Burck Smith, CEO and Founder of StraighterLine, recently likened higher education to the U.S. Postal Service, which faces private competition and changing methods of communication as a result of new technology. However, in the case of higher education, government subsidies and accreditation requirements provide barriers help established universities maintain their old business models even in the face of innovations such as online courses.
“The postal service, I think, gives us a good example outside of academics to look at a subsidized business model that’s uh whose business model is really past […] past the time or whose market conditions have changed,” stated Burck at the American Enterprise Institute (AEI) event. He later argued, “So if you applied what higher education has done to what the postal service could have done or thought they might have done it would be like requiring that every communication means be monitored and credentialed by the post office and charged first class rates.” StraighterLine offers students online courses through an online subscription model where these courses transfer to accredited schools.
According to Michael Stratford, reporting for the Chronicle of Higher Education, both Republican vice presidential candidate Paul Ryan and Republican presidential candidate Mitt Romney support for-profit education.
“In January, he praised Full Sail University, in Winter Park, Fla., as an example of how for-profit colleges can hold down the cost of higher education,” reports Stratford. “The chief executive of the university is a donor to the Romney campaign, it was later reported.”
Stratford reports that Ryan’s 2013 House budget proposal would “slash federal spending for nearly all non-defense-related programs, including many of concern to higher education,” cut spending on academic research, and alter federal student-aid programs.
“This budget ensures higher-‐education assistance programs are put on a sustainable funding path, better focusing aid on those in need and better addressing the root drivers of tuition inflation for all students,” states the 2013 plan.
“But, instead of helping more students achieve their dreams, studies have shown that increased federal financial aid is simply being absorbed by tuition increases,” it asserts. “While financial aid is intended to make college more affordable, there is growing evidence that it has had the opposite effect.”
The 2013 plan continues,
“Economists such as Richard Vedder point out that the decisions of colleges and universities to raise their prices would have been constrained if the federal government had not stepped in so often to subsidize rising tuitions.”
Dr. Vedder is the director of The Center for College Affordability & Productivity. Spencer Irvine, an intern at Accuracy in Academia, has an excellent article outlining Dr. Vedder’s perspectives.
Stratford reports that Ryan’s budget proposals called “for ending the in-school interest subsidy on undergraduate Stafford loans and tightening the eligibility requirements for the Pell Grant program. He would completely cut off Pell eligibility for students attending college less than half-time.”