COVID-19: Perspectives On The Price of a College Education
One thing is for certain: COVID-19 is here. The appearance of the virus has certainly raised more questions than it has provided answers. It is yet another demonstration of the power of nature to remind us of how much we do not yet know. Perhaps the outbreak is analogous to a timed exam like many of us took during our collegiate experiences; get the testing kits developed, get them distributed, and get them in use within a month, for example. Fortunately, the current situation also demonstrates the resourcefulness and intellectual horsepower of science and medicine, and the selflessness of the medical community to engage the ‘problem’ directly, not unlike our law enforcement community or our armed forces do in their respective areas of responsibility. Although many businesses will be hurt, the current national situation will almost certainly give rise to entrepreneurial adventures that no one would have foreseen just a year ago. Frequently, human ingenuity produces outcomes or ‘work-arounds’ that are borne out of circumstances such as we are currently experiencing in order to allow us to continue on our journey, albeit perhaps via detour. And so it is in higher education as that industry adapts to the current circumstances. Many colleges and universities are closing for a few weeks or longer, some in conjunction with ‘Spring Break’. Many are moving in a significant way to the delivery of their educational products online (see Quitana, Chris; College closings: More than 100 colleges cancel in-person classes and move online, USA Today, Max Londberg and Erin Glynn, March 11, 2020). The purpose of this brief article is to visit a few questions that students and parents might be quietly asking themselves with respect to the price and cost of the traditional process of education delivery by our colleges and universities.
In response to COVID-19, many colleges and universities, both domestically and internationally, have chosen to move to the internet for the delivery of their educational programs. New York University (NYU) Shanghai campus, for example, moved almost 500 courses online months ago as a result of conditions in China relative to COVID-19. Because of the restrictions placed on travel, and quarantines by the Chinese government, NYU Shanghai was likely faced with the alternative of adapting to the circumstances, or closing until the pandemic had passed. And while many of their faculty (up to 88% by some estimates) had no experience teaching online courses, they seem to have done just fine making the transition. The advertisement is that NYU Shanghai campus has adapted and the quality of the education is fine. The President of NYU Shanghai remarked recently that the pandemic had forced the university as a whole to scrutinize its pedagogies more in the last 7 months than it had in the past decade. If the previous two statements are true, they may be laudable on the one hand. On the other hand however, they are a bit alarming. First, if the hypothesis is that the quality of the education online is as good as attending classes in a brick-and-mortar classroom (as many colleges and universities are now maintaining given the current circumstances), then why would one choose to pay the monetary price to physically participate in a classroom setting, perhaps other than the socialization aspect? Second, one might assume that a college or university would always be thinking and questioning their pedagogy because after all, thinking is what colleges and universities are supposedly all about. So what might some of the implications be for the cost of delivering the educational product?
Cost is normally defined as the expense incurred for creating a product or service to be sold by a company (a university in this present discussion.) Price, on the other hand, is most often defined as the amount a customer (a student in the the current discussion) is willing to pay for the product or service. The difference between the price paid and the cost incurred is profit. The following two examples illustrate the difference in price (tuition) of a private university versus that of a public university, does not account for grants or scholarships, and is not intended as an in-depth analysis. Both schools in the examples offer similar business degrees. NYU Stern School of Business has an undergraduate population of approximately 2629 students, and advertises that for the 2019-2020 school year, the undergraduate tuition (both in-state and out-of-state) and ‘mandatory fees’ are $54,896.00. (See https://www.nyu.edu/admissions/financial-aid-and-scholarships/tuitionstern.html.) NYU has a total student population of 51,123 and an endowment of $4.35 billion. The University of Arizona Eller College of Management has an undergraduate population of approximately 5440, and advertises that their undergraduate tuition (out of state, as it is higher) and ‘mandatory fees’ for the 2019-2020 school year are $37,300. (see https://eller.arizona.edu/admissions/cost#tuition.) Arizona has a total student population of 44,831 and an endowment of just over $1 billion. Big numbers from any perspective.
The colleges and universities that have recently gone online join a large number of institutions that have been online in some fashion for a up to a decade or longer. In many cases the long time online programs had a stigma attached to them because they did not provide a significant in-residence experience, therefore they were perceived by some in academia as inferior. This seems less so in the past few years. If the current situation with COVID-19 persists for a protracted period, or if a future pandemic were to strike which necessitated prolonged avoidance of crowds, will colleges and universities react and adapt to future scenarios as we are seeing them react to COVID-19? When the student body is physically removed from a college or university campus, the infrastructure of the institution remains. It would seem that the ability of higher education to be delivered in an online format by an institution in the long run might lead to a decreased need for brick-and-mortar infrastructure at the institution, which might translate into a decreased cost of operations to the colleges and universities. No doubt there would be contrasting opinions. While the programs that have recently gone online are probably of good quality, once the COVID-19 threat has passed, will those in the education industry opine that an in-residence program is a superior way to deliver their product? An interesting comparison would be the analysis of the cost to an institution of one year of operations with the student body in-residence, and the cost of one year with the student body not in-residence but participating in an online setting instead. One of the assumptions is that the institution would be able to deliver all of its offerings in an online format. Realistically for certain disciplines, that would probably be a physical impossibility. Clearly, colleges and universities are going concerns and cash is the life blood. If a protracted pandemic type scenario were to present itself such that, in order to protect students and faculty, the entirety of the educational programs were moved online for remote delivery, would an institution realize any cost savings and perhaps change its tuition structure? More importantly, if they did, would they pass that savings along to the bill payers?
The 2019 U. S. student loan debt as reported by The Motley Fool is $1.59 trillion spread across some 44.7 million borrowers. (see https://www.fool.com/student-loans/student-loan-debt-statistics/ for a complete analysis.) Those are alarmingly large numbers. There are several contributing factors. They include inter alia: The ready availability of the loans, the siren’s song of obtaining a prestigious named college or university on a degree, and the false implication that a college degree equals employment. Many students were likely not concerned about paying back the debt for the education. Now the student loan situation has spilled into the political arena with political candidates of all stripes calling for debt forgiveness, at least for the federal loans. That potentially implies that the college or university would have been paid, the student got their college experience and may (or may not) have received a degree, and the U. S. taxpayers are left holding the bag. Maybe the COVID-19 pandemic will be instructional to those in the education industry. Perhaps the exigency of (in at least 100 cases) offering program courses in an online format will facilitate more frequent analyses of pedagogies by colleges and universities with an eye toward containing the costs associated with in-residence degree programs. Who knows? It might be good for business.