To Fix Higher Education, Embrace Innovation

To Fix Higher Education, Embrace Innovation
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The American higher education system seems to be in a state of crisis, but it’s not all bad. While the media is focused on campus radicalism, multi-billion dollar student loan relief, and the FAFSA disaster, some institutions are doing their part to flip the script, finding new ways to recruit, educate, and graduate students. The only thing standing in their way is a Department of Education that seems dead set on propping up a failing status quo.

The war on private sector innovation, especially third-party companies that help universities meet student demand for online education, is a perfect example. The growth of online learning dates back to long before the pandemic, when the 2008 recession prompted many students and institutions to reevaluate traditional, in-person degree programs. In response, the Obama administration issued sensible guidelines in 2011 that allowed schools to enter into revenue-sharing partnerships with online program managers (OPM), companies that specialize in the design and marketing of online programs. It was the rapid development of this market and maturing technology that made it possible for so many schools to switch to fully online models during the COVID-19 pandemic.

Although the COVID-19 pandemic that necessitated a shift to online learning is now fully in our rearview, demand for online and hybrid programs continues to rise, according to reporting from . Amidst a general decline in traditional enrollment, online programs are actually growing, with 56 percent of Chief Online officers at institutions of higher ed reporting a rise in online and hybrid enrollment. It’s easy to understand why – this flexibility has opened doors for people who simply want to learn, be it college students switching to a hybrid schedule so that they can take on valuable internships, or working parents getting the degree that will allow them to advance their career online.

Unfortunately, none of this seems to matter to the bureaucrats at the Department of Ed, who have taken a seek-and-destroy approach to regulation. As I wrote back in , at the prompting of a vocal minority of activists bent on eliminating the role of the private sector in higher education, the Department of Education put online programs in their crosshairs, proposing a Dear Colleague letter that would have dramatically limited universities' ability to enter into mutually beneficial revenue sharing agreements with online program managers. This would have restricted the ability of these companies to work with universities to build out mutually beneficial contract structures while potentially imposing massive liability costs on anyone classified as a “third-party service provider,” signaling to innovators looking to shake up the stale status quo in higher education that they will need to sacrifice limited R&D budget for lawyers.

The Department ultimately rescinded the letter after receiving an avalanche of criticism from policy organizations on both sides of the aisle, education tech policy organizations, and universities who have heavily invested in and benefitted these services and partnerships. 

This broad-based pushback was a testament to the success of these partnerships in carving out new pathways to attract and educate students. For universities, the low upfront cost of these partnerships makes them more nimble, and better able to build out new programs in response to market demand, without dramatically increasing their tuition.  Schools like Mount St. Vincent, a small college in the Bronx that traditionally serves minority students, y to become more resilient and better reach non-traditional students, providing avenues to opportunity for students whose familial and financial obligations might otherwise preclude them from pursuing higher education. This willingness to meet students where they are, and the framework that allowed for it, allowed the school to reach #1 in social mobility rankings for 2023.

While it’s a good sign that the Department initially pulled back, its unwillingness to rescind the proposed change altogether is still having a damaging impact. Both universities and the technology companies that they partner with will have difficulty making long-term plans while the possibility of a dramatic policy shift hangs over their heads. Given the litany of other issues bedeviling the department, as well as common sense, it would behoove them to take the advice of the overwhelming number of stakeholders who signaled their protests to this hastily cobbled-together Dear Colleague Letter and publicly announce that the existing framework that allows for revenue sharing will be preserved.

The market is signaling to universities that they can adapt or die. Regulators should let them.  As Michael Horn of the Christiansen Center for Disruptive Innovation , regulators should stop worrying about regulating “inputs” by placing onerous limits on college’s ability to find new ways to serve students- and start worrying more about outputs- the value institutions are providing to students and taxpayers. Such an approach would free up scant Department resources, while allowing universities the space to find new and innovative approaches to education, leaving us all better off.

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