Obama to “Rethink” How College Is Paid For

I’m genuinely curious to see what Obama will propose:

“To create a better bargain for the middle class, we have to fundamentally rethink about how higher education is paid for in this country,” Mr. Obama said. “We’ve got to shake up the current system.”

If it’s anything like healthcare, he’s probably barking up the wrong tree.

This is all speculation based on his statement, but tackling how college is paid for isn’t fixing the true problem. It’s simply transferring the burden of where the cost is going from an individual’s college savings to taxpayers. As a matter of fact, you introduce much bigger issues of moral hazard when colleges know it’s the government’s “free money” instead of price sensitive individuals.

Take insurance companies: Obamacare hasn’t made insurance cheaper, as a matter of fact most people are getting insane rate hikes over the next two years until rate caps kick in.

To fix the college cost problem, you have to eliminate the monopoly that universities have on minting workforce-ready professionals.

The cost model of colleges, especially in undergrad, simply don’t make sense. Putting thousands of students and highly paid teachers in a building to listen to the same lectures and do the same homework every semester is about as inefficient as it gets. It’s not as if education is getting better – in reality, universities are in a cosmetic arms race to attract bright eyed 17 year olds.

Show me the data that the increased cost is leading to a better education. I don’t think it exists.

A disruptive1 school would pre-record lectures from professors at the top of their field. If you think about it, Biology 101 isn’t changing any time in the next decade. Then all you have to do is make those lectures available to students anywhere at a low cost, and have students demonstrate proficiency in those topics.

The only difference between a college student and a Coursera student in Stanford’s Startup Engineering course is that one is paying money to sit in a lecture hall. It’s the same experience, and there’s no reason why the Coursera student shouldn’t receive the same professional accreditation for doing the same thing in a browser.

The real job a college degree serves to employers is proving that a student can start and finish something. As we “disrupt” college, let’s keep that in mind. Real disruption won’t come from squabbling in Washington about student loan rates. It’ll come from a university realizing they can reach the masses and still achieve the goal of educating students and demonstrating that to employers.

An update on Obama’s actual proposal for schools

  1. Using Clay Christensen’s definition, disruption is where a lower cost, lower featured alternative upends the established high end solution because it serves the same job. []
August 21, 2013