If colleges rethink the way they teach and do business, they can save students and taxpayers billions without compromising their educational missions.
America has a deep problem when it comes to the cost of higher education. You can measure it any number of ways - skyrocketing student debt, ever-rising tuition, strained state budgets. But the most basic and stunning fact today is that, when you factor in what governments spend on higher-ed and what individuals cover in tuition, the country pays about $110,000 for every bachelor's degree and $55,000 for every associate's degree granted, not including other costs like housing and books.
Throwing more money at the problem can't be the only answer -- not when these sums already devour an outsized share of government funding and family income, when net tuition has increased at an average rate of 1.4 percent per year beyond inflation, and when colleges and universities often turn additional support into higher spending. It certainly shouldn't be the answer when there are clear ways the system could be saving money. Our research at McKinsey shows that, when it comes to cost per degree, the top quartile of institutions is 38 percent more productive than the average of their peers. If more schools were to adopt their practices, it would translate into billions in savings for families and governments. Here are just five ideas that could help make college more affordable while maintaining or improving quality.
Make sure students graduate, and graduate faster
The surest way to boost college affordability is to make certain that students complete their degrees and do it quickly. Today, the country spends an enormous amount of money educating students who ultimately drop out before graduation. Only 60 percent of American undergraduates seeking a bachelors degree complete their studies within six years, according to the National Center for Education Statistics. Just 30 percent of students seeking an associate's degree finish within three years. But dropouts aren't the only problem. On average, students who do complete their degrees are paying for more courses and credits than required for their diploma or certificate. That's a waste of resources for both students and the governments that subsidize their tuition -- a waste that makes higher-ed more expensive for everybody.
Schools that do better on these measures, such as Southern New Hampshire University and BYU-Idaho, do several things well. They reduce the odds that students will take extra credits that don't lead to a degree, and they revamp antiquated transfer agreements that wrongly deny students credit for work done elsewhere. Other schools give students support and tools that help them plan the most efficient path to graduation.
Improving today's low completion rates will also require serious strides in K-12 schooling, because a student who isn't ready to do college work in the first place will have a harder time getting a degree. If all undergraduates were college ready when they entered school, for the same cost, the country would add 300,000 additional degrees above and beyond the roughly 2 million it graduates today.
Try new ways of teaching
A number of institutions are finding that, by rethinking their models of teaching and learning, they can substantially reduce instruction costs while improving educational outcomes. Redesign of individual course delivery championed by the National Center for Academic Transformation achieved 35 percent average savings while simultaneously improving outcomes such as attendance, grades, course completion and overall retention in the programs involved. The redesigned courses allowed faculty to incorporate good teaching practices into courses with a large number of students by deploying technology. They added online tutorials and exercise that gave students much needed practice and support, implemented automated assessments and feedback, and increased interactions among students.