By Jim Coleman
Universities sometimes try to explain away soaring college costs by claiming that the services they offer have fixed productivity levels. Because of these fixed productivity levels they are unable to become more efficient, so prices rise (in real terms) relative to many other goods. For example, lectures today are still more or less conducted in the same manner they were by Socrates in ancient Athens. That’s over 2,400 years without substantial productivity increase! The reality, however, is that college costs are soaring not because higher education genuinely has a fixed productivity level, but because colleges simply refused to innovate and serve the changing needs of their customers.
The success of Entrepreneur Burk Smith illustrates that there are plenty of productivity advances to be made in higher education if one is willing to seize them. Smith’s company, SmartThinking started offering alternatives to Universities’ traditional in-house tutoring in counseling services. SmarThinking.com offers a variety of tutoring to students at participating institutions, while InsideTrack.com provides counseling services to students to assist them in staying engaged and on track with their broader life goals. The results have been impressive. By utilizing the internet and moving away from the traditional labor structure of universities, Smith’s services have been able to provide higher quality at a lower price. Perhaps the most appealing aspect is the gains to the student. Not only does their company charge less, but they also have more convenient options. Tutors are available 24/7 on a variety of subjects; they can even turn in essays and receive a detailed critique back in less than 24 hours.
As reported in the chronicle, Smith recently took this concept to the next level by offering accreditated college courses through his newest venture, StraighterLine.com. Students can enroll in college courses for just $399 each. The courses are online so they can progress through the course when they want at the pace they want. There are significant economic gains from this arrangement. Students are offered cheaper more convenient courses, and colleges are able to free up resources; more classrooms will be available for other classes and labor that would have been used to teach intro or remedial courses can be shifted to a higher value use.
Smith’s success shows that there is clearly a demand for these services, and if the academy refuses to innovate, the market will be glad to do so. But first, obstacles in the form of federal regulations and accrediting agencies need to be reworked in order encourage more entrepreneurs to invest in higher education.