HIGHER education is one of the great successes of the welfare state. What was once the privilege of a few has become a middle-class entitlement, thanks mainly to government support. Some 3.5m Americans and 5m Europeans will graduate this summer. In the emerging world universities are booming: China has added nearly 30m places in 20 years. Yet the business has changed little since Aristotle taught at the Athenian Lyceum: young students still gather at an appointed time and place to listen to the wisdom of scholars.
Now a revolution has begun (see article), thanks to three forces: rising costs, changing demand and disruptive technology. The result will be the reinvention of the university.
Off campus, online
Higher education suffers from Baumol’s disease—the tendency of costs to soar in labour-intensive sectors with stagnant productivity. Whereas the prices of cars, computers and much else have fallen dramatically, universities, protected by public-sector funding and the premium employers place on degrees, have been able to charge ever more for the same service. For two decades the cost of going to college in America has risen by 1.6 percentage points more than inflation every year.