Education's Coming Revolution : Free Market Forces At Work

What the free market looks like! When the demand begins to fall on a product, the manufacture has to lower his price or go out of business. The same holds for education. When the cost of getting an education become prohibitive, someone will think of a way to present an alternative at a lower price.

So if the institutions don't or can't lower their prices to meet the competition they will have to close their collective doors. It's called the "invisible hand" where free market competition works to the benefit of all in the society.

The Coming College Revolution
Source: "Creative Destruction," Economist, June 28, 2014.

July 2, 2014

The traditional college model will soon be transformed into one that is more flexible, cheaper and mobile, according to the Economist.

Most students still recognize the benefit of a college education, with a degree increasing lifetime incomes by as much as $590,000 in net-present-value. However, even though colleges and universities are churning out millions of graduates this year, rising costs, changing demand and emerging technology are leading to a "reinvention of the university."

• The cost of higher education has been rising by 1.6 percentage points more than inflation every year over the past two decades, due in part to government funding and the premium employers place on degrees.
• According to an Oxford University study, nearly half of all occupations are at risk of becoming automated in the next few decades, meaning that people will need to strengthen their human capital.
• Technology enables students to be educated at fraction of the cost of attending a university. "Massive Open Online Courses" (MOOCs) allow colleges to offer cheaper classes to employees and students.

These three forces will lead to more prestigious colleges selling their MOOCs around the world. Mediocre schools, on the other hand, may see decreased revenue and school closures. While this might hurt those schools, the new model could benefit students, reducing the costs of higher education and making it more accessible to students, including older workers in need of retraining.