November 24, 2019
With Black Friday less than a week away, I’m sure your kids (and maybe you too) are finalizing a wish list of deals you would like to see. Maybe a new TV or Smart Speaker? Some clothes? The one area you are not likely to see deals on is on college tuition and education. In fact, going back two decades these categories have seen their prices more than double. This is by far the highest inflation in the consumer basket (see figure).
The reasons behind this are too complex to fully analyze in a short note like this one. But contributing to it is the fact that educational institutions don’t compete to take market share and increase the number of student in-take, but on the basis of prestige and academic and professional placement ability. Therefore, their incentive is to invest more in their facilities and services provided and pass that additional investment along to students in the form of higher prices.
The irony of this outcome is that it has never been easier to get access to top academic lectures and papers than today. The internet allows the casting of Ivy League classes around the world. It also enables interactive quizzes with instant feedback on your performance. Entrepreneurs have taken notice and a lot of them are offering services that (other than matching an Ivy League credential) offer students an improved value proposition:
- Lower tuition, or in a few cases (e.g. Khan Academy) free tuition;
- Learn at your own pace and at the most convenient time and place;
- Interactive quizzes allow you to test your knowledge acquisition level and identify areas where you need to improve;
- On demand training for related concepts you may need to complete an academic course or a professional accreditation;
- Access to top content and lecturers, sometimes even from top global universities.