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Disrupting College

As Tyler Cowen suggests my view of the college cost conundrum is that this is likely to be tackled initially at the low end. As Mark Kleiman says, to solve the Baumol effect problem in education you’d basically need to start offering something that doesn’t at all look like our canonical image of a college. Incremental change in what the University of Michigan does won’t cut it, you’d need a qualitatively different kind of institution. But to create something that’s qualitatively different from, but as good as, and also cheaper than the University of Michigan would be a mind-boggling logistical and regulatory challenge.

What you could plausibly hope to see happen is the creation of an institution of higher education that’s (a) much worse than the University of Michigan, (b) better than nothing, (c) radically cheaper than the University of Michigan, and (d) scalable. Then you could imagine a model like that moving incrementally up the quality ladder. CAP put out an interesting paper from Clayton M. Christensen, Michael B. Horn, Louis Soares, and Louis Caldera laying out some of the fundamentals here.

I know a lot of people, especially people working in or around academia, find this kind of talk unpleasant. But people thinking about education really do need to confront the Baumol problem. Around the margin, government subsidies can and should step in to make college affordable to talented students from poor families. But tuition subsidies as a share of GDP can’t just rise every year. Either a college education will turn over time into something that only a narrow elite can afford, or else our idea of what “a college education” looks like has to transform into something with a lower cost structure and more scalability. Even people who do focus on the cost-side like Matthew Kahn here often seem to me to be looking too much at the level rather than the shape of the curve. If tuition leapt 50% then stayed flat as a share of income, that would be fine; 5% a year forever isn’t sustainable.

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