Will $3 Coffee Kill $50,000 Tuitions?

An item in yesterday's newspaper could have real long term significance for institutions like the one at which I work. The story was about Starbucks beginning to offer to pay college tuition for its employees. When I read the headline I was genuinely startled ("Starbucks to Provide Free College Tuition"). But then I read the fine print and found myself saying "oh, for some particular online degree at Arizona State, big deal, seems like a bit of bait and switch."

But then I thought about it a little and noticed the numbers: 135,000 employees and around $500 per credit.  And then I read Joe Nocera's opinion piece.  Now, critics have already pointed out problems with the program (16 June), but the Lumina Foundation representative quoted in the first article had it right: Starbucks is just the first company to do this and the programs will evolve. There's a gigantic population in the US who basically cannot afford to go to college, period. And the jobs available to them without a college education are AT BEST jobs like Starbucks and Best Buy and on and on. If just a few of these companies go down this path, it could quickly become an important way to recruit and retain low wage, high aspiration workers and educational benefits like this will come to define the standard (both price and process) for a growing section of the higher education market.

And places like Arizona State's online degree program are going to capture that market share. And a whole bunch of people and families that are assuming unholy amounts of debt to get a college education are going to start asking why they are paying around a thousand dollars per credit if it's out there for half that.

It will be interesting to see how this unfolds, but it may well be that the company that convinced a world used to paying 50 cents for coffee served immediately to pay, instead, 3 dollars for a coffee they have to wait for, will convince a country full of aspiring young people NOT to consider paying 100-200 thousand dollars for an education.

This confirms a number I have arrived at by other means: unless we can figure out how to increase our productivity by about 100% (translating in practice into halving out price), we will be consigned to the proverbial dustbin of history. I think it can be done without replacing in-person education with all online degrees, but unless those of us in the in-person business start to get really serious about innovation, the only work left for us will be either producing online courses or tutoring kids who are enrolled in them.

Sources

• Joe Nocera "A New College Model: Arizona State Matches Starbucks in Its Trailblazing Ways." NYT  June15, 2014
• starbucks.com  Starbucks College Achievement Plan.
• Richard Pérez-Peña "Starbucks to Provide Free College Education to Thousands of Workers." NYT June 15, 2014
• Richard Pérez-Peña "Critics Point to Drawbacks in Starbucks Tuition Program." NYT June 16, 2014

Proposal: Two Years of Free College for All

A recent paper by Sara Goldrick-Rab and Nancy Kendall suggests the actual policy goals of federal financial aid might be better met by redirecting it away from private institutions and toward support of two years of free education at state institutions. 

The authors argue (among other things) that private institutions are subsidized but actively resist accountability measures to which public institutions are subject and even with current subsidies the privates enroll a very small portion of low resource students (be sure to read pp 24ff). 

It is a provocative plan by smart scholars of higher education; ideas like this should engage us both for their social justice implications and for their implications to our institutions' financial models.

Executive Summary

For almost fifty years, the federal government has tried to make the American Dream universally accessible by using need-based financial aid to lower the price of attending college. The effectiveness of this approach to expanding opportunity and investing in America’s future has diminished because of declines in real family income, increases in demand for college enrollment, poor regulation of state funding and institutional costs, insufficient funding for and targeting of grant aid, and a political movement that places the needs of private businesses and banks over those of students and families. The results have undermined the national ideal of equal opportunity to succeed and equal rewards for hard work. Talented students are forgoing college because of the costs, students who start college are unable to complete because they cannot afford to continue, and even students who finish degrees may not realize all of the expected returns because of sizable debt burdens. All but the wealthiest families must borrow or pay an amount equal to or exceeding one-quarter of their annual income in order to finance attending a public 4-year college or university.

Fortunately, financial aid is not the only way to make college affordable. We argue that it is time for the federal government to partner with states, public colleges and universities, and localities and businesses to offer two years of college for free. This paper outlines a Free Two Year College Option (F2CO) that can be funded with existing resources, developed to overcome the problems in previous efforts to make college more affordable, and designed to ensure that wider access occurs without reductions in educational quality. The effort begins with a simple message to every American interested in pursuing education after high school: If you complete a high school degree, you can obtain a 13th and 14th year of education for free in exchange for a modest amount of work while attending school. Key aspects of the F2CO plan include:

• All eligible students can attend any public college or university (2-year or 4-year) for free for the first two years
• Through a redirection of current federal financial aid funding, the federal government pays tuition for all students, and provides additional performance-based top-up funding for institutions that serve low-income students. We estimate that per-student funding will be higher than the average tuition currently charged by community colleges, and only slightly lower than the average tuition charged by four-year colleges
• Participating institutions cannot charge tuition or additional fees to students
• State funding for higher education will be redirected to cover books and supplies for all students
• Student living expenses will be covered through a state and local stipend equal to fifteen hours a week of living wage employment in the area, federal work-study in an amount equal to fifteen hours a week of living wage employment in the area, and access to federal loans equaling up to five hours a week of living wage employment in the area

We believe that such a policy is long overdue, and will significantly expand the quality, efficiency, and effectiveness of our collective investments in postsecondary education and in a shared and secure future.

Switch Fonts, Save Ink (and dollars)

In the news over the last few days, reports about a kid whose science fair project was to compute how much the government could save by changing fonts. Long story short: some type faces require considerably less ink than others; the federal government prints lots and lots of documents; it buys a lot of ink and toner for its printers; it could buy less if it changed fonts.

Garamond, a typeface that requires about 25% less than other common fonts (such as Times New Roman), was  created by Claude Garamont in the early 16th century. How much could a school like our save? Not millions, a fair guess might be 10-20% of toner/ink costs.

See Also

• Flowing Data. Save pens. Use Garamond font." January 29, 2010
• Danielle Wiener-Bronner. "14-Year-Old Figures Out That Bad Fonts Cost the Government Hundreds of Millions."
• Angela Neal. "Fonts That Use Less Ink."
• Digital Inspiration. "Best Ways to Reduce Printing Cost of Documents, Photos, Webpages." 8 June 2006
• Paul Rodgers. "Sixth-Grader Tells Government How To Save $400m On Ink." Forbes 3/28/2014

Of Restaurant Chains and Higher Education

One need not be a sophisticated economist to see that distribution of American family income makes the high tuition/high discount business model of non-elite, non-public higher education unsustainable. Unfortunately, most of the innovative and entrepreneurial thinking that's taking place in response to that is not, IMHO, very education friendly. But reciting the woes of HE in ever more graphic and data supported ways is like shooting fish in a barrel; real solution ideas are a little harder to come up with.

It will be interesting to see the comments Mr. Selingo's blog post garners.

Read more (see the comments too)

King & Sen. 2013. "The Troubled Future of Colleges and Universities."

King, G. and M. Sen. 2013. "The Troubled Future of Colleges and Universities." PS: Political Science and Politics 46, no. 1: 81--113.