Unbundling: Could It Make Education More Affordable?

Those who cannot afford a university degree face career earnings that are substantially lower than those who are college graduates, and recent university graduates are burdened by an average of $29,000 in student loans.  The high cost for attending college is a troubling issue for both groups.

The average annual undergraduate attendance cost for a public school in 2011-2012 was $12,410.  Attendance cost at a private, non-profit university was $34,136.  Taking a specific school, at California State University Northridge, the 2011 overall cost for a full time student was $11,000, lower than the national average.  Northridge’s cost breakdown was; instruction (49%), student services (18%), academic support (13%), institutional support (11%), and operations and maintenance (8%). Miscellaneous administrative functions for this school cost 43% of the total?

Administrative costs of 43% are oppressive even though some result from well-meaning federal mandates such as on disability rights, minority rights and public health issues.   These costs should not be hidden from tuition-paying students.  Rather, the scale the school’s administrative costs should be highlighted.  Students may cease reflexively approving unfunded federal “largesse” if they are aware of how much administrative costs add to their personal debt.

A small change in a university’s packaging could help rein in student costs.  Instead of offering students a bundled, resort-like experience with an all-in tuition and (mandatory) student activity fee, universities could unbundle their offering into an essential core and optional extras priced as à la carte experiences.

The essential core for a university would be an accredited baccalaureate or advanced degree.   The courses making up the baccalaureate could be delivered by either the university itself or other accredited institutions.  The university would take on the role of savvy coordinator, advising students on which selections of courses meet the requirements for the degree they seek.  The courses may be conventional lecture hall and laboratory fare at the university, or self-study / MOOC courses from elsewhere.

Universities would likely select courses from elsewhere that are especially good, presented by renowned teachers, or which round out academic topics that the university does not cover, or that are unusually low-priced, despite meeting accreditation.  Universities that use offsite courses to supplement topics offered by their own faculty will initially be able to conserve faculty costs.  In turn, conserved funds can be focused on academic areas where the university wants to excel through more depth of faculty.

The university will probably want to continue offering the following services, but they should be priced as à la carte electives; campus orientations and celebrations, sporting event tickets, dormitory rooms, food plans, health club variations, access to student lounges, study halls, and physical libraries, and studies abroad.

Truly busy students or those who struggle to afford school costs would regard these as irrelevant, frivolous, or costly.  Students who want the party-school or intensive socializing atmosphere can still opt for it and pay for it.  There should be no levy on students who cannot afford partying but are forced to subsidize the partiers.

A good education is an important start toward a successful career.  Arranging a degree program that avoids unnecessary costs would be a much welcomed public service.  There is no justification for schools to demand payment for “also-ran” courses, or for resort-like campuses, or follies like subsidized sports tickets.

Alan Daley is a retired businessman who writes for The American Consumer Institute Center for Citizen Research

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