Charter Colleges: A Market-Based Solution

The cost of higher education in America spirals out of control. Tuition and fees have increased fourfold in real terms in the last two decades, far outstripping the rise in the cost of medical care. At the same time, the quality of instruction plummets, thanks to declining standards, grade inflation, and the hollowing out of the traditional curriculum through the over-specializing of the faculty and the privileging of  abstruse publication over skill in teaching. In a recent book (Academically Adrift: Limited Learning on College Campuses), Arum and Roksa document the decline in student effort and results. At present, things look rosy, with the perceived benefits of a college degree still exceeding its perceived costs. The higher ed establishment encourages students to overestimate the value added by a college degree (the supposed $1 million earning premium, created by confusing correlation with causation), while students significantly underestimate the real costs of the crushing load of student debt they accumulate. In the long run, perceptions will catch up with reality, resulting in a precipitous drop in demand. All of this fully justifies talk of a “higher education bubble,” soon to burst with catastrophic results.

Those of us who care about higher education are looking for solutions that will dramatically lower costs to students and taxpayers, while improving the quality of instruction. Unfortunately, most proposals for reform take the form of top-down, bureaucratic measures, attempting to re-allocate resources from ‘research’ to ‘teaching’ (the basic thrust of Jeff Sandefer’s “Seven Breakthrough Solutions”). Although well intended, such proposals are doomed to fail. One cannot solve problems created by arteriosclerotic bureaucracy simply by adding more layers of bureaucracy. The only solution is to bring market-oriented solutions – competition and entrepreneurship– to bear. One vehicle for doing so is the counterpart of the very successful charter schools movement: the creation within state university campuses of charter colleges.

The internal bureaucracy within each university – presidents, provosts, deans, departments, college committees, and faculty senates — is the main obstacle to real reform. They are all committed to eliminating any real competition, while creating the illusion of a wide range of choices. Students can choose from more than one hundred majors and certificates, but each program is designed to shield faculty from competitive pressures. Dollars do not follow students, and so no department has any incentive to attract students. In fact, the actual incentives work in the opposite direction: the fewer students a department has, the freer its professors are to avoid undergraduate teaching and to concentrate on research.

Charter colleges would change all this. They would have the incentive to create innovative, student-centered curricula that would attract student demand, while also having the incentive to hold down costs and keep prices low. The competition provided by charter colleges would force the state universities’ existing departments to abandon their current, professor-centered models in favor of a market-oriented approach.

Charter colleges would introduce innovative programs that are coherent and well structured, in place of the chaos of thousands of discrete, narrow and unrelated courses on offer now. As things stand now, students in the state universities of Texas have no opportunity to study the Great Books of Western civilization in a comprehensive and orderly way. They cannot satisfy their core curriculum requirements by taking a well-designed sequence of courses, covering the development of ideas of freedom, human dignity and the rule of law. They are denied the chance to pursue integrated interdisciplinary programs like Oxford’s PPE (Philosophy, Politics and Economics), Stanford’s Symbolic Systems (logic, linguistics and computer science). They can’t study the history of Christian thought and art. Charter colleges could change all this, virtually overnight, and they could do so with no additional cost to students or taxpayers.

Here are the essential elements of a successful charter college program: 

1. To launch a charter college, just three things would be required: (i) a governing committee of full professors at the host university (as few as three, self-perpetuating), (ii) a funding institution, which could be either a private corporation or a non-profit organization (including an existing private college), with sufficient funds in the bank to cover the first year’s expenses, and (iii) a curriculum and plan of instruction that has been approved by the Board of Regents. A charter college would not have to secure the approval of university administrators or faculty committees, councils or senates.
2. Each charter college may offer bachelor’s degrees in specific fields, with its own definition of required courses, subject only to the approval of the Board of Regents and the Higher Education Coordinating Board.
3. A charter college may offer courses from the state’s official course inventory (such as the legislatively required courses in American history and government). The host university must count all such courses as satisfying its distribution requirements, on an equal footing with courses transferred in from other state colleges and universities.
4. Each charter college shall receive from the host university an income corresponding to 80% of the tuition and fees generated by student enrollment in its courses. If the host university uses flat-rate tuition, then the charter college’s share of undergraduate tuition will be proportional to its total enrollment. With this income, the college will be responsible for hiring teachers and advisors for its programs.
5. The charter college’s income will be reduced in proportion to its ‘grade inflation index’. Students receiving grades in charter college courses that lie above the host university’s grading curve will not be counted toward the college’s enrollment, preventing the ‘buying’ of student demand through inflated grades.
6. Each charter college will be authorized to issue tuition rebates to its students, as long as these rebates are funded from the college’s own income.
7. The charter college will be empowered to hire its own instructors and advisors, as well as to pay professors at the host university stipends to teach its courses as an overload (up to two additional courses per semester).
8. All students at the host university will have access to the charter college’s courses through the university’s schedule of courses and course registration system. The charter college may, if it wishes, add additional admissions requirements.
9. The charter college will be able to use under-utilized classrooms and labs on the host university’s campuses, by scheduling its courses at unpopular times (early mornings, evenings, weekends and summer). Hence, no additional resources will be required.
10. Students graduating from a charter college will be entitled to transcripts and diplomas from the host university (with acknowledgment of the charter college’s role), as well as to all alumni privileges and services. 

The charter colleges will cost state universities nothing: in fact, the host university will profit from every student enrolled in a charter college course, since it will still collect 20% of the student’s tuition while not having to provide any instruction. The charter college will make use of existing and underused facilities.

The charter college reform could be implemented by the Board of Regents at any state university: no new legislation or regulation would be required. It is entirely self-funding, so fiscal constraints provide no obstacle to its introduction. By relying on the genius of the free market, Texas could propel itself into the lead of higher education reform, widening accessibility and improving quality.


Robert C. Koons is a professor of philosophy at the University of Texas-Austin 


5 thoughts on “Charter Colleges: A Market-Based Solution

  1. Very interesting ideas here. There are thousands of unused (or barely-used) classrooms at our big public universities, just sitting there, air conditioned, gathering dust.
    Why not allow for creative and innovative ways to utilize that space?
    Why not at least test out charter colleges, the same way charter schools at the high school level were first tested? If they work, keep them and/or expand them. If they don’t get them go away.

  2. Professor Koons, though well-intentioned, appears to have fallen victim here to a fit of hysterical optimism. Why a market oriented approach given current culture and today’s students would privilege, say, courses in the Great Books of Western Civilization over Lady Gaga or Justin Bieber studies is nowhere made clear, much less probable. The combination of a more business oriented academic model leading to an increase in coherent studies of Western Civilization or Christian culture strikes me, as argued here, as little more than a desperate wish.

  3. I agree with the previous commenter. It sounds like you are describing a type of education taking places in private and small liberal arts colleges at a high premium that students and parents are more than willing to pay. Also, how would this system avoid becoming a two-tier system with charter degrees holding less prestige than the non-charter degree? Will the charter student be able to avail themselves of the full college experience- using the facilities, participating in clubs, social networking etc.- and if so how will this be funded? Why would a private company or non-profit want to start a charter college? It would be helpful if you developed this idea, because even after reading it several times, it seems little thin. Why don’t we just beef up vocational and 2-year colleges with the goal of getting students ready to work and if they want to study Christian Art later then fine they can always go back of take some continuing ed?

  4. Why not just send students to the myriad small liberal arts colleges that dot the landscape? This proposal to create a new kind of college smacks of inventing the wheel.

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