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The Cost Of Higher Education: A Proposed Solution

Posted on Tuesday, Sep 6th 2011

The cost of higher education has become a hot topic, especially in light of the outrageous levels of youth unemployment in America and Europe. The average price of tuition at American four-year colleges, in constant 2007 dollars, climbed from $8,552 in 1980 to $20,154 in 2009. Outstanding student loan stands at over a trillion dollars at the moment, and thought leaders like Peter Thiel have taken aggressive positions against education bought at these prices.

I happen to be a believer in higher education, but the cost issue is a real one, and it needs a solution. This post is a reflection on the subject.

Today, New York Times has a massive discussion under way about Texas Governor Rick Perry’s College Plan:

Everyone knows that if you are going anywhere in today’s economy, you have to go to college first. But that poses a serious economic dilemma because, at current costs, the nation simply cannot afford all the college that its citizens need.

Governor Perry’s proposal is refreshingly precise, and far more realistic than some people think. Its flaw is that it doesn’t go far enough.

That is why Gov. Rick Perry’s challenge to the Texas university system to provide a four-year bachelor’s degree for a total cost of $10,000 is so intriguing.

The article goes on to quote Bill Gates:

Further, Governor Perry’s plan is not as outlandish as some might suggest. In fact, to some extent, he proposes a world that is already within sight. Community colleges currently offer solid certificates and two-year degrees in the $10,000 range, and more than a dozen states are allowing such colleges to offer low-cost B.A. degrees. Bill Gates, for one, predicts a time when top-notch Web-based degrees will be available for $2,000.

The real flaw in Governor Perry’s plan is that it does not go quite far enough. We would argue that his focus should not be solely on offering affordable college degrees, but also on linking these degrees to real jobs.

If Governor Perry’s plan can do that — educate and place, say, a nurse, a teacher or an accountant for $10,000 — then more power to him.

I believe, Bill Gates has come to the conclusion, as I have, that the only way to get to an affordable higher education (or any kind of education, for that matter) that can also preserve quality, is by using technology. Bill has drawn inspiration and validation from Salman Khan’s Khan Academy, an online repository of video lectures, tests, etc. that students all over the world are using to learn everything from Physics to Mathematics to Art History. What’s even more revealing is that teachers, instead of trying to teach a certain subject themselves by preparing their own lesson plans, are assigning Salman Khan’s lectures as homework, and then using the class time for discussion and live exercises based on those lectures.

This phenomenon is converting the teacher from ‘sage on stage’ to ‘guide on side’, to quote Cheryl Vedoe, CEO of Apex Learning, and successfully mitigates the fact that the world is full of teachers who are not educated enough to teach a subject like Physics or Calculus.

The 1M/1M program for teaching entrepreneurship is such an endeavor – not to deliver a degree or a diploma, but to educate a large number of entrepreneurs in the art and science of building a sustainable business. The beauty of the program is that instead of going out to look for a job, graduates of the program can create their own. And it also mitigates the issue that most people trying to teach entrepreneurship around the world are neither qualified nor capable of doing so.

The program draws inspiration from Salman Khan, with one notable exception: while Khan Academy is free, and operates as a non-profit, 1M/1M is a for-profit business, and members pay a $1000 annual membership fee. Still well within an extremely affordable price range, enough to democratize entrepreneurship education, and address the stratification that we have experienced over the last few decades.

To the New York Times columnist Anthony P. Carnevale, author of the piece quoted above, I’d like to offer a simple solution. How about, if we take the Community College system that is successfully running through the length and breadth of America, and layer 1M/1M over it? An affordable college education combined with an equally affordable entrepreneurship education may create a generation of youth that can, finally, take destiny in their own hands.

Is it not worth testing?

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Yes, your idea is certainly worth testing. In addition to 1M/1M, Steve Blank has various start-up and entrepreneurship teaching material, and Perhaps a suitable combination could be readily offered on a on-line or hybrid fashion.

Mohan Narendran Wednesday, September 7, 2011 at 6:55 AM PT

I don't know about USA. After looking into the Indian experience myself, i feel the same might be applicable to USA. Please correct if i'am wrong.

In india the tuition fee+all other fees that a college charges for a engineering education is now 100 to 200 times higher that what it was 15 years back. The reason simply is because there is no government regulation and colleges here in India mint money and make huge profits. Colleges have become like money making machines. While there is regulation in all departments, In education there is no real regulation and no questions asked on the exorbitant fees.

In the USA, i feel it the same story, colleges provide extravagant facilities and expect students to support the extravagant ways of getting the eduction. and again in USA too, colleges are run for profits and no meaning regulation from govt.

Unless this is corrected, this is not going to improve either in India or US. This is the root cause.

Note: I recently checked with a reputed college in USA for a online post graduate programme and the tuition fee they told me was amazing US $100000 which translates to Rs 4500000.
I simple could not understand what they will do with kind of money.

aeve Monday, September 12, 2011 at 3:04 AM PT

Sramana, I think the topic of providing economic and quality education is a very important one. I agree with you that we have to use technology in order to bring down the cost.

I am trying to do something similar with I am adding applied computer science courses, such that 3 – 4 courses will give a student enough knowledge of software development, to get them started with a real job. After that they can continue to engage in life-long education and enhance their skills.

I think a large part of the cost of colleges is to keep all the fences and checks required with grading students.

With this in mind, I am trying to build as an environment which empowers learning. Unlike an institution it does not give grades or certificates. It offers students – community, interaction, and the ability to create a portfolio of their learning. A student's portfolio and reputation becomes their certificate.

What are your thoughts on this approach? I think it is possible to draw an analogy to startup education, where the success of the startup is the grade, rather than an 'A' or 'B' grade in an "Internet Marketing" course.

Parag Shah Monday, September 12, 2011 at 4:02 AM PT

any one with common sense knows that online education should cut costs and tuition fees and examination fees should reduce drastically, however looking at the tuition fees charged currently for online programs makes one feel there is no economic gains but pursing online courses. Colleges should come out of the profit making mentality..
Today i know it is becoming increasingly difficult for students in india to pursue quality education due to high costs. in particular it is now becoming a dream for people in rural parts of India to study in good colleges due to exorbitant fees.

aeve Monday, September 12, 2011 at 4:47 AM PT

Yes your idea is indeed worth trying Sramana…you are already showing them the way to do it via web with your program…as you know I have been pioneering mobile learning since 2004…my vision too is to make learning accessible and affordable…mobile and web…provide the solution to reduced fees and provide accessibility to learning :)

rani wemel Monday, September 12, 2011 at 5:09 AM PT

I agree and support your argument.
Also I would like to add that the real solution is not just manipulating fees figures to be damn low. I have seen a lot of government and/or government aided Higher Technical Education Institutions in India doing extra-ordinary job in giving good education & foundation at a very reasonable cost. I myself have studied in one such institution College of Engg. Guindy, Anna University, Chennai. Also there is other one PSG Tech, Coimbatore, India.
To be more proud enough, I myself have provided affordable Education & Training, Tuition services for both school students here in Chennai & engg. students from various colleges in TamilNadu, India.
In my opinion & experience Its not about playing the fees number game. Instead the focus should be on Stringent Government Regulations, Building Efficient Teaching Capacities among the teachers.
Nothing can replace and is as efficient as class-room teaching. Because all other modes like sharing video lectures etc are passive mode of knowledge sharing, but class-room mode is the best active-mode I have ever seen.


Selva Monday, September 12, 2011 at 7:36 AM PT

Many colleges/universities are bloated. Not only are professors "tenured", but many employees. For example, I've heard one Yale employee was caught selling drugs to students and wasn't fired. Another ran a hot dog stand during working hours and not fired. No one should have guaranteed employment.

splinter Monday, September 12, 2011 at 8:04 AM PT

As I told you when you pitched me in Pune, your approach could work just fine. It is a matter of execution.

Sramana Mitra Monday, September 12, 2011 at 8:28 AM PT

Yes, but today’s classrooms don’t have to just be physical classrooms. Have you ever attended a 1M/1M Strategy Roundtable? That’s an example of a 21st century classroom, over video conference.

Sramana Mitra Monday, September 12, 2011 at 8:29 AM PT

Good post and discussion topic, Sramana. I, too, believe that higher education is essential to long-term success in the US, particularly in a world that increasingly focuses on knowledge workers vs. blue collar workers. I also agree that the more that we can tie education to the attainment of employment upon graduation – something that business, medical and law schools have done for a long time – the better.

One challenge is the current pure academic focus of many undergraduate programs. I'll use my son's recent experience as an example. He finished his undergraduate program at a top national university not only with no preparation for a job, but with little assistance from the undergraduate placement office. He received his B.S. in 2009, a daunting time for undergrads to find jobs. So he elected to pursue a one-year business Masters degree, also at a top program, which he paid for with student loans. What a difference! From day one the focus was on preparation to land a job including interview skills, resume preparation, and an actively engaged placement office which assisted him in his job search. The result was that he and most in his class had jobs upon graduation this spring.

This is what ALL institutions should be doing, at all levels.

Sandy McMahon Monday, September 12, 2011 at 9:13 AM PT


I agree that you can only replace the regular classroom lectures with online stuff.
What about the lab, Informal tech discussions, chats with professors, collegues in college, Hobbies ? I think online course cannot replace a regular bricks and mortar course 100%.

aeve Monday, September 12, 2011 at 11:09 PM PT

Unless you are talking about dissecting animals or corpses or some other form of ‘practical’ lab work, almost everything else can be very effectively replaced.

Sramana Mitra Monday, September 12, 2011 at 11:11 PM PT

Except for computer science related courses. it will be very difficult to have a 100% online programs for other subjects. (Civil, mechanical, chemical, catering, medical programs, nursing, mining leather….). These programs are very practical. I suspect you may be from a CS background which makes you biased towards online without your knowing about it. I accept computer science courses can be replaced by online programs completely
Moreover where is the human touch ? nothing can replace hanging out with colleagues in classroom or campus.
I would say it should be a judicious mix of both online and physical classroom

aeve Monday, September 12, 2011 at 11:40 PM PT

You are right, but a lot of what is taught in Engineering in general is (a) Theory (b) CAD. That, in my opinion, can be taught online plenty fine.

On interaction, I do not agree with you. Interaction can be very rich and interactive online, and from our experience with 1M/1M, virtual classrooms are working great.

Sramana Mitra Tuesday, September 13, 2011 at 9:15 AM PT

My son took a remote class and hated it. I am sure it sounded good on paper and no doubt some entrepreneur made money on it, but it never worked well at all. It was virtually impossible to communicate in real time with the professor.

Frances Griffin Tuesday, September 13, 2011 at 11:39 PM PT

Hi Sramana,

Great post. Great topic. Long overdue in our national and global conversation.

Are you familiar with the "open courseware" movement, in which premium schools like MIT, Stanford, UC Berkeley, etc. are making their course materials available online for free?

I'm working with some colleagues to create an institution that will adopt those free courses, surround them with an academic "wrapper" so they can be academic credit-worthy and package them into degrees.

The plan is to offer a basic, self-paced course for free, and charge (reasonable) fees for facilitation and services.

As we've assembled the package we've noticed that the quality is unsurpassed. The program is quite heavy in the arts and sciences. So imagine your physics "prof" is none other than the great Richard Feynman. And your econ series a debate between the macro specialists at UC Berkeley and the great Austrian Murray Rothbard at NY Polytechnic.

Underlying this great content we're assembling an a-team of faculty mentors, literally using the term "guide" as you do above (or Cheryl Vedoe does, anyway). The idea is for the "guide" professor to assist students through the materials, assignments and exams.

We envision an institution that captures technology, moves the "free" line in higher ed and preserves – actually uplifts – the quality level of the degree.

If we join 1M/1M, will you help us? ;)

Todd Wieland Wednesday, September 14, 2011 at 7:37 AM PT

There is, like everything else, a lot of crap out there. Please ask your son to join 1M/1M, instead of some shady program.

Sramana Mitra Wednesday, September 14, 2011 at 11:55 AM PT

Yes. There is a project in my Vision India 2020 book along these lines, called MIT India, and I am intimately familiar with OCW. I think your kinds of models would be very powerful to build.

Sramana Mitra Wednesday, September 14, 2011 at 11:57 AM PT


This is a great post, I just came across it recently but think it still applies!

With so much free high quality educational material becoming available the alternative to a $100k degree is self study.

How the large institutions will work to maintain their extremely high premium on teaching material that be received online for free is going to be a challenge over the next 10 years.

Thanks for the great post.


Jone @ Student Loan Monday, October 8, 2012 at 9:37 AM PT