Wednesday, May 10, 2017

OER and Total Cost of Attendance

We’ve all had colleagues who tended towards conspiracy theories.  At a previous job, I pranked one once by leaving a folder on my desk labeled “My Top Secret Plans for World Domination, Part One.”  It was empty.

This is about as close as I get to real conspiring.  But I’ve come up with a...let’s call it “plan”...that might actually make a difference.

We don’t have free community college yet in New Jersey.  The original funding model was an even three-way split in costs among the state, the county, and the students; at this point, though, students pick up 57% of the cost, and their share is growing.  Nobody wants to raise tuition, for obvious reasons, but it’s also unrealistic to fund ever-more-expensive health insurance when every revenue stream is either flat or declining.  The math doesn’t work.  So there’s a premium, no pun intended, on ways to find revenue that aren’t so painful.

Some of those ways are the usual: philanthropy, public sector grants, space rental for conferences, summer camps.  Improved retention and completion offer the prospect of greater tuition revenue without raising tuition, simply because more people would stick around longer.  In business terms -- I know, but still -- a retained student is a repeat customer, and it’s cheaper to retain a customer than to find a new one.  Making that happen without spending significant money is a challenge.

But I’m thinking that an aggressive move towards OER could actually help generate revenue.  Here’s how.

Although tuition certainly matters to students, what matters more is “total cost of attendance.”  That includes fees, books, transportation, and the opportunity cost of taking classes, among other things.  (Reduced work hours to make time for classes leads to reduced income in the short term, which is a cost.  Over time, if they graduate, they more than make it back, but in the here and now, it’s a cost.)  Opportunity cost is lowest in recessions and highest during expansions, which is why our enrollments are countercyclical.  

We don’t control opportunity cost, and we have relatively little control over transportation.  (We’ve made some headway with bus routes, but the basic point stands.)  Tuition speaks for itself.  Fees come in different flavors, ranging from course-specific ones to a general student fee.  But books…

So here’s the plan.  If we get critical mass of sections using OER, and we can quantify the typical savings to students in some sort of credible way, I’d like to go to the Board with the following argument:

If we raise tuition $5 a credit, a student taking 30 credits pays an extra $150 a year.  But if we’re using OER in enough places that the student is saving $500 a year on books, she’s still coming out ahead.  And the college is getting some much-needed revenue.  The only loser here is the commercial textbook industry, which, frankly, isn’t our problem.  

In essence, it’s a redirection and splitting of revenue.  It directs revenue away from commercial publishers, and towards the college and the students.  Students would have a lower total cost of attendance, and the college would gain more revenue.  Over time, increased retention from having every student able to get the books from day one would add another layer of revenue.  

As conspiracies go, it’s somewhat less enticing than most of the ones involving Elvis or the Trilateral Commission.  But it has the virtue of being both benign and practical.  It could buy us some time until free community college comes along, and/or we get a health insurance policy that makes some sense.  

It’s not world domination, but that’s okay.  If it means students can learn because they have books and the college can teach because it has revenue, I’ll call it good.  Maybe I need a new folder...