Have COVID’s pricing and learning disruptions opened a Pandora’s box?
A common question for colleges today is whether to reduce tuition prices if they cannot provide on-campus classes due to the COVID-19 pandemic.
The short answer, both legally and morally, is that colleges should not charge students for services they cannot or do not deliver.
The ultimate answer is more complex and requires a disaggregating analysis of the services that that were included in the price of tuition, including a review of the value associated with in-person interactions.
Consideration of these questions by policymakers, parents and students has amplified dissatisfaction with the college value proposition overall that has been building for a number of years and is accelerating a demand for change.
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We saw something similar play out in other industries such as cable TV. When consumers became fed up with paying for services they did not want, they turned to Netflix, which was successfully disrupting the cable TV industry and its bundled services model by providing viewers with an innovative, a la carte option.
Last spring, the pandemic caused the canceling of on-campus delivery and a rapid transition to “online” classes mid-term, impacting tens of millions of students.
Some students were transferred to an existing online program offered asynchronously. Many other students remained in existing on-ground classes, but the delivery format switched to what has been dubbed “Zoom U,” where on-ground faculty members continued offering programs remotely either live via Zoom or YouTube.
Unlike their online counterparts, these programs maintained some level of real-time faculty and student interaction. What they oftentimes lacked, however, were the additional student support services provided with online programs that are necessary to succeed in an online environment.
Students and parents questioned whether the educational quality of these options was comparable to the on-ground classes for which they originally registered and paid. They also closely examined the other services that were part of their bundled educational package.
When colleges were unwilling to either discount or refund tuition and fees for the diminution in quality and services no longer being provided, more than 200 class action lawsuits were filed. Legal theories in the lawsuits center primarily around contract-related claims alleging that online or remote instruction is inherently inferior to in-person instruction.
Many courts, while rejecting so-called educational malpractice claims, appear to be allowing breach of contract claims to move forward to learn more about what the terms of the “contract” between the student and the university actually required.
Colleges try to adjust
A number of colleges, in anticipation of further pandemic related disruptions, adjusted their student “contracts” to give them an unfettered right to change the delivery method. Lawyers will continue to help colleges reduce their legal risks and the pending lawsuits will eventually be worked out in the courts, but legal liabilities are the least of their worries.
The questions raised about the value proposition are difficult for colleges to address since many institutions are already struggling financially. The sudden move by colleges to online or remote learning last spring also exposed their technological shortcomings.
Many colleges continue to be required to offer their programs through online or hybrid modalities, and also continue to be pressured to drop their prices. Despite claims that online instruction costs less to deliver and should be provided at a lower cost, evidence shows that shifting programs online is unlikely to result in cost savings from face-to-face instruction.
Giving students what they want
Exponential advances in technology and the disaggregation of services in areas such as banking, music, law and even healthcare have caused consumers to expect personalized products and services in just about every area of their lives.
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So what do college students want? The primary reason students go to college is for workforce outcomes. And their interest in online and hybrid education is strong regardless of COVID-19.
There are also markets for unbundled offerings around areas such industry-recognized credentials and around employment or employers. Finally, and importantly, they want the gap between cost and value closed.
If colleges can learn anything from the Netflix phenomenon, it is that if they do not adapt to the current environment, someone will come along and provide consumers what they want.
Tony Guida is a partner and team lead of the Education Industry Practice Group at the law firm Duane Morris LLP.