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I would model my proposed college, which I call “CostCo U”, after a law firm. Just as senior lawyers own the firm and delegate out various administrative responsibilities, I would have a college where faculty own the institution, and administrators work for faculty, rather than vice versa. Like CostCo stores, my CostCo U. would keep costs down by stinting on everything other than what matters: delivery of relevant services to the end user (No, students aren’t customers, even if they are paying the bills.). Thus, institutional infrastructure is to be avoided, with savings passed along to the students. Dining halls, residence halls, athletic programs, and even libraries are unnecessary, provided CostCo U is housed in a big city, and students have full access to the internet. Ideally, costs could be kept sufficiently low that tuition would cover essentially everything (That this could make economic sense, assume that each professor makes $80,000/year, and they teach 4 courses per semester, or 8 courses/year. With typical overhead, the yearly salary becomes $160,000/year, so each course costs $20,000/year to teach. If 10 students take each course, they each need to pay $2,000/course. A typical load is 4 courses/semester, or 8 courses/year, so tuition could be $16,000/year. OK, maybe the cost of classroom rental is extra– and, yes, everything is rented – a generous estimate of the cost of classroom rental is $50/hour, or $5/hour/student, or about $225/student for 45 classroom hour course. So students might have to pay, say, a $4000 admin fee, bringing their tuition to $20,000/year. Sorry, no scholarships are possible with this arrangement, but see below.).
Admittedly, lab courses are a problem, though not an insurmountable one. For one thing, relatively few subjects require expensive laboratory equipment, so CostCo U could outsource its lab courses to some nearby traditional university, rent space there, especially during off hours.
A major strength of the existing model of higher education is the combination of research and teaching “under one roof”. A sister institution, “CostCo Research and Development,” might be created to generate revenue by allowing CostCo U professors a vehicle for creating intellectual property. The most obvious model here is the MIT Lincoln Labs, which does contract research in science and technology. However, CostCo U humanities professors will also be encouraged to generate revenue by creating, for example, MOOC course content. While both CostCo U and CostCo research must remain separate partnerships, half time appointments in each and/or other forms of close cooperation will be encouraged. Indeed, certain courses at CostCo U could be internships at CostCo Research.
If entrepreneur Peter Thiel is willing to fund people not to go to college (http://www.thielfellowship.org), perhaps he, or someone like him, would be willing to spring for the necessary start up funds. Founding faculty partners would then buy into the partnership, just as new law firm partners do. Perhaps leading universities would buy into the CostCo U concept, too. Since they are blessed with many more qualified candidates for both students and faculty than they can possibly handle, perhaps CostCo U could be composed entirely by such candidates, without any further effort at selection.
If MIT embraced this paradigm in a serious way (and it easily could, given the size of its endowment and its access to donor funds), it would also address another problem in higher education: that the number of slots in elite universities has not grown anywhere near as fast as the number of people who want them, leading to insane levels of competition that cannot be good for anybody.