The Priceline model for choosing a college

I met today with a group of enrollment managers at the NACU conference at North Central College. One told the story of a father who came to the financial aid office on his campus and said "I have $xx,xxx dollars to spend on higher education for my son each year.  Make me a deal." This scenario was quickly called "the priceline model" of higher education.

This story is enlightening for what it tells us about debt, decision-making, and the place of higher education in the economy.  The people in the room agreed that this scenario would become more common in the near future, in part because of the cost of private higher education, in part because of the New Frugality, and in part because higher ed is no different from the rest of the economy where consumers are seeking more customized, personalized pricing and experiences.

How would a priceline model influence higher education?  It would do three things, I think.  First, it would shake the prestige nonsense out of higher education selection.  If a consumer of higher ed were to select parameters (location, field of study, NSSE scores, etc.) and then offer a price, students would end up in one of the thousands of good institutions in the US, but almost certainly not in the ones that use price as a proxy for prestige.

Second, it would encourage innovation on the margins of higher education.  New higher ed providers might "compile" an educational experience for students, putting together a set of classes from disparate institutions, united by advising, or an internship, or something else. The result would be a college degree that met the consumer"s demands by building an institution from scratch. Or providers might go in seriously for differential pricing (a history degree would be cheaper than a business degree, for example) or disaggregated pricing, so that instead of paying tuition for classes, you pay instead for a certain amount of faculty time for each class, or you select having a mentor in one class but not for another.

Third, institutions would lose the relationships that often bring students to campus and keep them once they arrive.  Instead, the decision to choose a college would be made almost entirely on cost.

Would this make for a better learning education for students?  Would it improve or diminish the quality of colleges and universities?