Getting more bang for our college bucks

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    Stretching the Higher Education Dollar: How Innovation Can Improve Access, Equity, and Affordability
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Article Highlights

  • Total US student loan debt is $1.2 trillion, and state funding per student dropped by a quarter between 2007 and 2012.

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  • Only 16 percent of the 420,000 students in the California State University system graduate within four years.

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  • Instead of trying to radically change the cost structure at existing schools, we should seek to create a more vibrant and open higher education marketplace.

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The cost of US higher education is at the forefront of the national consciousness. Tuition has more than doubled in real dollars since 1980, growing far faster than inflation, and total student loan debt finally cracked the $1 trillion threshold. Meanwhile, demand for higher education only continues to grow, prompted by the needs of a 21st-century economy and political rhetoric seeking to make the United States the most educated nation in the world. To meet this demand, higher education reformers must develop a bold vision for how to reduce costs. Harvard Education Press’s just-released volume Stretching the Higher Education Dollar: How Innovation Can Improve Access, Equity, and Affordability aims to explain why college has become so expensive, to offer solutions at both existing schools and via a raft of new providers, and to give policymakers new ideas for nurturing reform.

Key points in this Outlook:

  • US higher education has grown increasingly expensive, primarily because of a misaligned incentive structure that enables colleges to continue to raise money and because of an increasingly outdated vision of what “college” means.
  • Nascent reforms such as university-online partnerships, massive open online courses, and competency-based education seek to rethink the delivery of information and credentials.
  • While existing institutions can take some steps to contain their costs, truly low-cost higher education will likely come from the emerging wave of new providers.

 

To say college has become expensive is to state the obvious, and has prompted a great deal of angst from journalists, policymakers, and concerned citizens. This is understandable. Tuition has more than doubled in real dollars since 1980, far outstripping inflation. Total US student loan debt sits at a staggering $1.2 trillion, and state funding per student dropped by a quarter between 2007 and 2012, with a majority of states—despite slow signs of recovery—still reporting significant budget deficits for fiscal year 2013.[1]

This has led to widespread panic from a number of national figures. Former education secretary William Bennett opined, “In pure financial terms, students might be better off investing their tuition money in stocks rather than four years with one of our nation’s many colleges.”[2] Governors like Rick Perry in Texas and Scott Walker in Wisconsin have made lower-cost higher education a centerpiece of their tenure, pushing for measures such as a $10,000 bachelor’s degree and increased online delivery from their state universities. President Obama has also chimed in, remarking in his 2013 State of the Union address, “Today, skyrocketing costs price way too many young people out of a higher education, or saddle them with unsustainable debt. . . . taxpayers cannot continue to subsidize the soaring cost of higher education.”[3] He echoed these sentiments in a major August 2013 speech in Buffalo: “We’ve got a crisis in terms of affordability and student debt.”[4]

Such declarations from the White House to the state house have put the painfully high price of American higher education squarely into the national consciousness. As Andrew P. Kelly and Kevin Carey write in the introduction to their new book Stretching the Higher Education Dollar: How Innovation Can Improve Access, Equity, and Affordability (Harvard Education Press, September 2013), “After three decades of published tuition rates steadily increasing faster than inflation, the brutal arithmetic of college pricing has become impossible to ignore.”[5]

Stretching the Higher Education Dollar attempts to explain why higher education has become so costly, to offer possible solutions at existing institutions and by leveraging new models, and to discuss how state and federal policy would need to change to nurture reform. Ultimately, despite the rhetoric from President Obama and other policymakers, it seems likely that truly low-cost higher education will come not from existing institutions but from an emerging wave of new reforms that rethink the delivery of information and credentials.

Why is College So Expensive?

Perhaps the biggest confusion in the debates surrounding the cost of higher education, and one that Stretching the Higher Education Dollar takes great pains to clarify, is the conflation of “cost”—what it actually costs in terms of tuition, fees, and subsidies to run an institution—and “price,” or the amount the student pays. Anya Kamenetz, a technology journalist for Fast Company magazine, clarifies: “The entire framing of the current public debate over the cost of education and the growth of student loan debt is misconstrued . . . we focus more on affordability—the price to the student—than on transforming the underlying cost drivers in higher education.”[6] What are those underlying cost drivers? Economist Robert E. Martin identifies two primary culprits.[7]

The Cost Disease. In most sectors, technological advances lead to increased productivity and thus lower prices. But technology has yet to do the same in higher education. Economists William Bowen and William Baumol speculated that certain labor-intensive industries (such as performing arts, higher education, and health care) would, because of the service they provide, often be relatively immune to productivity improvements and thus see rising labor costs as they struggle to compete for employees. To borrow Bowen and Baumol’s analogy, this is because “it is fairly difficult to reduce the number of actors necessary for a performance of Henry IV, Part II.”[8] Regardless of any technological changes, part two of Henry IV always involves the same number of actors. The actors cannot speed up the performance and the acting cannot be outsourced to China; moreover, cutting one of the cast members or replacing him or her with an inexperienced substitute will diminish the ultimate product.

"Total US student loan debt sits at a staggering $1.2 trillion, and state funding per student dropped by a quarter between 2007 and 2012."

As labor costs decrease in most industries because of technological advances, they will increase in more stagnant industries such as performing arts and higher education. Bowen and Baumol termed this phenomenon the “cost disease.” The current conception of higher education involves a set number of students sitting in a physical building and learning from a highly trained faculty member. So long as this idea of what college is holds, the cost disease helps explain why costs continue to rise.

Bowen’s Rule and Misaligned Incentives. If the cost disease is a structural theory that colleges are relatively powerless to combat—costs are always going to rise by the very nature of the services colleges provide—then the late economist and university president Howard Bowen had a more cynical take: college costs rise because colleges raise all the money they can get, spend all the money they raise, and have little outside pressure to stop. This occurs in higher education largely because of information asymmetries. Prospective students lack the necessary information to make informed, cost-effective, and strategic decisions on which programs and schools to attend. Many students also associate higher cost with higher quality, so institutions can often raise their tuitions and students will still scramble to apply. Martin estimates that while both the cost disease and Bowen’s rule contribute to rising higher education costs, Bowen’s rule is the greater culprit.

What Can Today’s Schools Do About It?

The factors driving up costs in higher education do not lend themselves to easy solutions. This is especially true at existing institutions. Douglas N. Harris, a Tulane University economist, argues in Stretching the Higher Education Dollar that school leaders have more control over productivity than they think they do, but often suffer from a lack of information about which politics or programs are cost-effective. He presents a simple metric that universities can use to evaluate the cost-effectiveness of common programs and policies such as student-faculty ratios, the number of full-time versus adjunct faculty, and financial aid.[9]

Ari Blum and Dave Jarrat of InsideTrack make a case for strategic use of student services, arguing that targeted investments in academic advising and coaching, financial-aid counseling, and mentoring can increase graduation rates and lower time to degree.[10] Jeff Selingo of the Chronicle of Higher Education profiles some of the findings by leading management consulting firms such as Bain & Company when they examined the operations of top public institutions such as the University of North Carolina (UNC) and the University of California–Berkeley. Bain & Company found stark examples of unnecessarily complex organizational structures and extreme fragmentation. At UNC, for example, there were 380 unique departments and almost 200 supervisors who managed a single employee, while Bain’s advice to consolidate seven different e-mail platforms into a single one saved the school $1 million.[11]

The harsh reality is that though each of these approaches has some potential, they typically add up to tinkering at the margins. While Harris advocates for university leaders to use data to better understand how to effectively cut costs, he acknowledges that “No single strategy stands out as particularly cost-effective.”[12] Bringing in consultants or revamping student services also involves upfront costs, which might be a tough sell for a university leader. And most academic departments, under the pretext of retaining academic freedom, are notoriously successful at resisting administrative intrusion into their affairs, making their departments off limits for suggested cuts. This is unfortunate, since academics constitutes the dominant share of spending at most universities. Says Bain & Company partner Jeff Denneen, “We’re saving [institutions] 10 to 15 percent. That’s real money, but it still pales in comparison to what’s left on the table in terms of academics.”[13]

Most importantly, current US public policy is poorly equipped to drive lower-cost higher education at existing institutions. The regulatory framework or “accreditation” that colleges and universities are currently under is a largely collegial peer-review process, meaning the accrediting agencies that evaluate colleges and universities, vet their quality, and control access to federal funding are staffed by members from the same institutions they are regulating. This lowers the likelihood that accreditors will rock the boat by calling their peer institutions to task for high costs. It also stifles innovation, as accrediting agencies act as regional cartels designed to keep out new providers of higher education.

A New Vision of Higher Education

This is not to say that universities should not endeavor to be more cost-effective. They should. It is only to suggest that dramatically lower-cost higher education will likely come from outside the current system. And understanding what is going on outside the system starts with a theory of what exactly higher education is. In the words of entrepreneur Michael Staton, college is “a packaged bundle of content, services, experiences, and signals that results in an education with both inherent and transferable value to the learner.”[14] Staton is the founder of Inigral, a company that uses social media to boost college retention, and a partner at education venture-capital firm Learn Capital. It is his (and others’) proposition that higher education can be “unbundled” into component parts, and that some of these parts can be easily replaced by online or other low-cost providers.

In Staton’s framework, the various pieces of “college” include delivering content, providing a valid credential of a student’s knowledge or skills, fostering a ready-made network of relationships, and providing a personal coming-
of-age transformation. For Staton, the earlier parts of the stream (content and credentialing) are more easily replaced by alternative providers than are the latter parts (the network of relationships and coming-of-age experience). This makes intuitive sense: it is easier to share information online than it is to create a vibrant social experience. But, crucially, to the extent Staton’s framework is true, it further suggests that our focus on radically lowering the cost of a full degree at an existing school is misguided, and we would be better served to reorient toward new modes of delivering courses, awarding credit, and providing labor-market signals to stretch the higher education dollar.

Unbundling Coursework with a Vengeance

While online education is not new, colleges and universities have often priced their online offerings at the same level as in-person classes, despite being far cheaper to deliver, and have used the profits to subsidize their on-campus activities. As Burck Smith, founder of two online higher education companies, notes in Stretching the Higher Education Dollar, “Many colleges’ distance education programs are cash cows whose profits are maintained by the ability to keep prices high, allow students to access federal debt, and exert selective credentialing authority.” He cites Arizona State University, whose online partner-ship with Pearson netted a $6 million profit in 2011 alone.[15] What is different today is the movement to price online courses far closer to what it actually costs to deliver them.

The Growth of Massive Open Online Courses. The potential of low-cost online courses is most evident in the emergence of massive open online courses (MOOCs). In 2011, Stanford University professor and Google scientist Sebastian Thrun offered his course on artificial intelligence for free online, attracting 160,000 students from more than 190 countries and demonstrating MOOCs’ potential while ushering in a flurry of media attention.[16]

Since then, more MOOC providers have sprung up, attracted students, raised funds, and slowly started to move from the much-hyped next big thing to grappling with how to sustain the early fanfare. In the second half of 2012, a slew of schools joined MOOC providers Coursera and edX (a joint Massachusetts Institute of Technology–Harvard University partnership), while Udacity (Thrun’s outfit) raised $15 million in funding from noted venture-capital firm Andreessen Horowitz.[17]

Coursera’s growth has been particularly impressive: it raised $65 million in two rounds of venture-capital funding and attracted more than 4 million students and more than 80 partner institutions worldwide.[18] In an effort to determine how to offer valid course credit, the company announced two partnerships. In November 2012, Coursera partnered with the American Council on Education to evaluate select courses for credit—something Coursera cofounder Andrew Ng views as a potential game changer. “We created Coursera to help students overcome major barriers to traditional education access,” Ng said, “and providing credit-bearing college courses is a huge milestone toward that goal.”[19]

"Only 16 percent of the 420,000 students in the California State University system graduate within four years."

The company’s second partnership was a May 2013 agreement with 10 public-university systems to offer credit for Coursera courses, including the State University of New York system, the University of Tennessee system, the University System of Georgia, and the University of Colorado system.[20] If these partnerships hold up, they could go a long way in legitimizing MOOCs in the eyes of both potential students, who could transfer the credits to traditional institutions, and of employers, who could recognize MOOC credit as a valid signal of competency.

The Golden State. California has been particularly ambitious in considering how MOOCs and other online course providers can lower costs. Two endeavors merit mention because of their cost-saving potential and because they
are representative of some of the challenges facing these new providers.

First, with Governor Jerry Brown’s support, California legislators introduced a bill that urged public institutions to allow students who could not find a seat in overenrolled introductory classes to earn those credits through an online equivalent, including MOOCs. As AEI’s Andrew P. Kelly and KC Deane commented at the time, the bill would “empower students to fulfill their degree requirements in a timely manner even if their own university can’t fit them in the lecture hall that semester”—a much-needed investment in a state where each community college averages 7,000 enrolled students who are stuck on course waiting lists, and where only 16 percent of the 420,000 students in the California State University system graduate within four years.[21]

Despite passing the California State Assembly in June 2013, the bill’s sponsor, Senator Darrell Steinberg (D-CA), decided to shelve it in August. Ostensibly this was because California institutions had promised to expand online courses on their own accord, lessening the need for the state to force them to do so via legislation. But vague institutional promises are a far cry from actually providing such online courses, prompting journalist Steve Kolowich to write that the “political, regulatory, administrative, and faculty barriers to the kind of unfettered online education that MOOC promoters originally envisioned have proved quite high.”[22]

San Jose State University (SJSU) has also encountered implementation hurdles with its own online efforts. In January 2013, SJSU announced a partnership with Udacity to run a pilot program of three introductory math courses geared toward incoming students. SJSU professors would create the courses and use the Udacity platform to offer them online, and then SJSU students who desired credit could pay $150 to receive it—roughly one-third the cost of a normal credit at SJSU.[23]

The experiment, termed “SJSU+,” would be “a testing ground for phase two of the MOOC experiment, which includes fees and a path to college credit, and where public colleges try to use material from MOOCs to help meet student demand in gateway courses.”[24] The courses were piloted to 300 students—half were SJSU students and the rest were a mix of high-school and community-college students and those waitlisted at SJSU—in spring 2013. In a related but separate endeavor, SJSU announced it would work with edX to offer select edX courses for credit.

The SJSU–Udacity partnership and SJSU’s agreement with edX were not without critics. In May 2013, a group of SJSU philosophy professors sent an open letter to Harvard professor Michael Sandel announcing their refusal to teach his famous “Justice” course via edX and generally decrying the MOOC movement as an attempt to “replace professors, dismantle departments, and provide a diminished education for students in public universities.”[25] Then, in July, SJSU announced a “pause” on SJSU+, citing poor student performance in the pilot courses.[26]

It is worth noting that the student population enrolled in SJSU+ could very well have differed from the general SJSU student, given that SJSU+ included high-school students, community-college students, and students who had been waitlisted at SJSU. Poor performance from this group of students therefore does not necessarily mean SJSU+ would falter with already enrolled SJSU students, or that the MOOC experiment in general is doomed to fail at other schools. Still, faculty pushback and quality control are the kinds of practical challenges that MOOCs face going forward. The hype surrounding MOOCs has bordered on the hyperbolic since Udacity, Coursera, and edX formed in early 2012. Even the MOOCs themselves were swept up: Udacity’s Sebastian Thrun is on record saying SJSU+ could “change the life of Californians.”[27]

Thrun’s premature declaration coupled with the poor pilot results, however, do not prove that MOOCs cannot provide low-cost courses. Rather, the pause on the SJSU+ experiment could instead represent a wise approach to quality assurance and a chance for improvement. Attempts to pursue low-cost higher education options need to be faithful to such concerns, answer objections, ensure stakeholder buy-in, and build strong political support. If Udacity can learn from the SJSU+ pilot, it would go a long way in ensuring that similar endeavors do not drown in a sea of overhype.

New Modes of Pricing and Awarding Credit

In addition to course content, alternative providers are working on assessing and certifying student learning. In Stretching the Higher Education Dollar, higher education journalists Paul Fain and Steve Kolowich discuss a number of early efforts in this area. This includes MOOC providers planning to let students who pass their courses pay a small fee for a credential, Udacity and edX partnering with Pearson to give proctored exams at Pearson testing centers to lend their courses more validity, or experimenting with competency-based learning (whereby students earn credit for demonstrated knowledge rather than accumulated credit hours).[28] Elsewhere, established institutions are hoping to utilize online delivery models to lower prices for full degree programs.

Georgia Tech–Udacity. In May 2013, Georgia Tech, one of the country’s top engineering schools, announced a three-
year master’s degree in computer science that will be provided wholly through the MOOC delivery format, via partnership with Udacity and with a $2 million boost from AT&T to finance the first year.29 The first class will enroll in fall 2014. Following the typical MOOC format, all courses in the program will be available on Udacity free of charge to anyone, but Georgia Tech will only award credit to those they admit, are degree-seeking, and pay for the credential—an estimated $7,000. This is significantly less than the $25,000 average cost for an online computer science master’s degree or the $21,300 (for an in-state student) or $59,900 (for an out-of-state student) that it would cost in tuition and fees alone to earn the same degree from Georgia Tech in person.[30]

While it is quite possible that the Georgia Tech–Udacity experiment could work with a computer science degree, but not, say, a biology or English degree, the proposition remains immensely intriguing. Georgia Tech is seeking to leverage the MOOC delivery model while charging a fee for the credential, betting that the significantly lower cost for the degree combined with the George Tech imprimatur will win students over. Whether employers will agree that a degree earned online is of the same value as one earned in person is an open question, but AT&T is one employer willing to take a chance: as part of AT&T’s initial funding, a pilot program of the online degree will be offered in spring 2014 for select groups, including AT&T employees.[31]

Competency-Based Learning. Farther north, Southern New Hampshire University (SNHU) is experimenting with low-cost degrees. SNHU is a brick-and-mortar, accredited university, home to 8,000 on-campus students and equipped with dorms, fraternities, and Division II athletics. It is their online College for America initiative, however, that has attracted the attention of national figures.

College for America, in the words of SNHU president Paul J. LeBlanc, “means to harness competency-based learning models, social networking theories and methods, self-paced learning, open educational resources, and strong assessment to offer a radically new degree program—radical in terms of price (our target is $4,000 for a two-year associate’s degree), precision of learning outcomes, and assurance of quality and mastery.”[32] College for America replaces courses with “competencies,” assigns badges to each competency, and insists firmly on using open-source materials rather than expensive textbooks. The combined effect is to allow students, anywhere, to progress at their own pace through course material so long as they demonstrate competency, with minimal upfront costs in buying books or relocating to a physical campus.

In March 2013, the program got a huge vote of confidence from the US Department of Education when Secretary Arne Duncan sent a “Dear Colleague” letter encouraging institutions to branch away from the credit hour when it comes to measuring student learning.[33] Dear Colleague letters are frequently circulated among policymakers on Capitol Hill and in federal agencies encouraging votes on certain pieces of legislation or otherwise making a public declaration of intent. While Duncan’s letter does not change any current rules or regulations, it does send a strong signal that the Obama administration is open to SNHU’s approach to student learning, and offers guidance for other aspiring institutions who want to experiment with the approach.

Competency-based instruction makes intuitive sense—judge students on what they know, not how many hours they sit in a lecture hall—but its real promise when it comes to low-cost college is in permitting students to move as quickly as they like through their degree requirements if they can demonstrate expertise. In August 2013, College for America graduated its first five students—the first of whom earned his associate’s degree in just less than 100 days, heralding the potential of competency-based education and online education to significantly lower the time and cost to a degree.[34]

New Signals to the Labor Market

In addition to College for America’s competency-based approach to learning or to the MOOC providers’ efforts to legitimize their courses, there are other, more dramatic developments that aim to tackle the credentialing aspect of the college degree. Two recently launched ventures, Degreed and Accredible, try to aggregate what an individual has learned through coursework, employment, and other life experiences to send an estimated signal of competency to future employers. Degreed, whose beta version launched in September 2012, is outspoken in its attempts to “jailbreak the degree” by providing a score for “lifelong education.” A person can input any kind of learning broadly defined—an entire bachelor’s or associate’s degree, individual courses taken online via a MOOC, material learned from midnight sessions on Khan Academy, books read, lectures attended, or skills picked up from years on the job—and Degreed will output a lifelong learning score.[35]

Accredible, started in January 2013, has similar ambitions in rethinking what a certificate means. Says founder Danny King: “We let anyone create certificates for skills, achievements or knowledge they have and let you embed proof of that onto the certificate itself.”[36] Ultimately, it’s conceivable that students in the not-too-distant future could “stack” credentials piecemeal style—an associate’s degree from a traditional community college, subsequent credit from a handful of MOOC courses, and additional credit for prior knowledge learned on the job—into a total package that paints a valid picture of skills and knowledge that employers would find valuable.

The million-dollar question, of course, is if employers will recognize Degreed, Accredible, or similar measures of skill and competency with the same force that they recognize a degree from an accredited university. In areas where it is relatively easy to prove competency with an electronic portfolio—say, computer programming or graphic design—employers might be willing to let a certificate from Degreed service as a proxy for a traditional degree, especially if the employer is in an industry (computer science) or location (Silicon Valley) that values doing things in new ways. Were this to happen, even in select industries, it is possible that the enterprising 18-year-old who loves to tinker with computers in his room could forego the Ivy League tuition and land a job at Google.

But there is plenty of reason to be cautious that alternative credentialing will catch on en masse. For one, it is unclear whether similar efforts are bearing much fruit. LinkedIn, the popular professional networking site, allows users to “endorse” their colleagues for certain skills. But there is no indication that employers utilize endorsements to inform their hiring decisions. More fundamentally, Degreed and Accredible, like MOOCs, are going up against firmly entrenched systems. “Jailbreaking the degree” sounds fun and edgy, but it is a key piece of the puzzle that colleges will be reticent to give up.

Asking New Questions

The Internet has already revolutionized and changed the cost structures for how we listen to music, consume news, network, process information, and buy and sell most every product imaginable. It is not far-fetched to envision this happening with higher education. And yet to date, most of what we view as groundbreaking developments in higher education are in fact fairly pedestrian by comparison. MOOCs are still classes taught by professors, and MOOC providers like Udacity and Coursera are scrambling to link their courses to established brick-and-mortar institutions to increase validity. Most of the political rhetoric surrounding college affordability—such as Rick Perry’s $10,000 bachelor’s degree, the cantankerous congressional debate over student loan interest rates, or President Obama’s own calls for reform—are trying to lower the cost of a certain kind of degree, primarily the four-year bachelor’s degree at existing institutions.

Perhaps we are asking the wrong set of questions. One of the primary insights of Stretching the Higher Education Dollar is just how hard it is to provide low-cost higher education at existing institutions because of factors ranging from the nature of higher education regulation to faculty resistance toward perceived intrusion into their affairs to the inevitable (and costly) organizational framework that tends to spring up at many universities. It is also a result of the services colleges are trying to provide.

"'Jailbreaking the degree' sounds fun and edgy, but it is a key piece of the puzzle that colleges will be reticent to give up."

If we take Michael Staton’s framework seriously, it suggests there are certain elements of the higher education apparatus that are relatively easier or harder to provide at low cost. Transferring information is easy to do in this way; getting a bunch of students into a dormitory for that transformative experience is much harder. Insofar as our belief of what “college” is stays about the same, it will continue to brush up against these limitations and the insights of the cost disease and Bowen’s rule.

Public debates over college affordability and corresponding policy solutions need to shift gears. Instead of trying to radically change the cost structure at existing schools, we ought to instead seek to create a more vibrant and open higher education marketplace that focuses especially on providing valid, low-cost courses and credentials. This includes MOOCs, competency-based learning like that at College for America, and other innovative providers.

One of the biggest hurdles in doing this is accreditation. Burck Smith closes Stretching the Higher Education Dollar with a discussion of the outdated regulatory framework that governs higher education, explaining why it is a barrier to innovative providers.[37] The current regulatory structure assumes a higher education model with high fixed costs undergirded by the premise of scarcity—that the stuff it takes to create a college is rare and must be aggregated into a central location. This vision of higher education is used to justify substantial public subsidies, driving up costs even while the Internet is making the vision obsolete: today, information can be distributed for minimal cost worldwide, and there is less of a need for professors and students to meet in a central location. By assuming this vision of what college is, the corresponding higher education accreditation model, Smith argues, favors existing institutions and keeps prices artificially high.

Smith brings personal experience to this question: his company, StraighterLine, offers low-cost, individual college courses online. But since an institution has to provide full-degree programs, not just individual courses, to receive accreditation (and, with it, access to federal student aid), StraighterLine cannot be accredited and loses out on federal student-aid dollars. Short of a significant overhaul of the accreditation system, such reforms are unlikely to reach their full cost-savings potential.

In addition to revamping accreditation, public policy should seek to provide greater transparency around student outcomes and costs. “Without objective indicators of quality and value,” Kelly and Carey conclude in Stretching the Higher Education Dollar, “new providers that look nothing like a traditional college will have a hard time competing even if they can enter the market. Rigorous measures of student outcomes like learning and graduate success are needed to level this playing field.”[38] Already, some of these efforts are happening in the states, where leaders like Florida, Texas, and Virginia are linking their college and wage records to create data on how graduates fare in the labor market.

Senators Ron Wyden (D-OR) and Marco Rubio’s (R-FL) 2012 Student Right to Know Before You Go Act would do something similar from the federal level. Greater transparency is not only useful for consumers, but would also help prevent the information asymmetries that currently enable Bowen’s rule to drive up higher education costs. While it is too soon to say if these new ventures will be successful in their attempts to lower the cost of higher education, or if public policy will be able to help them do so, there is room for optimism. With significant political backing, fervent public cries for reform, the ever-increasing emergence of new providers, and the gradual acceptance of even elite Ivy League schools to embrace these innovations, it is quite possible that a new vision of higher education is emerging, one that can truly stretch the higher education dollar.

Notes

1. National Center for Education Statistics, “Fast Facts: Tuition Costs of Colleges and Universities,” http://nces.ed.gov/fastfacts/display.asp?id=76; Libby A. Nelson, “Federal Student Loan Debt Tops $1 Trillion,” PoliticoPro, July 17, 2013,  www.politico.com/story/2013/07/student-loan-debt-tops-1-trillion-94316.html; Arthur M. Hauptman, “10 Dubious Claims about Higher Ed Decline,” Inside Higher Ed, June 20, 2013, www.insidehighered.com/views/2013/06/20/challenging-10-claims-about-higher-educations-decline-essay; and Phil Oliff, Chris Mai, and Vincent Palacios, States Continue to Feel Recession’s Impact (Washington, DC: Center on Budget and Policy Priorities, June 27, 2012).
2. William J. Bennett, “Do We Need A Revolution In Higher Education?” CNN, June 13, 2012, www.cnn.com/2012/06/13/opinion/bennett-higher-education.
3. Barack Obama, “State of the Union 2013: President Obama’s Address to Congress (Transcript),” Washington Post, February 12, 2013.
4. Arlette Saenz and Mary Bruce, “Obama Unveils New College Affordability Plan,” ABC News, August 22, 2013, http://abcnews.go.com/blogs/politics/2013/08/obama-unveils-new-college-affordability-plan/.
5. Andrew P. Kelly and Kevin Carey, “Introduction” in Andrew P. Kelly and Kevin Carey, eds., Stretching the Higher Education Dollar: How Innovation Can Improve Access, Equity, and Affordability (Cambridge, MA: Harvard Education Press, 2013), 2. 
6. Anya  Kamenetz, “From Baumol’s Cost Disease to Moore’s Law: Bending the Cost Curve in Higher Education,” in Stretching the Higher Education Dollar, 14.
7. Robert E. Martin, “Incentives, Information, and the Public Interest: Higher Education Governance as a Barrier to Cost Containment,” in Stretching the Higher Education Dollar, 27–43.
8. W. J. Baumol and W. G. Bowen, “On the Performing Arts: The Anatomy of Their Economic Problems,” The American Economic Review 55, no. 1/2 (March 1965), http://pages.stern.nyu.edu/~wbaumol/OnThePerformingArtsTheAnatomy
OfTheirEcoProbs.pdf
.
9. Douglas N. Harris, “Applying Cost-Effectiveness Analysis to Higher Education: A Framework for Improving Productivity,” in Stretching the Higher Education Dollar, 45–66.
10. Ari Blum and Dave Jarrat, “A Strategic Approach to Student Services: Five Ways to Enhance Outcomes and Reduce Costs,” in Stretching the Higher Education Dollar, 67–86.
11. Jeffrey J. Selingo, “Bain Goes to College: Rethinking the Cost Structure of Higher Education,” in Stretching the Higher Education Dollar, 87–104.
12. Harris, “Applying the Cost-Effectiveness Analysis to Higher Education,” 61.
13. Selingo, “Brain Goes to College,” 89.
14. Michael Staton, “Unbundling Higher Education: Taking Apart the Components of the College Experience,” in Stretching the Higher Education Dollar, 107.
15. Burck Smith, “Public Mandates, Private Markets, and ‘Stranded’ Public Investment,” in Stretching the Higher Education Dollar, 194.
16. Ben Wildavsky, “Classes for the Masses: Three Institutions’ Efforts to Create High-Quality, Large-Scale, Low-Cost Online Courses,” in Stretching the Higher Education Dollar, 125–44.
17. Audrey Watters, “Top Ed-Tech Trends of 2012: MOOCs,” Hack [Higher] Education, December 18, 2012, www.insidehighered.com/blogs/hack-higher-education/top-ed-tech-trends-2012-moocs.
18. Ki Mae Heussner, “More Money for MOOCs: Coursera Nabs $43M from Diverse Set of Investors,” July 10, 2013,  Gigaom, http://gigaom.com/2013/07/10/more-money-for-moocs-coursera-nabs-43m-from-diverse-set-of-investors/
19. “American Council on Education to Evaluate Credit Equivalency for Coursera’s Online Courses,” Coursera Blog,  http://blog.coursera.org/post/35647313909/american-council-on-education-to-evaluate-credit.
20. Steve Kolowich, “In Deals with 10 Public Universities, Coursera Bid for Role in Credit Courses,” Chronicle of Higher Education, May 30, 2013, http://chronicle.com/article/In-Deals-With-10-Public/139533/.
21. Andrew P. Kelly and KC Deane, “In California Senate, Student Success Trumps Tradition,” AEIdeas, March 14, 2013, www.aei-ideas.org/2013/03/in-california-senate-student-success-trumps-tradition/; and Tamar Lewin, “California Bill Seeks College Credit for Online Study,” New York Times, March 13, 2013.
22. Steve Kolowich, “The MOOC ‘Revolution’ May Not Be as Disruptive as Some Had Imagined,” Chronicle of Higher Education, August 8, 2013, http://chronicle.com/article/MOOCs-May-Not-Be-So-Disruptive/140965/
23. Jeffrey R. Young, “California State U. Will Experiment With Offering Credit for MOOCs," Chronicle of Higher Education, January 15, 20123, http://chronicle.com/article/California-State-U-Will/136677/.  
24. Paul Fain, “As California Goes?,” Inside Higher Ed, January 16, 2013, www.insidehighered.com/news/2013/01/16/california-looks-moocs-online-push
25. Steve Kolowich, “Why Professors at San Jose State Won’t Use a Harvard Professor’s MOOC,” Chronicle of Higher Education, May 2, 2013, http://chronicle.com/article/Why-Professors-at-San-Jose/138941/.
26. Ry Rivard, “Udacity Project on ‘Pause,’” Inside Higher Ed, July 18, 2013, www.insidehighered.com/news/2013/07/18/citing-disappointing-student-outcomes-san-jose-state-pauses-work-udacity.
27. Ibid.
28. Paul Fain and Steve Kolowich, “Beyond the Classroom: Alternative Pathways for Assessment and Credentialing,” in Stretching the Higher Education Dollar, 145–62.
29. “Georgia Tech Announces Massive Online Master’s Degree in Computer Science,” May 14, 2013, www.gatech.edu/newsroom/release.html?nid=212951.
30. Martha C. White, “The $7,000 Computer Science Degree—and the Future of Higher Education,” Time, May 21, 2013,  http://business.time.com/2013/05/21/the-7000-computer-science-degree-and-the-future-of-higher-education/; and Georgia Institute of Technology, 2013-2014 Tuition and Fee Rates per Semester, www.bursar.gatech.edu/student/tuition/Fall_2013/Fall13-all_fees.pdf
31. Brian Dodson, “Will Georgia Tech’s $7k Online M.S. in Computer Science Program Make the Grade?,” Gizmag, August 25, 2013, www.gizmag.com/georgia-tech--graduate-computer-science-degree-mooc/28763/.
32. Paul J. LeBlanc, “Disruptive Technologies and Higher Education: Toward the Next Generation of Delivery Models,” in Stretching the Higher Education Dollar, 163.
33. Paul Fain, “Beyond the Credit Hour,” Inside Higher Ed, March 19, 2013, www.insidehighered.com/news/2013/03/19/feds-give-nudge-competency-based-education#ixzz2ZJqR1ElW.
34. Paul Fain, “Experimental College’s First Graduate,” Inside Higher Ed, August 16, 2013, www.insidehighered.com/news/2013/08/16/new-form-competency-based-learnings-first-batch-graduates
35. Audrey Watters, “Hands on with Degreed—Jailbreaking My Transcript,” Hack [Higher] Education, September 27, 2012, www.insidehighered.com/blogs/hack-higher-education/hands-degreed-%E2%80%94-jailbreaking-my-transcript; and Degreed, “What is Degreed?” http://degreed.com/about.
36. Paul Glader, “Five Questions With An EdTech CEO: Will Accredible.com Certificates Succeed?,” WiredAcademic, April 22, 2013, www.wiredacademic.com/2013/04/five-questions-with-an-edtech-ceo-will-accredible-com-certificates-succeed/.
37. Smith, “Public Mandates, Private Markets, and ‘Stranded’ Public Investment,” 183–203.
38. Andrew P. Kelly and Kevin Carey, “Conclusion,” 215.

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