#2 Port in the Academic Storm Is About to Close
by Gary North: Austerity
The wave of
the future for higher education is distance learning. The World
Wide Web is a revolution. It offers people opportunities to buy
information from anywhere. The cost of delivery is close to free.
The need for bricks and mortar facilities is ending. There are several
accredited colleges with no physical facilities that offer low-cost
As of 2006,
3.5 million students taking distance learning courses. The figure
is higher today.
When I wrote
the early editions of my manual, College for $15,000 (or Less),
I realized that the bricks and mortar colleges now face a major
crisis. They are facing price competition. Management guru Peter
Drucker wrote a generation ago that any industry that faces price
competition from a new source that offers the same product or service
for 10% of the existing price will be replaced by the existing industry.
Drucker saw what this means for university education.
from now the big university campuses will be relics. Universities
won't survive. It's as large a change as when we first got the
printed book. Do you realize that the cost of higher education
has risen as fast as the cost of health care? . . . Such totally
uncontrollable expenditures, without any visible improvement in
either the content or the quality of education, means that the
system is rapidly becoming untenable. Higher education is in deep
crisis. . . . Already we are beginning to deliver more lectures
and classes off campus via satellite or two-way video at a fraction
of the cost. The college won't survive as a residential institution.
Today's buildings are hopelessly unsuited and totally unneeded.
(Robert Lenzner and Stephen S. Johnson, "Seeing things as
they really are," Forbes, March 10, 1997)
and mortar campuses are in a position to enter the field of distance
learning, yet with only one major exception, Louisiana State University,
none of them is doing this. They are in a position to offer low-cost
courses to out-of-state students in many fields and do so at a profit,
yet they resist.
In 2009, there
were three main campuses that offered a wide range of courses at
a price of under $200 per semester credit: LSU, Texas Tech, and
Eastern Oregon University. Texas Tech offered courses at under $170
per semester credit. In 2010, the school hiked its fees to out-of-state
students to over
$770 per credit hour. It went from the #2 school in the nation
in terms of course offerings and price to one of the most expensive.
It thereby killed its distance learning program.
As of summer,
2012, Eastern Oregon will double the price of its courses to all
students other than Oregon, Idaho, and Washington. That will effectively
remove it from contention.
governor of Georgia, Roy Barnes, described the thinking of any college
administration that prices its courses at a significantly higher
rate to out-of-state distance-learning students.
ask whether states can afford to do this in times of a sluggish
economy and state budget cuts. This question is based in large
measure on the fallacy that thousands of students will pay out-of-state
tuition for a college course they take on a computer at work or
at home. When a distance-learning course is priced at an out-of-state
tuition rate of $1,200, for example (three times the average in-state
charge), the revenue for a college or a state is usually $1,200
x zero students = zero dollars.
pricing, but university presidents do not. The president of Eastern
Oregon University offered this
explanation for the school's decision to double the price of
its distance learning courses to out-of-state students.
In order to
increase our revenues, and as mandated by the state, we must develop
a non-resident tuition model that fits in with our strategies of
being cost competitive. This can be done (Western Oregon is a prime
example of this) and we are working diligently in this area. Non-resident
tuition will not be our "silver bullet" and save EOU from
future budget issues; however, if implemented correctly and aggressively,
it will enable us to control our revenue streams much more effectively.
This is economic
nonsense. With the defection of Texas Tech in 2010, Eastern Oregon
University could legitimately claim to be the second-best deal in
distance learning in the United States. There are 4,000 colleges
and universities. Eastern Oregon is now in second place. Yet the
school never promoted itself for what it was: in the top three.
It then moved from #3 to #2 because of Texas Tech's suicidal policy.
But it will keep this position for only one more academic year.
the University of Phoenix has 500,000
students at tuition fees far higher than Eastern Oregon University's.
the rest of the article
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
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