Information Technology Will Lower the Price of College, or Else...
Journalist Fareed Zakaria discusses the true cost of American higher education and the structural changes that must take place to correct an unsustainable trend.
Fareed Zakaria: The problem of the cost of college is an enormous one and it’s real. And frankly it’s true whether you’re a liberal arts grad, you’re an engineering graduate because you’re still facing those issues of debt and is it worth it. So I have a few things to say about that. First is the data still shows that a college education is worth the investment. That is your earnings will be higher over your lifetime because you have a college degree and they will be significantly higher than the cost of that college degree over the lifetime. Point one. Two, there isn’t that much difference in the lifetime earnings of an engineering graduate and a non-engineering graduate. The engineering graduates start out higher, but it equalizes after a while. Point three, the real change that one has to hope is happening is that the cost of college is going down and that it will therefore allow people to be more experimental, to follow their passions, to pursue what they want to. And the cost of college is going down because information technology and the information revolution are finally hitting colleges, finally hitting education. Education is a field remarkably unchanged basically in, you know, several thousand years.
And if you think about the way the ancient Greeks taught at schools — a guy would stand up in front of a classroom, teach a bunch of people; they would listen and that’s really what a college seminar is even today, right. But now it’s changing because online education is going to massively change the way in which education is delivered, but also the way it is priced. And if that happens my hope is that it will produce a huge expansion of liberal education for everybody, but it will also allow people to be more risk-seeking in terms of their educational choices. If you’re paying, you know, a thousand dollars for 20 online courses, then it’s not as difficult to say I’m just going to follow my passion, get really good at this, perfect it, do really well, and whether it’s English or history or philosophy or physics or chemistry, you will do it in a way that really reflects who you are and your intellectual curiosity. And you’re probably going to be better at it if you do something you’re passionate about.
If universities cannot get their cost structures under control, we have a problem no matter what. And the problem is frankly beyond the issue of liberal education. It’s STEM, or engineering. It is just that it is getting to the point where it is unaffordable. We have a problem with two areas of our economy. We have wrung inflation out of every other aspect of the economy in the last 40 years. The two areas where costs have risen several times the rate of inflation for 40 years now are health care and education. And they share some similar characteristics. In both cases, the consumer tends to be somewhat price-insensitive because they view this as something that you can’t put a monetary value on. The customer is not the person actually paying. Often there’s a federal government or governmental involvement with lots of third-party payments. So the price signals are complicated and muted. The consumer is not as price-sensitive and that allows for enormous amounts of cost distortion and frankly inflation. So I think that in both areas you’re going to see information technology begin to change that dynamic. And if it doesn’t happen, look, you can’t have education rise at three times the rate of inflation for another 30 years. That is simply unsustainable.
It's no secret that the inflated cost of American higher education is a major problem that needs to be addressed. The cost of college cannot be allowed to continue to rise at three times the rate of inflation for another 30 years. That is simply unsustainable. In this video, journalist Fareed Zakaria addresses three key points related to the true cost of American higher education. First, it's still a good investment despite the price. Second, it's a myth that there's a huge difference in the lifetime earnings of an engineering graduate and a non-engineering graduate. Third, if the cost of college goes down, it will allow for a new era of experimentation in education. Paramount to Zakaria's third point is that it's taken far too long for information technology and the information revolution to tackle higher education. Major structural changes rooted in new technologies must be allowed to happen because the alternative is a total collapse of the education system.
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