Can Cost Sharing Save Higher Ed?

Only 36 percent of Americans say they have confidence in higher education, down from 57 percent in 2015. Two years ago, 60 percent of Americans believed college was worth the time and money. Today, 56 percent think it isn’t, and skepticism is greatest among those aged 18 to 34. More than 60 percent of Americans think higher education is going in the wrong direction, and both Republicans (77 percent) and Democrats (92 percent) cite high tuition as a major reason.

Student debt, which now totals $1.75 trillion (about $30,000 per borrower), is up 75 percent over the last 10 years. As a result, more than 75 percent of Americans now think college is unaffordable.

Not surprisingly, rising costs have hurt enrollment. From 2010 to 2021, undergraduate enrollment in the United States fell 15 percent, and it continues to decline, albeit slowly. By contrast, college degree attainment rates among U.S. allies and competitors, where higher education is heavily subsidized, are soaring.

A growing number of colleges and universities in the United States are closing or merging in the face of rising expenses and falling enrollments. Many fear that the 2025 enrollment cliff—when the number of high school graduates will drop sharply —may soon force more of them to shut their doors.

While controlling the cost of college is an urgent need, the picture is more complicated than falling enrollment and rising sticker prices suggest. Over the past few years, college tuition has stayed relatively constant, despite significant inflation in the cost of most other goods and services. In fact, since 2017, the amount students pay, after deducting financial aid and adjusting for inflation, has fallen. And college graduates on average “earn more, live longer, pay more in taxes, donate more to charity, use less in government support, and contribute more to their communities than those who lack a degree.”

Still, the long-term trends are alarming. Although federal support for need-based student financial aid has increased in recent years, state support for public institution operating budgets remains well below 2008 levels in many states. And demands for student support services and amenities, from dining halls to climbing walls, are growing. Breaking this cycle would be a boon to higher education and society.

In The Synthetic University: How Higher Education Can Benefit From Shared Solutions and Save Itself (Princeton), James L. Shulman, the vice president and chief operating officer of the American Council of Learned Societies, offers a partial solution: cost sharing through independent organizations—“synthetic service providers”—that provide “realistic and mission-aligned solutions to collective institutional challenges.” In a detailed, thoughtful and wide-ranging analysis, Shulman lays out the challenges to inter-institutional cooperation and suggests ways to overcome them. In the end, however, the cases he analyzes highlight the limits of this approach, particularly with regard to the teaching and research that are at the core of higher education’s institutional mission.

Shulman apparently agrees with former Tufts and Harvard University president Larry Bacow that “there is no natural constituency for cost control on a university campus.” Although many university administrators, chief financial officers and trustees have a different view, Shulman’s broader point is sound: unlike for-profit entities, which prioritize profits, colleges and universities prioritize their missions, often in ways that drive up spending. Lower student-faculty ratios and smaller classes, for example, support good teaching but increase cost.

Perennially in competition with each other, moreover, colleges and universities value autonomy and often choose local but redundant solutions to problems over collaborating with peers to develop cost-effective approaches and the shared infrastructure to implement them. When colleges do form consortia to reduce expenses, through joint purchasing agreements, shared administrative functions and cross-registration of courses, the savings, though real, tend to be modest.

As Shulman acknowledges, colleges and universities already outsource a wide range of services provided by private enterprise, including dining, custodial services, bookstores, health care, enterprise software and learning management systems. That said, on-campus resistance to their involvement grows the closer they get to the academic core.

Enter the synthetic university, where, Shulman indicates, not-for-profit service providers, often with seed funding and support from foundations like Mellon, develop programs “in which market-tested solutions can be reconciled with mission-driven values to address shared institutional needs.” Shulman believes that “institutional entrepreneurs—who understand and respect the myths that undergird the daily behavior of those who work on college campuses”—can synthesize the change-resistant, mission-focused approach of individual institutions with the “disruptive change” and for-profit ethos of the free market and drive down spending.

Shulman uses the history of Artstor—which he headed for about 15 years—as his principal case study. In the 1990s, art history departments across the country began to digitize the slides shown in their classes. Instead of supporting these expensive efforts at each individual institution, the Mellon Foundation funded a new organization, Artstor, to build a digital library that would vastly expand the images available to subscribing institutions, while seeking mainly to cover its costs. Despite initial resistance from faculty members who feared a loss of local control, Artstor achieved widespread acceptance.

Artstor, of course, is just one example of a “synthetic” organization that serves higher education. Others include TIAA-CREF, which supports faculty retirement plans; the National Student Clearinghouse, which tracks student enrollment and degree completion; and JSTOR, a digital library of books and academic journals.

Shulman offers a theory of how and why institutions of higher education resist shared solutions and strategies for overcoming that resistance. And he analyzes financial models, from venture philanthropy to impact investing, that might enable institutional entrepreneurs to form and thrive. Ultimately, however, Shulman acknowledges that, “having explored the question of whether there are any real models for financing this kind of change, especially on a large scale, we reach a place of being daunted.” And he —and we—are left with “only scattered experiments for merging purpose and capitalization.”

Those experiments, alas, are likely to founder as they approach the core mission of higher education and the biggest drivers of its cost structure: teaching and research. As Shulman indicates, many faculty and students balked at participating in Sunoikisis, a Mellon-funded virtual classics department created at 15 liberal arts colleges. Nonetheless, Shulman believes that online courses of the sort offered by edX and Coursera can be used to “craft a synthetic transinstitutional approach to teaching.”

Shulman recognizes this approach will generate opposition, but his response—that he is “absolutely not” proposing to lower the number of higher education instructors from nearly 1.3 million to “a few hundred or a few thousand”—is not likely to reassure most faculty, who will no doubt point out that, as the pandemic experience demonstrated, heavy reliance on online instruction undermines educational outcomes and student satisfaction. And the substantial reductions in tenure-track positions that Shulman seems willing to accept as inevitable will also drastically curtail research, an essential function of higher education. Research is conspicuous by its absence in this book, perhaps because the kinds of initiatives Shulman advocates are unlikely to yield more than marginal savings in STEM fields (for shared equipment), and virtually none in the humanities, creative and performing arts, and soft social sciences.

Shulman is probably right that some decline in the number of permanent faculty is inevitable, whether accomplished through program closures, increased reliance on adjunct instructors or other means. And he is surely right that “colleges and universities need the public’s trust and cannot let their costs be seen as a runaway train.” Unfortunately, he leaves his readers with little reason for optimism that the synthetic university will do much to bend the cost curve or help higher education “save itself.”