A small but consistent part of my job as Dean is approving Directed Studies courses. In nearly every instance, the course is a solution to a problem in the system--a student can't graduate without taking a course that isn't offered during a particular semester, or the two courses a student needs to graduate are offered at the same time, or a student needs to re-take a course offered only by a professor with whom s/he has had a falling out. No one likes Directed Studies courses in these situations--neither the students who have to fit in an additional course in an already hectic term nor the faculty who get no compensation for offering the course. (Not to mention that learning often stumbles in these courses because they emerge at the last minute and are built around a syllabus that assumes classroom interaction, not one-to-one discussions.)
The "solve a problem" approach to Directed Studies is fine in individual cases, but done too frequently it hides near-misses in the system. As Catherine Tinsley et al point out in "How to avoid catastrophe" in the April 2011 Harvard Business Review, leaders are tempted to count near-misses as successes rather than as signs of potentially catastrophic break-downs.
While Directed Studies courses don't signal the same sort of impending disaster as, say, problems at BP's Deepwater Horizon well, they do signal that the curriculum may have too many different classes in it, or that student advising fails to ensure that students move rationally through their majors, or that student demand outpaces capacity in key areas.
Now all of these problems are big and expensive and therefore perhaps better to treat with Directed Studies courses than with thorough-going changes. But if colleges built Directed Studies into their curricula, they could actually improve student learning, deepen faculty satisfaction, customize learning to the interests of students, and support innovation.
Suppose, for example, that a college radically reduces the number of electives in a particular major. Instead of requiring students to choose elective classes (where demand is unpredictable), the department instead requires that students take Directed Studies courses on topics of mutual interest from three faculty in the department. In turn, faculty teaching load would include Directed Studies--perhaps 18 hours of classroom and the equivalent of 6 hours of Directed Studies (or perhaps 12 to 12 if a campus really wanted to support customization and innovation). Finally, the demand and supply for courses would be managed on an electronic exchange--faculty posting the topics they would most like to teach about; students posting the topics they would most like to learn about--a sort of curricular dating service.
In this scenario Directed Studies courses are a benefit to the system, not the sort of melancholy task that occupies the time of Deans trying to do right by students in a system that isn't working quite right.