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Student debt: What's been driving college costs so high, anyway?

Average tuition at public four-year colleges rose 73 percent from 1999 to 2009, even as median family income fell about 7 percent. Tuition at private colleges outpaced income, too. Here's why.

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Still, that structure is changing, and it is expected to change more as pressure rises for a high-quality, lower-cost education. While some middle-class Americans may put a value on the "college experience" of a campus and dorm life, the majority of today's students – often older, working part time, or living at home – just want a good degree for less money.

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"The key watchword in higher education is disruptive innovation," says ACE's Hartle. "We're living in a period where the availability and delivery of information are changing very rapidly."

Technology to the rescue?

Already, Harvard and the Massachusetts Institute of Technology are collaborating to offer online courses free of charge, beginning this fall. The schools, which will use an open-source software platform for the courses, say they hope other schools will use it to offer courses, too. Stanford University's School of Engineering is also offering free online courses. Those courses, which transfer knowledge but don't lead to a degree, may not be the answer to high college costs, but they hint at new ways schools can deliver good teaching for less money.

At the University of Maryland, where cost-cutting is a priority, "course redesign" is under way throughout the 11-campus system. Working with the Center for Academic Transformation, the state's public colleges have changed the designs of lower-level "bottleneck" courses: ones with high failure and attrition rates and large class sizes, often in math and sciences.

The new online-only format for those courses not only has cut costs by about 25 percent, but also has led to greater success rates for students, says Chancellor William "Brit" Kirwan. "Rather than large lecture classes, which are a very passive learning environment, we turned them into active learning classrooms," he says. Systemwide, about 60 courses are now offered this way, serving about 12,000 students.

Dr. Kirwan and the board of regents have also consolidated administration; purchased goods as a system, rather than through individual institutions or departments; and moved to a single energy contract and a single software contract with Microsoft. They required faculty to spend 10 percent more time with students and limited the number of credits a major could require students to earn. The result: They cut $250 million from the base budget operation.

More important, Kirwan says, is that the university system earned credibility with state government – and helped to persuade law-makers to avoid draconian cuts during the recent recession.

Kirwan says cost-cutting must become a priority for more higher ed institutions – and he sees technology, like the systems he has used to redesign courses, as a big part of the solution.

"This is an absolutely critical moment for our nation," he says. "We are at risk of losing our competitive edge.... Every other enterprise I know of in America, except maybe symphony orchestras, has been able to find ways to use technology to lower their cost structure."

Callan agrees, but adds that the student-loan crisis should be a call to rethink the higher-ed finance system in a more fundamental way.

"In this country, every generation has paid for the bulk of the education costs of the generation that came behind it, through taxes or parental support," he says. "Now we're saying, 'you're on your own, pay for it out of future earnings,' even though there's not a lot of confidence that those earnings will be as good as in previous years.... Is this really the way we should fund education in this country?"


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