Digital Economics is Transforming News Media; Are Universities Next?
The Wall Street Journal reports today that student loan borrowing for college "in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion," with the average student borrowing $13,172 to pay for college. So it should come as an enormous relief that one Internet start-up, StraighterLine, has essentially made the university fully virtual, offering classes for just $99/month. While this may seem like a boon for students, especially the millions of Americans for whom even community college tuition seems an insurmountable obstacle to climbing up the economic ladder, such "e-Learning" offerings are already, predictably, coming under attack by entrenched interests in "Big Ed" (the professoriat!) as the "media-software-publishing-E-learning-complex."
Colleges are caught in the same kind of debt-fueled price spiral that just blew up the real estate market. They're also in the information business in a time when technology is driving down the cost of selling information to record, destabilizing lows.
In combination, these two trends threaten to shake the foundation of the modern university, in much the same way that other seemingly impregnable institutions have been torn apart. In some ways, the upheaval will be a welcome one. Students will benefit enormously from radically lower prices--particularly people like Solvig who lack disposable income and need higher learning to compete in an ever-more treacherous economy. But these huge changes will also seriously threaten the ability of universities to provide all the things beyond teaching on which society depends: science, culture, the transmission of our civilization from one generation to the next.
Whether this transformation is a good or a bad thing is something of a moot point--it's coming, and sooner than you think.
Here are Bob Litan of the Kauffman Foundation and Brink Lindsey of Cato with a good, wideranging discussion of the Fannie/Freddie mortgage meltdown, the prospects for free-trade and globalization, and how to fix American K-12 education.