brand new institution, with far fewer facilities than normal (lots of online courses, no sports team, lean administration and on-site support services), to start up where all degrees that are available (possibly a limited selection for starters) are offered for $10,000 over four years. It could be done by not allowing yourself to be held hostage to past practices, tradition (very import in the academy, apparently), institutionalized inefficiencies, and all the other non-starters that would come from trying to turn around an existing institution.

It would look very different from almost all existing colleges and universities. And maybe that’s exactly the point. Maybe that’s what’s needed.

(CC Flickr photo By Mark Coggins)

The $10K Degree – Who Wants It?

This is the third post in a series of undetermined length. All posts are categorized as $10K Degree.

Before you can dive too deeply into the pool of discussion around the $10,000 baccalaureate degree, I think you need to clarify several things about the proposed degrees.

  • Are we talking about all degrees for all people? Doubtful.
  • Are we talking about bachelor’s degrees in only certain fields, and if so, who determines which fields would be appropriate?
  • How important is perception? Will these degrees be seen as the Walmart of Education? If so, what types of students will be drawn to such degrees and why?

Regarding perception: there is already a huge gap in the perceived quality of college degrees in the US (and probably beyond the borders). I believe that the quality of the education received at Princeton is not substantially better than the quality received at Arizona State University – but there is a HUGE perception difference in those two degrees for most people. If that’s already true – how low on the perception meter will the branded “$10K degree” be ranked? The absolute bottom of the list, I’m pretty sure.

Consider this scenario. The current cost sticker price for one year in the Business Program at the University of Pittsburgh for tuition, fees, and books is approximately $18,000 (2011-12 tuition of $17,058, plus estimate of fees and books). Therefore, the 4-yr degree costs $72K if you complete it in four years. FWIW, the USN&WR ranks Pitt in the top 20 for public institutions.

What if Pitt added a new business program to their existing mix. Let’s say that they add a degree in e-Commerce, which is a field that they don’t currently offer. Let’s assume that it will not have a significant impact on all the other degree offerings at the university. In a magnanimous gesture, Pitt agrees to start this new program where the tuition/fees/books will cost the student $2,500 per year thus being their first (and only) $10,000 degree. Furthermore, assume that degrees in e-commerce are in demand and that graduates have very good job prospects (and entrepreneurial prospects) for the foreseeable future.

If viewed as lesser, why? It’s still Pitt, right? Or is it? To really have the Pitt experience, do you need to pay $72,000?

If a highly ranked, public institution is going to have perception issues with such a degree, how much worse will it be for graduates of a $10K degree program from schools that are not highly ranked and may already have “less-than” reputations?

I would love to hear your comments about the possible perception problem with the $10K degrees.

(CC Flickr photo By Mike Licht, NotionsCapital.com)

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.”

The $10K BS Degree – Price or Cost?

I recently engaged in an exercise with the Southern Regional Education Board (SREB) on the concept of the $10,000 bachelor’s degree. The SREB Educational Technology Cooperative, led by Myk Garn, facilitated a session titled “Affordable Baccalaureate Degrees: Scenario-Based Strategic Planning Workshop.” This concept of the $10,000 BS (BA or whatever) degree seems to have taken on a life of its own in recent months, probably fueled by Prez candidate Rick Perry’s support for such an idea.

ten thousand dollar bill

It’s difficult to get into a conversation like this without clarifying a few things up front. First and foremost, in my mind anyway, is the following question: are we talking about the price to the students being $10,000, or are we talking about the cost to the institution(s) being $10,000 per graduated student?

Those two things are very, very different.

The data gathered by the SREB showed an average price to the student (tuition, fees, and books) at public colleges and universities of just under $28,000 for a four-year degree, if completed at a university within four years without wasted credits. Using this average figure – we have a price of $28K that we would need to reduce to $10K.

However, this average price is subsidized by taxpayers since we are only talking about public colleges and universities. On average, the amount of state funds that are used per student appears to be 50% of the total revenue collected – which means that the tuition is the other 50% (ignoring smaller amounts of funds from other sources such as grants, much of which is not available to fund basic undergraduate education).

Considering an approximate 50/50 revenue split between tuition and state allocations, the amount of revenue sought by the university to educate a 4-year graduate is about $56K ($28K tuition plus $28K state allocation). Considering that over the long haul, a not-for-profit university should have revenues approximately equal to costs (balanced budgets) – the revenue figure can be assumed to be equal to the institutional cost of educating a student for four years. Using this average cost figure – we have a cost of $56K that we would need to reduce to $10K.

I think it’s pretty obvious that we can really only tackle this issue if we look at reducing student price from $28K to 10K – which would be a 64% reduction in the sticker shock facing our incoming students (on average – with wild swings of highs and lows resulting in that average). The other side of the equation is that we would need to reduce costs from $56K per student to $38K (same reduction of $18K)  That also seems to be what Rick Perry was asking for, but it’s always a good idea to enter into these conversations with a clear picture of what you’re trying to do.

This is the first in a series of posts about the $10K degree. In future posts I’ll reveal some of the solutions suggested by the 45+ educators at the SREB meeting, point to some of the other resources on the web related to this issue, and also try to work in some of my own suggestions as to how to make a bachelor’s degree more affordable.