Disruption on the horizon: Americans turn go overseas for college and private universities worry about enrollments


Feb 2, 2009

In my last post, I wrote about an article by Tamar Lewin of the New York Times that talked about the escalating costs of traditional universities in the U.S.

Lewin has written a string of these articles. Another one, also highlighting the escalating costs of traditional universities in the U.S., points to a different solution from my previous post. This one, “Going Off to College for Less (Passport Required)” shows students making a rational tradeoff for a different experience for less money—by going overseas.

In a third article, Lewin writes about how many private colleges are worrying about a dip in enrollment. For those universities whose budgets are driven by tuition dollars, this will have a significant negative impact. As of December, according to a survey by the National Association of Independent Colleges and Universities, roughly two-thirds of 371 private institutions said “they were greatly concerned about preventing a decline in enrollment.”

At a time of tightening budgets, applications to the more affordable state universities are higher, but states like California and Florida are having to cap enrollment numbers. I wrote about this earlier here.

A key takeaway? Many existing institutions will be hurt, but in the long run, let disruption take its course so we can find better, lower cost arrangements for these students.

A fourth article by Lewin is equally fascinating—and provides a possible hint of how this could unfold. Titled Israeli Entrepreneur Plans a Free Global University That Will Be Online Only, it talks about Shai Reshef’s plans to start the University of the People and to leverage open courses and social networking to offer a robust online university experience. I’ve speculated about this before (here for example)–saying open courses weren’t by themselves disruptive as offered by MIT and Yale, for example, but if an entrepreneur came along and patched them together into a degree with some other services around it, they could be quite an enabler for a monumental disruption. What do you think about this?

For those from the College Board and the like who want to see 55 percent of Americans attaining postsecondary credentials and realize affordability is important (see the report Coming to Our Senses), note that subsidies from third parties likely won’t help us in the long term because they won’t address the fundamental cost structures at play; allowing disruption to work and having lower cost options move in will.

– Michael B. Horn

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a principal consultant for Entangled Solutions.