Redesigning State College: Lessons from the Sharing Economy

Redesigning State College: Lessons from the Sharing Economy

The state of Texas is in the college business. Texas has chartered over three dozen colleges and universities. Those colleges have been granted land and are supported annually through the state budget, and the Permanent University Fund, a public endowment which supports colleges in the University of Texas System and Texas A&M University Systems. There is no realistic prospect that the state of Texas is going to privatize its major universities.  But, by applying innovations and lessons from the private sector it may be possible to expand access to state college, manage state budget constraints on colleges and universities, and reduce the cost of college for Texas residents. Here are some thoughts on what state college reform might look like.*

The Purpose of State College. The state’s role in college education is both utilitarian and humanitarian. The state has a utilitarian interest in providing job skills to future taxpayers. It follows that the state expects a return on its investment in the form of an educated, skilled workforce. Cynicism aside, state universities are also founded on the altruistic notion that students should study the humanities to build personal virtue and improve society.

Criteria for State College Reform. As we set out to reform state colleges, here are the sometimes-competing criteria that should be considered:

  • Offer the highest quality education economically feasible that offers a combination of relevant job skills and humanities
  • Expand access to college (or trade school) education to the broadest number of students economically feasible
  • Reduce taxpayer costs of providing the college (or trade school) education
  • Reduce the costs to the students for the education

Inflated Tuition and the Student Debt “Crisis”. Tuition is already price supported by the federal government. This is already a government intervention into the market place. If the federal government did not offer guaranteed financing, economic theory suggests tuition would drop to market levels. But with easy credit, students incur debt and apply that debt to tuition. College tuition rates are like sponges that soak up the available financing.

What Texas Can Do to Fix a Federal Problem. At the state level, we can’t do anything to change the federal policy on student loans. But I believe there is a better alternative to Bernie Sanders’ idea of providing a free college education to all as a new federal entitlement.  Instead, states like Texas can adopt their own policies to expand accessibility, reduce the cost of delivering state college education, and reduce the cost of a Texas college degree by more fully utilizing existing resources.

“Democratizing” Technology. In various sectors we see costs being driven down by decentralized technology and the so called “sharing economy”.  (Although the term “democratize” is commonly used, I believe “decentralized” is more accurate) Uber and Lyft are prime examples of the sharing economy and decentralizing tech. Traditional cab services benefitted from protectionist licensing regimes that shielded them from unlicensed competition. Uber and Lyft disrupted the taxi oligopoly by using technology that allows private car owners to ride share.  For Uber and Lyft to be successful, the ride share technology had to be adopted, and state and local governments had to allow a circumvention of existing licensing laws.

The free market did not create the cab licensing regime. But disrupting the licensing regime unleashed the free market in personal transportation. The Uber analogy is not completely apt when it comes to state college education. But public services can learn from the private sector and redesign a portion of their “business model”.

Building the Online Course Catalog. Here’s how this model could be implemented. As a condition to ongoing state funding, each state college would be required to “share” a certain number of online courses with a state eLearning college catalog. State colleges are already offering online courses. Such schools already have the technology to create the online video course. Some of these courses are likely fully developed and already in circulation. But by requiring each state institution to contribute online courses to an eLearning curriculum, the state would be able to offer basic degrees in select fields at cost to more users. As the Texas college population grows, eLearning would scale up much more efficiently than building more buildings on each existing state college campus.

Addressing Limitations. Online courses have limitations, particularly when it comes to lab work and proctoring of tests.  Occasional exams could be proctored on college campuses or other public facilities. To satisfy lab courses, students could elect to take certain courses on nearby college courses. The student would pay the host college at their prevailing rate and the eLearning college would recognize the transferred credit.

Transfer Credit Recognition. The eLearning course should have a liberal credit transfer policy. Any credits from a traditional accredited university should be recognized. The purpose of the eLearning degree would be to reduce costs. Moreover, students should be able to propose that other education experience be reviewed for possible college credit. For instance, if a student completes a MOOC course (massive open online course) or a rigorous series of TedTalks, those learning experiences might be considered for college credit.

Continued Learning and Skill Training. With this versatile online platform in place, the state could offer an expanded range of courses geared towards job skills beyond a traditional four-year degree. As technology changes rapidly, it becomes necessary for workers to retrain mid-career. This platform could be used to deliver skills training to graduates. By delivering continued learning opportunities to Texas workers at or near cost, Texas would add to its “economic development” case when attracting non-resident companies to relocate to Texas.

The nation is looking for answers to address inflated tuition and mounting student debts. We don’t expect the federal government to end its price supports that are driving up the costs of college. But leveraging technology may counter-act the unintended consequences of federal financial aid programs.

Intervening in a Public “Market”. Free market aficionados may initially be uneasy with this proposal. But Texas colleges are not for-profit entities or even private non-profit organizations. The market for college is already crowded by public institutions and price-supported with public support. But this doesn’t mean that lessons from the “democratizating” technology like ride-share apps should not be applied here to create efficiencies and expand accessibility. Be delivering online college courses and degrees at or near cost, the state of Texas would counteract the unintended, inflationary effects of federal student loan policies.

Stewardship of Existing Resources. Understand, this is not a pitch for single-payer college. The objective is not to enact a new entitlement or end education inequality. Rather, the goal here is to use the existing state budget supporting colleges and existing public assets more efficiently, thereby by making them available to more users. This plan would not directly cause brick and mortar state colleges and universities to charge tuition rates for the full on-campus experience. Similarly, this plan would have no direct effect on private universities like Southern Methodist University, Baylor, or Texas Christian University. There is a market for a traditional college experience.  It is appropriate to charge a premium for use of real estate, and for the real work experience of peer relationships, in person teaching, tutoring and mentorship. But, there is also a market for an online, remote program. One size need not fit all.

The Subjective Value of a Degree. Unlike a degree from a for-profit online college, I suspect that employers would respect a degree from an online Texas state college nearly as much as a traditional state college. Admittedly, not all Texas colleges have the same appeal, reputation and swagger. A degree from “University of Houston – Levelland” (names have been changed to protect the innocent) would not have the same appeal as University of Texas – Austin. So, we recognized that an online Texas college degree would not have the same market value as a degree from UT Austin. So be it.  This proposal would expand the students choices, but would not attempt to undermine successful institutions.

Doug McCullough, Director

*This ideas in this article are presented to spark innovative thinking about state college reform. We have not conducted a feasibility study that would include estimates of the initial formation of the online platform, or forecasted the student population that would apply for the online degree.  Details of the 2018 Budgets and public support for The University of Texas System and Texas A&M System available online for reference.

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