Home Cost of a Degree Is It Possible for a Free Market to Deliver Free College?
Is It Possible for a Free Market to Deliver Free College?

Is It Possible for a Free Market to Deliver Free College?


In Monday’s Wall Street Journal, investor Daniel Pianko pens an opinion piece, stating that higher education is at the stage today that the stock brokerage industry was in 30-40 years ago. (Full disclosure – Mr. Pianko is a board member of APEI, the publicly-traded education company that I led for 15 years.)

Mr. Pianko began his career as a junior investment banker and “earned” the job of carrying bags for the CEO of Ameritrade, the company that enabled stock trading by touch-tone phone. Seven years later, Ameritrade introduced online stock trading.

At the time, the universal trading fee for stock brokerage firms was $199 per trade. Ameritrade upset the apple cart by offering the ability to trade unlimited shares for the unheard-of amount of $8 per trade.

Today’s brokerage firms charge little to nothing for stock trades. Stock brokerages now make their money from new revenue sources.

Mr. Pianko notes that mega-universities Southern New Hampshire University (SNHU) and Western Governors University (WGU) have already become some of the largest and fastest growing non-profit universities in the country by charging less than $10,000 per year in tuition. Each university serves over 100,000 students, using online delivery and competency-based instruction to lower costs without lowering academic quality.

Mr. Pianko maintains that these very large universities will leverage technology to drive tuition revenue to zero over time. I believe that they could reduce tuition substantially now if they were able to reduce their marketing expenditures, which likely lead the country as well.

Among the ideas that Mr. Pianko cites (and which are not new) as possibilities for universities like SNHU and WGU to utilize as a way to generate alternative revenues and reduce tuition are the formation of partnerships with employers, income sharing with college students post-graduation, and government-issued, social-impact bonds tied to successful outcomes.

The lessons from Ameritrade’s innovation and its impact on the brokerage industry should be a red flag to every college president and college board member in this country, according to Mr. Pianko. Technological change impacts industries that established players ignore at their peril. In the wake of the pandemic, the winner will be the institution that takes the cost of online learning down to free.

I agree with Mr. Pianko’s conclusion, but I also have some caveats. First, the higher education industry is heavily subsidized by federal and state funding. The brokerage industry was not. Subsidies can help businesses last much longer than they should last. If the leadership in Congress and the White House changes over in the next election, expect increased subsidies to higher education.

When Rick Perry was governor of Texas, I observed with interest his call for the $10,000 bachelor’s degree. As a leader of a low-cost online institution (American Public University System, also known as APUS), I noted that we would have to reduce our tuition by two-thirds to accomplish that. Without spending a lot of time in research and development, I figured it was theoretically possible to offer a bachelor’s degree for $12,000 total, so $10,000 was not out of reach.

Second, it’s easier to offer a degree at a substantially lower price point when you are a new entrant to higher education than when you are an incumbent facing the complexity of how to replace revenues reduced by a price decrease with a volume increase. For this reason, I don’t think any of the large mega-universities will be the first to offer a no-tuition four-year degree. However, it’s very possible that a tech startup could.



Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In July 2016, he retired as APUS president and continued as CEO of APEI. In September 2017, he was reappointed APUS president after the resignation of Dr. Karan Powell. In September 2019, Angela Selden was named CEO of APEI, succeeding Dr. Boston who will remain APUS president until his planned retirement in June 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. During his tenure, APUS grew to over 100,000 students, 200 degree and certificate programs, and approximately 90,000 alumni. In addition to his service as a board member of APUS and APEI, Dr. Boston is a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, a board member of the Presidents’ Forum, and a board member of Hondros College of Nursing and Fidelis, Inc. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus.


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