Technology, Labor, and College Costs

Education Sector, the think tank where I work, sponsored a panel discussion in Washington this morning. The subject was “Is Technology the Answer to Rising College Costs?” You can listen to the audio here. The discussion centered on a recent article that I wrote for Washington Monthly on the same subject. Briefly, the argument goes like this: College is becoming increasingly expensive, which makes many people unhappy. This problem could be partially (although not fully) addressed if higher education did what many industries have already done: increase efficiency by using technology to make labor more productive. We know this is possible because many colleges and universities have already done it. But the cost savings aren’t being passed on to students in terms of lower prices — partly because public officials are cutting funding for higher ed, but also because universities operate in a competitive environment that provides many incentives to raise prices and none to lower them. In other words, colleges could use technology to lower costs and thus student prices, but they won’t until the terms of competition change.