The United States has, overall, the most effective system of higher education the world has ever known.”
— Clark Kerr

From a global perspective, the most distinctive characteristic of American higher education is its heterogeneity. While higher education in almost every other country is public and fairly homogeneous across institutions, private institutions are much more widely represented in the U.S., and among public colleges and universities, a high degree of heterogeneity has been tolerated. Clark Kerr’s master plan for the University of California is the archetype for American public higher education, with the UC schools charged with enrolling the top eighth of high school graduates, the CSU system enrolling the remainder of the top third, and community colleges providing access to everyone else. As Arthur Levine remarked in his preface to Higher Learning in America, 1980-2000: “The importance of the California Master Plan was that it stopped the stampede toward a single, homogeneous model of higher education. Excellence, in many purposes was chosen over mediocrity… .”

Over the next 50 years, the rest of the world looked at American colleges and universities with envy. As John Godfrey, former president of University of King’s College in Halifax, Nova Scotia, noted with an analogy fellow Canadians undoubtedly understood: “Wayne Gretzky belongs to the elite of hockey players. He is the best. I am also a hockey player. I am not the best… Nevertheless, I would really enjoy playing hockey for the Edmonton Oilers, given half a chance. I suppose the issue here is accessibility versus elitism in professional hockey. Otherwise stated, the proposition might be phrased: ‘Are we here to play hockey or just fool around?’ ”

American higher education has not shied away from elitism. The social bargain, of course, was that an unequal system, with a level of inequality of inputs across institutions far outpacing any other country, would somehow manage to reduce social inequality, i.e., students coming out of the system would be less unequal than they were coming in.

This certainly seemed to be the case through the 1980s, as a wave of merit-based upward social mobility in higher education allowed colleges to be viewed as key contributors to social equality. But while it was still possible to hold on to this guiding fiction up to the Great Recession, it is no longer. The statistics are damning; we are failing to live up to our end of the social bargain:

According to Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce, “Our postsecondary system has become highly segregated by class, by race and by ethnicity. It is more and more the case that the four-year college system is whiter and more affluent, [while] the two-year system is browner and blacker and more working class and some poor. In the end, the system is predictably reflecting the advantaged in the society.”

The outputs at two-year institutions are well-known, with graduation and transfer rates typically in the 10-20 percent range despite 75 percent or more of entering students expressing a desire to earn a bachelor’s degree. Meanwhile, the key input of spending per student at two-year institutions averaged $13,000 in 2009, while private four-year colleges spent over five times more ($67,000).

Research over the past decade has demonstrated that state policies to sustain heterogeneous systems are increasing social inequality as students are matched to institutions based on their level of preparation. And the situation seems to be deteriorating as non-elite institutions have raised tuition to the extent necessary to offset declines in state support, while elite institutions have raised tuition to increase per student spending.

Higher education is receiving increasing attention as a major source of the increase in inequality and decline in social and economic mobility. Sixty-two percent of Americans raised in the top 20 percent in terms of income now remain in the top 40 percent for their entire lives, while 65 percent raised in the bottom 20 percent remain in the bottom 40 percent. So while we continue to have a merit-based system of higher education, “merit” is increasingly passed down from one generation to the next.

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Elite universities — where the Wayne Gretzkys of academe convene — have come to recognize that this is a major problem. It has taken a while. A study by William Bowen, former president of Princeton University, found that, controlling for test scores, low-income students had no better chance of admission to 19 elite colleges than high-income students. But in the past few years, our wealthiest universities have taken action: “We need to recognize that the most serious domestic problem in the United States today is the widening gap between the children of the rich and the children of the poor,\” said Larry Summers when he served as president of Harvard. The context for this statement, and President Summers’ initiative, was to announce that Harvard would give full scholarships to all its lowest-income students.

Of course, even if Ivy League schools were an accurate reflection of national income distribution, it wouldn’t reverse the overall trend. In any event, this isn’t going to happen; in the rankings-driven arms race, no institution is prepared to unilaterally disarm by admitting large numbers of low-income students with lower SAT scores. Indeed, this is how some colleges have climbed the rankings ladder over the past decade: reducing the percentage of low-income students. So despite generous grant programs from our most elite institutions, it is as true as ever that diversity at top institutions means putting a rich kid from California in the same room as a rich kid from New York.

Replacing loans with grants is not how the social bargain will be remade. The most likely candidate to do so is technology. Using innovative technologies to significantly lower costs while delivering measurably excellent outcomes to students (albeit in very different ways from elite, residential institutions) is the best hope for remaking the social bargain and retaining public support for heterogeneity in American higher education.

In a world where online courses are largely text-based and priced at the same level as on-ground courses, this may seem like a distant hope. But reading the Ithaka S&R report released in May on \”Barriers to Adoption of Online Learning Systems in U.S. Higher Education\” — a report co-written by Bowen and Larry Bacow, the former president of Tufts University — it’s clear that “machine-guided learning” is emerging. According to Bowen and Bacow, machine-guided learning has the potential “to greatly expand the reach of the nation’s colleges and universities to populations currently not served, while at the same time helping to bend the cost curve in higher education… It also has the potential to benefit students by allowing them to have more targeted and personalized learning experiences.”

This is why the recent tsunami of elite university interest in massive open online courses (MOOCs) is so interesting, and yet so maddening. On the one hand, many of the technologies that are and will be deployed by companies like Coursera and edX will be instrumental in helping to test and prove the concept of machine-guided learning. On the other hand, their application in non-degree, not-for-credit courses indicates these institutions either fail to recognize or have no interest in solving the problem.

It is absolutely in the interest of elite colleges and universities to pave the highway so that, if this promise is realized, digital community colleges and state university systems will have the opportunity to drive unprecedented student outcomes for millions of students at all income levels. To do so, elite institutions need to demonstrate new technologies like adaptive learning in the context of degree programs, thereby gaining acceptance from accreditors, regulators, and prospective students.

If we continue to “fool around” with MOOCs rather than “play hockey,” the U.S. system may continue to be the most effective. But it won’t be viewed as just. And therefore either federal support for higher education will go the way of state support, or continued federal support will be linked to new policies that will increase the homogeneity of our colleges and universities. Neither are good options for elite universities.

So rather than using MOOCs to reach “needy” lifelong learners, employed professionals and alumni, much better to blaze the trail so that, through innovative applications of learning technologies, large public institutions have the opportunity to re-instill faith in the notion that continued government support for higher education is a pro- (not anti-) social enterprise.

Ryan Craig is a partner at University Ventures, a fund focused on innovation from within higher education.