To deliver effective new alternatives to traditional practices and models, education leaders and policy makers must embrace a truly entrepreneurial approach to postsecondary education.
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While graduation season has drawn to a close, debate surrounding the future of U.S. higher education has only just begun. Notwithstanding the strengths of our premier research institutions, it seems every week brings more news about the significant shortcomings of many U.S. colleges and universities. Evidence is mounting that these institutions need to do much more than just lower costs: they must improve completion rates, hone their focus on student learning and workforce success, use technology more effectively, and take innovations to scale more quickly.

To tackle these problems and deliver effective new alternatives to traditional practices and models, education leaders and policy makers must embrace a truly entrepreneurial approach to postsecondary education. Unfortunately, numerous barriers continue to slow innovation, both in traditional institutions and startup ventures.

First, campus culture has traditionally been averse to the kinds of productivity improvements that have transformed other sectors of the economy. And regulators beyond campus walls often thwart innovation as well.

Consider this story from Dominic Brewer, professor at the University of Southern California, who helped launch the Rossier School of Education's partnership with 2tor, Inc., a for-profit online startup. When USC sought permission to serve students in every state, it encountered what Brewer terms "a slew of obscure and irrelevant [bureaucratic] provisions, such as needing to submit typewritten applications and specifying the fire rating of file cabinets in which student records were to be stored." It was as if no computer technology was available.

Powerful regional accreditation systems, administered by consortia of the same institutions that too often want to hold back change, are another obstacle to reform. Entrepreneurial providers starting new higher ed ventures built on different business models, such as offering à la carte courses, often face accreditors focused on traditional input requirements like "seat time" in class and faculty PhDs, rather than outcomes like academic success or loan default rates.

Compounding all this is a severe information deficit. Prospective students and policymakers know too little about which institutions -- and which programs within those institutions -- offer the best value in terms of learning and future earnings. As in health care, an informed consumer marketplace simply can't take root without such measures.

The good news is these problems can be fixed. By creating smarter regulations and incentives, developing better performance measures and exploring new pedagogies driven by technology, reformers are developing an ambitious set of ideas for reinventing higher education.

One key strategy is to provide better policy incentives to help cash-strapped universities meet goals such as improving dismal graduation rates. Pell grants for low-income students, for example, could be staggered, with more dollars awarded as students advance toward degree completion. Lawmakers could require colleges to provide evidence of thoughtful cost containment to remain eligible for federal loans.

Universities must explore new pedagogies, driven by technology's low marginal costs, to dramatically drive down tuition. One leading effort, the Open Learning Initiative at Carnegie Mellon University, is pioneering technology-based teaching techniques that use personalized "adaptive" instruction. In the program's statistics course, students who have completed a 15-week class on an accelerated eight-week schedule learn as much as or more than their peers.

New entrants need easier access to the nation's massive higher education market. That means accreditors should place the fewest possible restrictions on both new and existing programs, so long as minimum course-level outcomes are specified. As accreditors move away from input to output measures, a wealth of new possibilities for entrepreneurship would result.

To get better information to students and parents, all states should be required to link statistics on individual students' college experience to how they fare in the job market. Given that a college education can cost as much as or more than a house, prospective students should be required to sign a "truth in enrollment" form, akin to the truth-in-lending statements required for home purchases, confirming they have received information about the institution's costs, completion rates, graduates' employment rates, and graduates' salary information by major.

Such transparency measures are essential for scaling the most promising ventures and practices. Clear and accessible information about student outcomes will introduce greater competition and help entrepreneurs spread the most successful new models. Policymakers could aid the process by making it easier to start charter colleges, akin to K-12 charter schools, providing flexibility in exchange for better results.

As U.S. higher education faces intensified scrutiny and profound rethinking, more debate and experimentation lie ahead. Only one thing is certain: If our nation truly aspires to enhance college access, boost quality and improve graduates' success, it's time to open the campus gates to innovation.

Ben Wildavsky is a senior scholar at the Kauffman Foundation, where Robert Litan is vice president of research and policy. This commentary is adapted from 'College 2.0: An Entrepreneurial Approach to Reforming Higher Education,' a new Kauffman report drawing on the work of leading education entrepreneurs, academics and policy analysts.

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