 Reinventing
Higher Education Finance: The Impact of Information Technology
Implications for State Higher
Education Finance Policy
| POLICY
IMPLICATIONS…
 Distance education
is now in the mainstream.
Technology costs must be built in, not added on.
Competition needs to be encouraged, not prevented.
Tuition policies must be updated.
Collaboration is good.
Learning- centered education will require new systems
of course accounting and finance.
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THE following
are some of the specific financial issues that states will need to address
in the near future in order to respond to this rapidly changing environment.
 Distance
education is now in the mainstream. Distance education
has moved from the fringes of the higher education system, where it
was mainly a self-supporting enterprise that did not factor into state
funding decisions, to a key role in meeting state access and economic
development needs. Each state must determine the role that distance
education will play in its higher education system.
Technology
costs must be built in, not added on. While states and
institutions have committed significant funds to technology, it is still
treated mainly as an add-on cost and not as a recurring expense. Stopgap
approaches do not reduce costs or increase productivity. It is time
to consider how to re-structure state financing to support the reengineering
of higher education around the available technology. States may need
to abandon current short-term cost-based funding approaches and develop
in their place new approaches that encourage longer-term investments
in course and program development.
Competition
needs to be encouraged, not prevented. The natural monopolies
of higher education institutions, at least in their geographical service
areas, are rapidly coming to an end. State funding policies have arguably
become protectionist barriers to the expansion of alternative forms
of higher education.
Tuition
policies must be updated. State and federal policy on
student costs has focused almost entirely on the desire to keep higher
education "affordable" for traditional, full-time, residential
students. States have, for the most part, assumed that students served
by technology-mediated instruction will pay all or most of the cost
of their programs and that off-campus students should pay more than
on-campus students (couldn't the reverse be true?). State policies regarding
tuition rate setting, student fees, and financial aid have not kept
up with this rapid shift to technology-based instruction.
Collaboration
is good. As direct instruction is replaced by more complex
interactive learning systems, there is an increasing need to share the
high cost of program development, recover development costs by spreading
them over a larger student base, and secure the quality enhancements
that collaboration can offer. One implication of the need for collaboration
is that state residency and tuition policies are becoming a barrier
to initiatives whose elimination could yield significant cost savings
and quality enhancements.
Learning-centered
education will require new systems of course accounting and finance.
States will find it increasingly in their interest to support the mastery
of competencies and not just the accumulation of contact hours.9
Unfortunately, no state has figured out how to appropriately fund mastery
instead of seat time and enrollment in courses. It may be that an entirely
new system of course accounting is needed. Is it time to replace the
Carnegie unit?
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