I ran across an interesting article about college tuition on the Credit.com blog.  Entitled The $7,000 Master’s Degree thats Scaring Colleges, personal finance writer Mitchell Weiss reports that Georgia Tech plans to offer a fully online master’s degree in computer science for $7,000 – roughly one-seventh the cost of an on-campus degree (i.e. around $50,000).

As an Atlanta resident and native I can tell you that Georgia Tech is considered one of the nation’s finest engineering and computer science universities and that its undergraduate programs are considered one of the top values in higher education, especially for Georgia residents who pay in-state tuition.  In other words, this is one of the top universities in the country offering a legitimate master’s degree online.

In a broader sense, however, Georgia Tech’s pricing model suggests that much of the cost of higher education arises from services ancillary to education.  If a “normal” computer science master’s degree costs $50,000 and the education component is $7,000, this means that $43,000 of that tuition covers administration, housing, student activities, construction and campus maintenance.

The current model of leafy campus based higher education has resulted in a situation where newly minted college and post-college graduates are leaving school with tens of thousands of dollars in student loan debt.  Often this debt comes in the form of private student loans, which are not dischargeable in bankruptcy and are not subject to federal student loan income based restructure.  Most importantly a wide disconnect exists between likely earnings from the jobs available to graduates and their student loan debt service.

Unfortunately most student loan borrowers do not become aware of this disconnect until after they have completed their education and the student loan payments start to come due.  As a student loan lawyer, I try to help horrified student loan debtors find solutions to these difficult debt problems.

The leafy campuses have done a good job so far of preserving their monopoly on the concept of what constitutes quality higher education¹.  Unfortunately for them, when schools like Georgia Tech see a market opportunity, it may be only a matter of time before the entire higher education model in the United States undergoes a sea change.