Outside of education, small organizations get a lot of praise for being efficient with their resources--they adapt well, move quickly, and because in small businesses everyone needs to know a bit about everything, they innovate as well. They do only a few things, but they do them well. Let's call this the responsive model of efficiency.
As businesses get larger they trade many of these efficiencies for economies of scale, which at the production and systems levels mean some cost savings. You can make widgets cheaper (or sell them more cheaply) if you produce (or sell) millions of them. Software is cheaper per employee if you get an enterprise-wide solution. Managers are cheaper if they manage more employees, etc. Interestingly, this often means better quality in the products, since standardized processes lead to standardized outcomes.
In education, it is largely the economies of scale version of efficiency that wins out. Put dozens of schools in a district and administrative costs per employee go down. Put dozens of students in the classroom and the cost of instruction, per student, drops. (Interestingly, though, quality doesn't improve. It would be interesting to know if in big systems, though, quality became more standardized.) We'll call this the scale model of efficiency.
Small schools (especially colleges), on the other hand, pride themselves on their willingness to avoid economies of scale. They are proud of their small classes. They have majors with only a handful of students in them. They offer tiny versions of all of the programs you would find at bigger schools. And their costs are high, as they make the case that small programs mean big quality. In public schools you see this tendency most clearly in charter schools who eschew system efficiency for the ability to do what they think best for their students.
It seems like higher education ought to be more thoughtful about efficiency. Rather than accept the responsive or scale model of efficiency, they ought to blend them. Here is the mix I think would lead to low cost and high quality learning:
1. Narrow curriculum (responsive)--small colleges ought to take advantage of their intellectual connections and offer a narrow, focused curriculum rather than offer every major under the sun. Doing so saves money and it allows for meaningful connections to develop between faculty and across the band of disciplines. It also permits the sort of intellectual innovation that happens in focused small businesses.
2. Universal pedagogy (scale)--If colleges think that their model of education really works, they ought to employ it across the board. Students should come to expect that every class will include a group project, or that service-learning happens in every year, or that faculty focus on asking questions. A universal pedagogy allows for improvement across the board. It also allows the campus to specialize, and by so doing, distinguish itself from the big, "we do it all" schools. Finally, it permits savings--no need for a projector in the ceiling of every room if PowerPoint presentations don't exist on your campus.
3. Standardized Core Content/Large Lectures (scale)--These days content is essentially a commodity. Campuses ought to take advantage of that fact, and treat it as such, either by ensuring that every section of physics, for example, includes the same content, or by delivering core content to very large groups of students. It saves money and ensures reliability across the organization.
4. Small activities (responsive)--while content is a commodity, meaning-making is a specialty. As such, students ought to have access to a wide range of meaning-making experiences so that the best meaning for them (be it about physics or about themselves as humans) emerges from their small activities. Note that I say small, not individualized. Small groups allow students to have the same opportunities for collaboration and innovation that their faculty do.
I don't mean to suggest that efficiency is the sole window onto cost and quality, but it may be a useful one, especially if schools can get past the idea that economies of scale is the only way to low cost, or that ignoring them is the only route to quality.
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