Markets Work, Even In Higher Ed: Three Recent Examples

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Many liberal academics complain that universities are increasingly being run on an enterprise model, which arguably means that they are increasingly responding to the financial demands of the markets, reflecting the scarcity that all economies face. I think that despite many (mostly government) imposed barriers, the markets are working to make universities more responsive and efficient.

Creative Destruction: 67 Colleges Die

A major reason for the spectacular success of competitive market capitalism in delivering the goods and services people want is that “creative destruction” is a by-product of market processes – less successful companies die to make way for more successful ones. According to Higher Ed Dive, 67 colleges closed between 2016 and today. That’s less than the late Clay Christensen and others (including myself) predicted, but that’s partly because government bailouts from the pandemic-era saved many schools with life support, at least temporarily. And the numbers are up a bit from previous levels.

The deceased’s colleges were found across the country, but were concentrated in the northeast. Vermont has had more closings (five) than California (three), with over 60 times the population. But the recently announced planned closure of the once highly regarded Mills College in the Golden State (it will likely merge with Northeastern University to avert total identity loss) suggests that even prestigious colleges in historically growing states are vulnerable.

2U buys assets from EdX

Although “MOOCs” (massively open online courses) never achieved the revolutionary impact that many had predicted when they were introduced almost a decade ago, a surge in innovation at that time has developed into an enormous increase in competition with the traditional educational model of residential colleges.

Harvard and MIT, with roughly $ 60 billion in foundations, just got $ 800 million more from the sale of EdX, which has a large library of free or low-cost courses, often taught by world-class faculty. They have vaguely promised to use those proceeds to create more affordable online alternatives to the traditional educational model that has been so cleverly but dearly pursued by these institutions in Massachusetts and others.

A huge success over the past decade, 2U offers support services to colleges looking to expand their online presence, a goal positively impacted by the pandemic. Colleges often have the resources and even the expertise to offer good online courses, but they are not experts in back office things that the new providers can do better than traditional residential universities. Hence, new companies like 2U help with course design and marketing expertise, etc. This “online program manager” has branched out into undergraduate endeavors like coding bootcamps and has partnered with some reputable universities. Its biggest (and bigger) competitor, Coursera, founded by a few Stanford professors, offers thousands of courses at numerous universities and has a market cap of over $ 5 billion, showing that investors see it as a company with a positive future.

The Supreme Court and state governments have seriously violated the NCAA exploitation cartel

A major flaw in American higher education has been the vicious exploitation of student athletes for financial gain, much of which goes to adult “coaches” rather than the players who provide the most talent for success in football or basketball. Over the past month, attacks on two fronts have dramatically weakened the NCAA, the cartel that runs the system of exploitation.

The Supreme Court unanimously stated that the NCAA could not prohibit college athletes from making commercial profits from the sale of products bearing their name, image or likeness (NIL). Colleges that made monopoly profits from selling these uses of their own students will now have to accept competition – from these students.

Meanwhile, with growing public support for the view that it is unfair to deny compensation to students, state governments have passed their own NIL laws, the first of which went into effect last week. Given the possibility that high school athletes in schools in states with NIL legislation like Alabama and Georgia would sign up, many other states have hastily passed NIL athlete legislation and the NCAA has reluctantly surrendered.

Will the final step be taken to end the “amateur” college model of athletes negotiating salaries and dropping the salaries of top coaches to just a million dollars? Only time can tell.

My latest book is Restoring the Promise: Higher Education in America.

EdX merger, 100 colleges close a diving history, college sports

source https://collegeeducationnewsllc.com/markets-work-even-in-higher-ed-three-recent-examples/