The high cost of free college

College leaders speak on 2016 election issues
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Story highlights

  • Julia Freeland Fisher: Hillary Clinton is proposing free tuition for public colleges, universities
  • She says Clinton's plan would do nothing to deal with the inefficiency of higher education

Julia Freeland Fisher is the director of education research at the Clayton Christensen Institute, where she leads a team focusing on innovation in education. The opinions expressed in this commentary are hers.

(CNN)Over the course of her campaign, Hillary Clinton has floated a bevy of ideas to improve higher education in America, but one proposal has struck a real chord: free college.

Last month, Clinton announced a distinctly Bernie Sanders-esque proposal to eliminate tuition at in-state public colleges and universities for families with annual incomes up to $125,000. Although well-intentioned, the proposal risks focusing the nation's higher education reform agenda on the wrong side of the affordability equation. Free college may allow more students to "afford" college, but it won't actually make college more affordable -- and that's a hugely important distinction.
    Rather than ratcheting up aid to meet ever-increasing price tags, we must get at the root of the affordability crisis by addressing the most fundamental component of any organization: the business model. Although a portion of mounting tuition rates can be attributed to decreases in state-based funding, a closer look at the traditional business model of higher education reveals a stockpile of embedded inefficiencies and warped incentives.
    The largest problem, by far, is that the vast majority of higher education institutions pursue three distinct and often incongruous business models: producing research, providing instruction and preparing students for life and careers -- all bundled together. As my colleagues Professor Clayton Christensen and Dr. Michelle Weise have noted, this results in a surge in overhead and direct labor costs with universities dramatically increasing their administrative capacities to cover these different and conflicting value propositions.
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    Troubling inefficiencies have also arisen out of a subset of colleges' attempts to compete on the basis of infamously indulgent non-academic offerings -- rock climbing walls, lazy rivers and extravagant student housing facilities, to name a few -- intended to lure students, particularly those who can pay full tuition. In 2012, there were at least 157 recreational projects in progress at 92 U.S. colleges, representing more than $1.7 billion in new construction and renovation. These costs are inevitably passed along to students, even though the amenities do little to predict the value of a degree down the line.
    We tend to tolerate these broken business models in part because the accreditation and ranking systems do little to weigh the actual value a college delivers, such as how graduation rates of low-income students, earning potential and job placement rates from different colleges stack up against one another.
    This is particularly troubling given that employers are increasingly frustrated with what colleges and universities are producing; Gallup polls reveal that although 96% of chief academic officers believe they are doing a good job of preparing students for employment, only 11% of business leaders agree that graduates have the requisite skills for success in the workforce.
    Merely subsidizing tuition, then, is unlikely to offer a proportionate boon to economic productivity among graduates who leave school underprepared for the workforce, not to mention those who don't make it to graduation in the first place.
    So how can we honor this noble intent -- expanding access and affordability to post-secondary education -- without propping up a system rife with inefficiencies?
    For one, we should take a page from Clinton's VP pick, Tim Kaine, who has called upon the system to embrace higher education alternatives. We are seeing these potentially disruptive approaches emerge from outside traditional higher education. They are generally simpler and more focused, and can consequently sidestep many of the quagmires plaguing traditional institutions.
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    They don't look like traditional higher education either. Many do not have four- or even two-year programs; they lack breadth; they do not aspire to accolades in academic research; they don't have luxury residential facilities.
    Coding bootcamps, for example, offer short, intensive programs that help students find jobs with their new skills. These experiences cost students between $5,000 and $15,000, and show extremely promising post-completion employment rates. One provider in the space, General Assembly, reports having a 99% job placement rate into a student's field of study.
    Other innovative offerings are coming out of traditional higher education systems themselves. For example, by planting itself outside of some of the traditional cost structures that accompany its central institution, Southern New Hampshire University's College For America (CfA) has managed to offer online competency-based degrees at just $3,000 per year -- a fraction of the cost of a traditional brick-and-mortar degree. CfA partners directly with employers to design their curriculum -- ensuring that students graduate with skills that the labor market actually values -- and allows students to move through coursework at their own pace.
    What sets these models apart is not just the price and flexibility they offer students, but that they are fundamentally reimagining the business model behind higher education and how best to align their offerings to workforce opportunities.
    Many will argue that college offers more than just workforce preparation. There is no reason innovations can't usher in new offerings that allow students to explore the world and their place in it, or to study a range of humanities and the liberal arts. But there is also no reason those experiences should be priced into behemoth traditional institutions' broken business models.
    Simply paying for tuition at existing traditional institutions won't solve our systemic shortfalls or make up for poor business model design endemic to higher education. Clinton would be wise to keep her eye on the real affordability crisis facing higher education today. This means seriously reconsidering which business models the federal government is willing to subsidize -- and would like to see thrive -- on behalf of our students.