Thursday, November 19, 2015

Will Higher Education Need to Restructure to Keep Costs Low?

Tuition costs are slowing and will land somewhere around inflation (2-3%) according to a Moody's Survey last year. The reasons why this slowing of tuition rates has many factors that include public awareness and new technology. To keep costs lowering new technology is likely to force many traditional universities to change the way they view themselves and their roles in society.

Consider the cost of buildings, taxes, sports teams, laboratories, and other overhead that large land-grant universities must endure. Elite schools may have large endowments but many state schools must find a way to keep their costs low while ensuring the quality stays high. Public money comes with public scrutiny over its use.

The cost of college is of major concern to legislators and students. It has been rising steadily over the past decade and now increased scrutiny over spending has made its way into the government halls. Officials are looking for ways to retard growth while students are seeking to find alternative methods of getting an education through Moocs and certificates.

Technology is also making its way into the equation and putting pressure on universities to adapt and streamline. Online education has the potential to put downward pressure on costs but creates problems for full-time professors who must have employment incentives for getting Ph.D.s.

The very models of higher education will need to change if it is to overcome public scrutiny, retain quality professors, lower costs, and improve quality. New technologies can be added on top and are a primary strategy of handling costs issues. However, eventually without adjusting the entire platform, it will be on the rise again. The process of funding and the way in which we think about education must change if we hope to improve cost effectiveness.

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