Cutting College Costs: Creative Ways to Get the Same Education at a Lower Price

Policy

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A faculty member cheers on graduates from California State University San Marcos during a car parade. (Mike Blake/Reuters)

In my column on the “Gap-Year Gap,” I looked at the potential financial impact on college campuses if the minority of students who pay full tuition are disproportionately missing when the fall semester starts, especially in schools that are not reopening their campuses. That could just be the start of a shakeout in the college and university sector, which has become overpriced, overextended, and overly dependent upon taxpayer subsidies.

On Friday, I spoke with Aaron Rasmussen, the CEO of the online-learning startup Outlier.org and previously a co-founder of the ubiquitous MasterClass to get his thoughts about online learning and how it could compete or cooperate with traditional colleges.

Outlier launched in the fall of 2019, little expecting how the college world would be stood on its head a few months later. Its business model is simple: For a comparatively low price (currently $400), students can take a 3-credit course. The courses are still partnered with a traditional university, the University of Pittsburgh, and can be accepted most anywhere that Pitt credits would be good. For now, Outlier is strictly a cash-on-the-barrel business, without financial aid eligibility, but that means it has every incentive to keep prices low. Rasmussen started the business with just two core course offerings in the fall (calculus and psychology), but is expanding the offerings.

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Online colleges are not a brand-new thing, but this is an intriguing approach, more geared to offer modular, low-cost alternatives to accumulate credits and reduce the need to spend four full years on campus. Rasmussen told me that they started with calculus in part because so many students fail it, so aiming to get more students to pay less and pass the class is a double-barreled way to get more bang for the educational dollar.

Of course, online courses can’t substitute for three big things: the credentialing value of admission to a selective college, the campus-life value of sports and activities, and the socialization value of being on campus to make connections and learn how to behave around the college-educated. But then, a whole generation of students is getting an education in what education looks like without two of those three things. What I like to think of as “the Great Unbundling” of college education from the full campus experience is worth exploring, for students who are strapped to afford tuition or debt to pay for the whole experience.

Moreover, a model like Outlier doesn’t really aim to replace elite four-year colleges so much as provide alternatives (both for 17-to-19 year olds and for continuing-education students) for students looking to spend fewer than four years on campus or, in the case of more marginal students, to try their hand at a couple of courses at a lower price. A lot of our college-debt crisis is students who borrowed big and didn’t finish school; better for those students in particular to seek out ways to test their academic readiness and prepare for college without borrowing the full cost of a standard semester.

The world of American colleges is going to look very different five or ten years from today. The coronavirus pandemic is likely to accelerate that. Creative competition can help accelerate that trend and bring more affordable options that don’t require colossal infusions of taxpayer money.

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