Peter Morici: How universities will reinvent themselves for the better

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Faculty at my university recently received a call for proposals to develop innovative online courses—especially large enrollment, introductory courses—for the fall semester. Similar initiatives across the country will prove as disruptive to my colleagues as automation was for assembly line workers.

Lecture classes with hundreds of students are essential to the business model of residential universities. Those pull down average course delivery costs and subsidize smaller seminars, supervised field work and the personal instruction necessary to deliver high-quality programs from anthropology to zoology.

Without a COVID-19 vaccine and with social distancing, large lectures simply aren’t feasible but tripling the number of sections significantly diminishes their financial efficacy. And I doubt social distancing can really be adequately accomplished with 18 to 21-year-old students whose inherent nature is to discount risks.

A quality learning experience can’t be delivered simply by putting ordinary lectures online. In economics, concepts such as price elasticity of demand and the social costs of product differentiation require some direct contact with faculty.

Once a course is substantially automated, it can be offered again and again with low costs for updating, but the saving can only be accomplished by eliminating tenured faculty.

Blended learning—featuring professional quality videos, custom integrated reading materials and exercises and online direct access to faculty and teaching assistants—can do the job. Apple’s very successful Worldwide Developers Conference offers a leading private-business example.

The bad news for many faculty is once course content is perfected the Caruso Effect takes over. Before the famed opera singer, most cities had local performers and music halls but his career coincided with the commercialization of the phonograph. Suddenly, stars at the Metropolitan Opera and Vaudevillians at the Palace in New York could be heard everywhere—again and again.

Caruso even had his own brand of olive oil.

Radio and talking motion pictures followed. The likes of Nelson Eddy and Jeanette MacDonaldMaurice Chevalier and Al Jolson turned vaudeville theaters into movie houses and displaced less-famous performers.

Similarly, most biology departments would be challenged to match the production quality and teaching value of Eric Landers’s Introduction to Biology at MITit already reaches over 130,000 students per semester.

Most universities have lagged terribly at exploiting technology for instruction and been reluctant to outsource the standardized content such as in 101 courses.

The startup costs for truly high-quality, engaging content is terribly high. Once a course is substantially automated, it can be offered again and again with low costs for updating, but the saving can only be accomplished by eliminating tenured faculty.

The latter would start a revolution unless the only alternative was to disband departments altogether or close universities. And, university presidents and admissions officers have justified skyrocketing costs and tuition with the uniqueness of their institution’s learning experiences for so long now they believe their own advertising.

Savvy administrators and faculty see the future much as early auto makers anticipated the end of the horse and buggy.  

Harvard University offers an online liberal arts degree for $60,000 plus the expenses associated with taking four courses on campus. The average cost of attending a private college is nearly $200,000

The University of Illinois offers an online MBA program for $22,000, a fraction of the cost of the residential alternative. It features micro-emersions for students to connect on projects and work with regional companies.

Over the last two decades, college tuition and fees, net of discounts, rose 172%—health care went up 99% and overall inflation was 53%. That has been sustained by students amassing a $1.5 trillion debt, the influx of foreign students who pay out-of-state rates at public universities, which enroll about three-quarters of all students, and many domestic students traveling far from childhood homes to pay out-of-state rates.

Tighter restrictions on student visas and more costly air travel as adequate social distancing is implemented will reduce the number of students paying the highest tuition in public and private institutions.

Even before COVID-19 crisis students were pushing back on big price tags. Since 2016, more than 60 institutions have closed or merged into other schools, and 30% of schools rated by Moody’s Investors Service were in the red.

The COVID-19 crisis will pass but now that universities have been jarred loose from their hidebound ways, competition for students seeking value will drive change. The industry will consolidate, and many fewer tenured professors earning six-figure salaries will be needed. Lesser known institutions will close, star performers will be paid much better, and prices should fall.

The West has got to make China play by the rules

Are universities morphing into Orwellian states?

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