A Solution to Soaring College Costs

How can skyrocketing college tuition be reined in?

The answer is surprisingly simple: ban the “bundling” of campus services just as they are prohibited in the consumer telecommunications industry. That is, instead of a single tuition bill, give students the opportunity to choose à la carte. Because many of these “extras” are either unwanted, unnecessary, or can be bought off campus much cheaper, the cost of college will fall, much of today’s administrative bloat will vanish and, perhaps most importantly, student debt will shrivel.

Or, put a little differently, while the marketplace of ideas may be weak in the classroom, it certainly can flourish for the rest of the campus.

We are all familiar with bundling when buying telephone and Internet services. I use Verizon and can choose from multiple levels of service. Eventually I settled on a relatively modest plan, eschewing all the “premium” cable channels, unlimited monthly cell phone services, regular upgrades to hi-tech phones, “free” repair service and other enticements that would have pushed my monthly bill to over $500. Yes, I would like HBO but not that much and instead substituted a few dollars extra per month for cheap international landline phone service. Hardly rocket science.

Compared to today’s university, Verizon is a bare-bones operation. Students typically must pay for armies of bureaucrats and services unthinkable in traditional European universities. There are campus health services, dining halls, subsidized affinity groups, countless entertainment choices (especially subsidized football and basketball tickets), recreational facilities, copy and printing services, placement and advising centers, psychological counseling divisions, remedial education, below market priced campus newspapers, study abroad programs, and campus housing (which usually includes in-dorm quasi-academic seminars). Add university-supplied computer assistance with “free” e-mail, the campus bookstore and even the library.

I cannot price all of those “free” services but I’d guess that they comprise at least a third of the tuition bill, and perhaps more when you factor in the university’s long-term overhead.

None, in my estimation, is vital to learning; leading universities here and abroad flourished for centuries without a Dean of Student Affairs, or a distinguished lecture series, let alone today’s diversity apparatchiki.

Surely students can buy used textbooks from Amazon.com or find cheap housing on Craigslist. If a student wants to use the campus gym, let him or her buy access on a per use basis. Yes, even the library can be out-sourced, and don’t forget that many of today’s professional sports teams were once business owned (e.g., the Green Bay Packers). The University of Texas-Austin would earn millions selling the Longhorns to investors and collecting royalties.

The beauty of this unbundling is that it will be totally market-driven. No need to begin by disaggregating campus services, arguing over the value of assets or otherwise engaging in acrimonious debates. Just request bids and make choices. Paraphrasing that old Marxist slogan, the bloated university would just wither away.

To prevent the university from lying to students about costs, give them legal standing to sue and, rest assured, universities would quickly realize that defending deceptive pricing would cost more than it’s worth. 

Actually, given the predictable lack of student demand once services become optional, I suspect that many schools would preemptively dump their non-academic assets.

Administration of this “no frills” policy would be simple. Students would just buy academic credits and then anything else would be extra. The upshot would be a college instantly more affordable for students willing to sacrifice services they do not need or use for quality academics. This return to the old days of slum housing and Ramen noodles is far better than years of post-graduation debt.  

Non-academic employees would naturally resist but such creative destruction is hardly new. It just brings today’s economic reality to the campus. If these unbundled functions are as vital as universities insist, newly created private sector versions would absorb these ex-university employees. Moreover, ambitious ex-employees might re-establish the services off-campus better and cheaper. Lowly paid adjuncts and instructors might jump at the chance to buy the Writing Center, for example.

It’s that simple—enact a single state anti-bundling law, no different from the ones that apply to multiple industries, and watch bureaucratic fat melt away and a college education become far more affordable.