New York’s Free College May Fundamentally Alter Higher Ed

The business model of higher education has got to evolve to serve new customers in new ways, doesn’t it? Many of us have been predicting this for years, yet the higher education system in this country has remained fundamentally unchanged.

A lot of observers (including me) have egg all over their faces predicting what the evolution would be that slayed the giant. At one point, it looked like college consolidations and mergers would significantly reshape the system. Then it was the for-profit colleges, as the University of Phoenix became the largest university in the country. Then it was online learning. Then it was MOOCs.

We can all see where those avenues led. Some mergers have occurred, and more probably will, and a few small private colleges will close every year, but mergers are barely a hiccup on the higher education landscape. The for-profit industry is in retreat, the once-dominant University of Phoenix is barely alive, it’s parent company was sold for pennies on the dollar. Online learning is only part of the answer for overhauling higher ed, not the whole answer. What’s a MOOC?

But I can’t stop thinking about a new existential threat to higher education, one that I really believe may be the killer app: Free college in New York.

Not convinced? Then let me invite you to be the president or admissions director at, say, the College of Mount St. Vincent, or Wells College or Cazenovia College, or any of the other small private liberal arts colleges in New York without either a big brand or a large treasure chest. Your job is to convince New York residents to pay thousands of dollars to go to your college when they can go to any campus of the State University of New York system or the City University of New York system for free.

You can talk about your interdisciplinary majors, your small class sizes, the personal attention you will receive, but that all fades to black in the face of the word “free.” Marketing research shows us that making a desirable object free has a powerful impact on consumers far greater than simply cutting prices significantly. And once you have established that a product will be given away for free, it is awfully hard to charge for it again. How did giving away information for free help newspapers? Amazon’s free shipping has fundamentally reshaped the retail industry.

You dangle a free sample in front of a customer at Costco and suddenly yes they will eat Brussel sprouts. You offer a free car wash, and suddenly a driver decides, yes, I do have an extra 20 minutes. You offer a free college class to Joe Woebegone, and suddenly the couch doesn’t look as inviting. I might make something of myself, I might learn a new skill, I might meet a girl. And what have I got to lose?

That’s the psychology of free. It causes people to act in ways they ordinarily wouldn’t, to try things they have always shunned.

Now you might be asking: But MOOCs are free, aren’t they? You are right, but after the initial frenzy, it soon became clear that lots of people were signing up but few (only 7% by one study) were completing them. The difference is that MOOCs are a discretionary product. Most did not offer credit. Enrollees, by and large, already had a degree. They registered because they wanted to know more about a certain topic.

Some states created low-cost degree programs, reasoning that people would flock to the opportunity to get a degree for as little as $10,000. Yet, they have been a dismal failure in Florida. Too many restrictions, critics say, and not enough programs are offered at that price. Also, they are $10,000. That doesn’t look so good next to FREE!

You can already see the powerful impact on consumer behavior. Tennessee made community college free in 2015, and has seen a 24 percent increase in enrollment. New York is making every class free, entire degree programs free. And if it works in New York, won’t people in Pennsylvania wonder why their colleges can’t be free? And then Ohio, and then Kentucky, and so on. The University of Michigan is already jumping on board, offering a free degree for children from families that make $65,000 or less a year.

A lot remains to be seen about the experiment in New York. Its very popularity might be its undoing. For example, if the universities in New York are not staffed up sufficiently and don’t have capacity to meet demand, students might quickly get discouraged and leave. They might be jammed into overcrowded classrooms, they might not be able to get the classes they need to graduate in a reasonable time, or a serious student might be in a classroom full of rubes who are only there to see if they might like it more than delivering pizzas or watching Gomer Pyle reruns.

We shall see. But I wager that when there is nothing to lose and everything to gain, the tables tip. I think we might have something here that changes everything.