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The $10,000 Question

February 14, 2011

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Texas prides itself on being a place where everything is bigger. But when it comes to higher education, Governor Rick Perry does not just want the price tag of a four-year bachelor’s degree to be smaller. He wants it to be the smallest.

“Today, I’m challenging our institutions of higher education to develop bachelor’s degrees that cost no more than $10,000, including textbooks,” said Perry on Tuesday in his “State of the State” address.

“Let’s leverage Web-based instruction, innovative teaching techniques and aggressive efficiency measures to reach that goal,” he said.

Perry is not the first Republican governor to turn heads by suggesting that colleges could use technology to vastly reduce the cost of degree programs without sacrificing quality. Last summer, Tim Pawlenty, then the governor of Minnesota, suggested that students should be able to pay $199 per course for “iCollege.” (While Pawlenty was inspired by Steve Jobs, Perry’s muse was rival tech cynosure Bill Gates. At a conference in San Francisco last August, Gates said that a four-year bachelor’s program should cost $2,000 per year, not $20,000. Accounting for textbooks, Perry’s math roughly matches Gates’s.)

But while Pawlenty appeared to be speaking rhetorically and perhaps a bit in jest — he proposed the idea on “The Daily Show with Jon Stewart,” not from the bully pulpit — Perry is deadly serious. “He wouldn’t be challenging universities to implement it if he didn’t think it could happen,” said the spokeswoman.

So, can it be done?

If so, Texas’s higher-ed institutions will have to come up with something nobody else has tried, says Jane Wellman, executive director of the Delta Project, which focuses on costs and productivity in higher education. Even the most efficient online colleges —for-profit companies, which have the advantage of highly centralized governance structures — cannot match that $10,000 end-to-end sticker price, she says.

“It’s a number in search of a model,” says Wellman. “It’s like the [U.S. Congressional] Republicans saying they want $100 billion of budget cuts.”

The book on online education is that while it increases the capacity of classrooms and eliminates the costs associated with buying and maintaining buildings, high-quality online courses are costly and require substantial upfront investment; instructors have reported that teaching well online often is more time-consuming than classroom teaching, and high-quality delivery platforms are expensive. And buying prefab courses from commercial providers, a tack that can cause unrest among faculty, can only defray the cost of delivery to a point. (Several Texas officials said that, since the governor’s pronouncement, they had not heard anyone talk about outsourcing facets of higher education.)

“Over four years, I don’t know how that’s possible,” says Wellman. Even shooting for a $20,000 or $30,000 price tag for all four years would be “ambitious,” she says. “This is going to require alternative delivery and cost structures, but also doing it in a way that keeps spending from going up,” Wellman says. “And that hasn’t happened anywhere, not even in the for-profit sector.”

A parade of higher education leaders through the state house this week largely failed to produce any bright ideas, says State Sen. Judith Zaffirini, a Houston Democrat who chairs the senate committee on higher education. The committee heard the testimony of officials from the University of Texas System, Texas A&M, Texas Tech, and the community colleges, asking each about the feasibility of the governor’s proposition.

“Nobody answered positively or optimistically,” says Zaffirini.

Pockets of optimism have been reported elsewhere. Some possible leads could come from a handful of community colleges in the state that offer a special bachelor’s degree in applied technology for close to $10,000 over four years. South Texas, Brazosport, and Midland community colleges offer four-year applied technology degrees with concentrations in fields such as industrial management, computer and information technology, and technology management. But whether those programs survive proposed funding cuts in this year’s state budget remains an open question, according to the Texas Tribune. Besides, the idea behind Perry’s call to arms is to offer various degrees for that low, low price, says a spokeswoman for the governor’s office.

Mary Dean Aldridge, executive director of the Texas Faculty Association (and a former instructor at South Texas), criticized Perry as naïve. “We aren’t California,” Aldridge said. “We have huge disparities in technology. I taught down in Rio Grande Valley and had kids who not only didn’t have computers, they didn’t have electricity.”

State Sen. Dan Patrick, a Houston Republican, says bringing down tuition costs at bachelor’s programs need not involve building online programs. Alternatives such as awarding college credit during the final year of high school, or creating partnerships that would allow community college students to slide seamlessly into bachelor’s programs at state universities, are also on the table, Patrick says. Everything is.

Wellman, the Delta Project director, said that even though she thinks the governor’s goal might be criticized as unrealistic, that does not make it irresponsible. Texas currently ranks 43rd among the states for proportion of citizens with any college degree at all. Being the first to lower the cost barrier to four-year degree programs down to the threshold of four figures might not fix everything, but it could help shock the state’s education system out of inertia.

“I don’t know how they get there,” Wellman says. “But working on a solution to their attainment problem is just what they need to do.”

For the latest technology news from Inside Higher Ed, follow @IHEtech on Twitter.

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Comments on The $10,000 Question

  • Cost, not price
  • Posted by Jane Wellman , i at Director on February 14, 2011 at 6:30am EST
  • Just to clarify, it's a $10,000, BA Cost (not price) of a degree I'm referring to as something that hasn't been done, It's possible to have a $10,000 PRICE (tuition or sticker price) if the state (or someone else) pays for the other costs of the degree. But I've not seen a BA program that only costs $2,500/year or anywhere close to it.
  • DETC schools are the answer
  • Posted by Steve Foerster , an adjunct IT instructor at a Midwestern community college on February 14, 2011 at 7:30am EST
  • There are a number of DETC-accredited for profit schools that cost nearly as low as ten thousand dollars total for a Bachelor's even when books are considered. Ashworth University, Penn Foster College, and Andrew Jackson University come to mind.

    Perry's goal is a challenge, but it's reachable. Asking existing educrats to implement it is probably not the best way to go about it, though. In fact, since Perry's supposedly so keen on the private sector, perhaps he should simply make a deal with one of the existing private ultralow-cost distance learning institutions. All that public institutions in Texas would have to do would be to accept those credits in transfer, if they don't already.
  • It's Possible, and Being Done Right Now
  • Posted by Naomi at University of the People on February 14, 2011 at 7:45am EST
  • Have you checked out University of the People (UoPeople)?

    UoPeople is a tuition-free, online University offering Business Administration and Computer Science.

    To answer the "less than $10,000 question," UoPeople’s pedagogical model draws on the principles of e-learning and social networking, coupled with open-source technology and open educational resources.

    You can see more about this tuition-free University at www.uopeople.org

  • Posted by Lesley on February 14, 2011 at 10:00am EST
  • The low cost degree is possible, I believe. Look at the pioneering work of the early years of the Open University in Britain, when access to higher education was very restricted. Not only did those who hadn't gone to university at eighteen have a chance to study for a degree, but they did so at prices that ordinary working people could afford.
    http://www8.open.ac.uk/about/main/the-ou-explained/history-the-ou
  • The Open University
  • Posted by Lesley on February 14, 2011 at 10:00am EST
  • The following link leads to the history of the Open University: http://www8.open.ac.uk/about/main/the-ou-explained/history-the-ou
  • Posted by Sue Donna Moss on February 14, 2011 at 10:00am EST
  • University of the People may be an honest effort, but so far it doesn't even have the state license needed to legally award degrees, so I'm not sure it serves as a very useful example here.
  • Transfer Credit
  • Posted by A.C. Hanes , Team Lead, Online Programs at Waldorf College on February 14, 2011 at 10:15am EST
  • As a staff member at an institution that offers affordable classes online, I know first hand that one of the best ways to lower the cost of education is to be more liberal with transfer credit. I speak with many students throughout the United States (many from the great state of Texas) that are able to transfer in as many as 70 hours from previous colleges and professional training (i.e. Fire/Police/Military). At normal state colleges, these students are required to take/retake courses they completed at other institutions. Making students retake courses they have already completed through professional training or other colleges serves no other purpose than to make the student pay more money to complete their degree. If more institutions would look out for the pocketbooks of their students education would cost much less.
  • Do the Math
  • Posted by Alex Usher , President at Higher Education Strategy Associates on February 14, 2011 at 10:30am EST
  • Here's an easy little back-of-the-envelope math to help understand what this proposal means in practice.

    The basic math here is this: students/prof = (revenue/student)/(expenditure/prof). Assuming that professors direct costs are equal to 50% of total institutional costs, you can make a $2500/year proposition work at the following trade offs:

    If avg. faculty salary = $50,000 p.a., you get a student/prof ratio of 40:1

    If avg. faculty salary is $70,000 p.a ., you get a student/prof ratio of 60:1.

    If avg. faculty salary is $90,000 p.a., you get a student/prof ratio of 72:1.

    Obviously, you could play around a bit with overhead to change these ratios somwewhat, but you get the idea.

    Just a quick look at the common data set gives you an idea of how far away UT campuses are from this. UT Pan-American, for instance, has a student-faculty ratio of 21 to 1. In order to keep this ratio in a world where their income is $2,500 per student per year, UTPA would have to either:

    a) (Assuming faculty salary costs are 50% of overall costs) drive average faculty salaries down to $25,000 p.a. or

    b) Keep faculty salaries at $50,000 and drive all other overhead costs to zero (no buildings, heat, libraries, student services...just people teaching in a field somewhere)

    or something in between.

    Since neither of these options is remotely possible in real life, the only other solution is to drastically drive up student-faculty ratios. While it's certainly possible to do that, there would inevitably be some (probably quite substantial) negative effects on the learning environment.

    The question for the Governor must therefore be: would you want to send *your* kids to such an institution?
  • Cost, or Tuition?
  • Posted by guest on February 14, 2011 at 11:45am EST
  • After reading the speech again, it's not clear to me if he means "tuition" or "cost."

    If it's "Tuition," this is a fairly straightforward cost reduction task. The $10K in 4-year tuition is backed by something like $40K in state subsidies. A $50K bachelors is in easy reach... many schools can reach this. Several for-profit, regionally-accredited schools, for example, work around this price point.

    If it's "Cost," that's another model entirely, from what has been done, but completely possible. It would be a highly asynchronous environment with rigidly defined outcomes. This "cost" is about 25% of current state appropriation levels... this college could be offered for "free" to students.

    It will be interesting to see what happens in Texas. One thing is for sure; the latter will be so incredibly disruptive that I don't see the traditional system ever backing it.

    --- original speech ---

    As leaders like Senator Zaffirini search for more low-cost pathways to a degree, it’s time for
    a bold, Texas-style solution to this challenge, that I’m sure the brightest minds in our
    universities can devise. Today, I’m challenging our institutions of higher education to
    develop bachelor’s degrees that cost no more than $10,000, including textbooks.
    Let’s leverage web-based instruction, innovative teaching techniques and aggressive
    efficiency measures to reach that goal. Imagine the potential impact on affordability and
    graduation rates, and the number of skilled workers it would send into our economy.
  • DETC alternative
  • Posted by Tom on February 14, 2011 at 12:00pm EST
  • If the DETC schools already exist, if they already can serve students anywhere, then why not just let Texas students who want a cheap education get it from one of those schools? They have the option already. (Of course, the fact that they offer only a handful of majors at the BA level is a problem, but not an insurmountable one.)

    Why reduce the availability of choice by forcing public universities to adopt the online model (which, it would seem, is the only possible way to get to a $10,000 degree without significant state support)?
  • funding?
  • Posted by missoularedhead , adjunct at in Arizona somewhere on February 14, 2011 at 1:00pm EST
  • As someone who teaches in a school that just lost 78% of its state funding, I'm wondering, given that Texas is going much the same as Arizona funding wise, how the governor proposes to pay for the infrastructure (both people and capital assets) to provide these $10,000 degrees? You need faculty, staff, IT people…they aren't free, sir, nor are computers or the programs that run them (even if we consider open source software).

    The idea is noble, and yes, I'm all for the idea of lowering student cost for, and thus raising access to, higher education. But in a time of shrinking state allocations, I'm not sure how this is possible.
  • Texas Tuition
  • Posted by Linda , Director/Nursing at Lewis University on February 14, 2011 at 1:15pm EST
  • Who would play football??
  • Transfer credits, et al
  • Posted by Kathleen , Assoc. Prof. on February 14, 2011 at 1:15pm EST
  • I love the idea of transferring credits from institutions whose course descriptions or standards do not even come near to what universities have on their books. I work at a small liberal arts college with very high standards and we have to take in credits from some colleges - then we find out that the transfer students are incapable of doing Calc II at our level after having Calc I transferred in from another place. The same for languages. They might have taken French 101 or 102 at another institution, but they are hardly capable of doing the third semester at our place. I won't even go into writing skills - except to say that many transfers come in with little to no training even though they have taken freshman comp elsewhere. There is also the issue of accreditation. We simply cannot take transfers from places that haven't the accreditation. Can you imagine, too, engineers taking courses at substandard and unaccredited institutions? Would you like the graduate of such a place to be in charge of building bridges? Simply accepting transfers sounds easy - but it's very complicated.

    Isn't it interesting that those who are not at all involved in higher ed know the best about teaching and regulating its costs? I read that Rick Perry had no idea what he wanted to do with his life, so he ran for office. Maybe later on he can get his professorship like Paterson of New York (he's at NYU now as a "professor") and show us what he's made of in the classroom. That would indeed be quite interesting.
  • How the money is applied
  • Posted by m.s.russo , contractor at self on February 14, 2011 at 1:45pm EST
  • It's not hard to imagine or to plan (see below for ideas/discussion) ---it's a "hard-sell" to the constituency (Academics and University Bureaucrats). At the end of the day ---what's in it for them?

    1) On-line teaching, while removing some of the touch & feel, allows a much more personal relationship, if the lecturer/professor promotes it. I have sat at my desk at home and with the right tech (which allows "split out" rooms of 15 students and finger-nail photo images), I can personally assist anyone who needs an explanation. But I have to be willing to be "in the classroom" eight hours a day...and do my research in the other part of my day.
    2) If research and publishing are the "only game" for reaching tenure and seniority, no Academic in their right mind will ever "go for" a $10K tuition. The reason any of the Academic Industry continues to work is because research that is not underwritten by grants is carried on the back of the students and state matching. Simply strip out the research and stop believing the notion that Professors (of any "rank") teach small classes of undergraduates (40:1) at State Universities, it seldom happens.
    3) Identify Academics who simply love to and are exceptional at instruction and then $10K is possible - especially considering per capita for high school and grade school students in Texas. Most University professors have not taught in either Grade School or High School so haven't a clue of the hard work of Educating based on a career salary far inferior to University-stature workers.
    4) If the idea is to award College Credit in High School; then it's not High School anymore but College {like back in the 1860's-1920's}. Many High School teachers who have experience with AP and IB will tell you it's at least a two-year effort to move from "mainstream" High School into a new paradigm.
    5) Who's going to certify those credits [a new bureaucracy/QA teams at one of hte Universities" And which one gets the task and money?) How is the AP program (the powerful College Board lobby)going to react?
    6) For students with no at-home computer access - in the evenings open the High Schools and Grade Schools that are wired and have the students work there throughout the night...leads to better utilization of the currently-owned capital assets; perhaps a security guard or two would be necessary as additional overhead costs.
    6) There remains a caveat, for the students who need access to high tech equipment (e.g. electron microscopes) or clinical liability coverage; there would be courses for study with plus up fees beyond the $10K base. The goal would be to identify which Degree plans must be more expensive and where it would be sensible to reduce costs through consolidation of high cost majors into a pair of sites (e.g. all Health Sciences in El Paso and Houston, all Engineering at A&M and Tech).
    Again, it's not hard to imagine or plan, it's hard to sell and implement given the culture and inertia of the University Industrial complex. If anyone really wants this, there's got to be a pay-off or benefit for the workers who have the public attention and political clout.



  • Posted by Betsy Smith on February 14, 2011 at 8:00pm EST
  • When I got my B.A., it cost my parents less than $10,000. But milk then was 25 cents/quart and gas was 29 cents/gallon. Perry must think that we're still living in the good old days of the 1960s...
  • What is a cheap education good for?
  • Posted by Sandy Thatcher on February 17, 2011 at 6:30pm EST
  • You get what you pay for, and my question is what value such a cheap degree will have in the marketplace when the degree holders are looking for jobs? Not much, I suspect. They will be at the greatest disadvantage in even getting jobs given the tremendous competition among recent graduates these days. If the governor wants to cut the costs of a four-year education, maybe he should urge universities to stop providing high-cost entertainment (like basketball and football) to their students and use the savings to lower tuition? But we know the governor, a big Aggies fan, will never go down this road.---Sandy Thatcher, Frisco, TX