“I wish college were like this!”

I hear this exclamation over and over at the seminars put on by organizations like the Foundation for Economic Education and the Institute for Humane Studies.

Attendees are blown away by the excellence of the content, the professors’ willingness to engage students even in free time, and the intelligence and interest level of the other participants.

And it’s not just the students who see a difference. Faculty also talk about how these seminars are far better than typical college classes.

What causes this distinction?

One obvious explanation is self-selection. Faculty and students who choose to give up a week of their summer to discuss ideas are high caliber and highly engaged.

But college has self-selection, too. Shouldn’t it be full of professors and students who are earnest truth and knowledge seekers of the finest quality?

With the rare exception of one or two classes, college is nothing like this. Why does the self-selection only produce quality learning in these seminars?

It’s because college offers an official credential — a degree. Educational experiences outside of college do not.

That’s it. Every other difference is insignificant.

Imagine how different these summer seminars would be if they offered an official, government-approved piece of paper at the end — something without which you couldn’t get past the first screening of job applications. A summer seminar selling a magical ticket to a job that Mom and Dad would feel proud of and that society would respect would be overwhelmed with attendees. And many of them wouldn’t give a hoot about what they had to do to get the paper at the end. Demand for faculty would spike, and many instructors would do whatever it took to get the paycheck and retreat to quiet corridors where they could be with their books and the few colleagues who actually care.

It would become, in a word, college.

The evidence is everywhere that the credential is killing the classroom. I’ve guest taught entry-level college classes before. It’s pretty painful. Most of the students are half asleep, grumpy, forlorn, texting, and generally inattentive.

I like to joke that if aliens from another planet came down and observed a typical class at a typical university and were asked what they had witnessed, they would scan the cinder block and fluorescent room, ponder the pained look on student faces, and conclude it was a penal colony. Imagine their surprise when told these people are not only here of their own free will, but paying tens of thousands of dollars for their suffering.

Not every classroom is that painful, but few inspire the joy of learning. Consider this: when class is cancelled, everyone is happy — students and professors alike. What other good can you think of where you pay in advance and are excited when it’s not delivered?

What other good can you think of where you pay in advance and are excited when it’s not delivered?

But what is the product that colleges are selling? The professors may not always realize it, but it’s not their lectures the students are buying. It’s nice to get a little enjoyment and knowledge out of the deal, but that’s not what tuition pays for. After all, if that’s all that students were seeking, they could simply sit in on classes without registering or paying.

They are there for the credential. The credential is the signal to the working world that they are at least slightly better, on average, than those without it. That’s it.

In some fields the credential is required, and in many others alternative ways to measure competence are illegal, so the signal of a degree retains artificially enhanced value. Even so, that value is fading.

Large institutions form because transaction costs are high, with tons of individuals exchanging goods, services, and information separately. This is why family names mattered so much in times past. Economist Ronald Coase famously explained the existence of firms using this basic logic. It works for universities, too. When it’s hard to prove your worth, you get a trusted institution to vouch for you. It’s a shortcut that reduces risk on the part of those who want to hire you.

But each passing year, the value of this institutional reputation-backer declines compared to the available alternatives. Technology has dramatically reduced information costs, so it is now easier than ever to vouch for yourself — or to get vast networks of clients and customers to vouch for you.

Whose steak is the best? Where once you had to rely on a few food critics or word of mouth among a small set of friends, now Yelp reviews let you consult a vast array of food lovers.

With reputation markets, you can build a better signal than what college is selling.

As long as legal and cultural norms make the degree the primary signal of value in the marketplace, the classroom will continue to decline in quality. When the majority of students are purchasing one good (the credential) but are made to endure another (the classroom), they will continue to see formal education as more of a cost than a benefit — and they will behave accordingly, sliding through to minimize pain and suffering.

The classroom isn’t doing the credential any favors, either. Most employers admit that a degree signals very little these days. Everyone has one. Most universities sell as many as they possibly can. Cases of professors passing bad students and universities passing bad professors are well known, and the institutions’ clout is waning.

Even employers who still require a degree ask for much more on top of it, because sitting through a bunch of classes you didn’t care about and doing the minimum amount of passionless hoop-jumping doesn’t convey much about your energy, eagerness, and ability to create value in a dynamic market.

My professor friends sometimes chastise me for what they think are unfair criticisms of college. What I’m suggesting, however — that the credential should be separated from the classroom — reflects my respect for great professors and the value of their style of education.

Classroom learning at its best — classes like those I’ve experienced in summer seminars — is so powerful and so valuable that I hate to see great education destroyed and diminished by artificial attachment to a supposedly magical credential. The subsidies, loans, restrictions, requirements, and licensure laws, as well as the parental and societal worship of college as the great economic security blanket, have filled the classroom with so much clutter that it’s a rarity for quality interaction to occur.

I’m excited to see the cleavage between the credential and the classroom happening right in front of us. It’s not the proliferation of free online university courses that will fundamentally change the college experience in countries like the United States, where access to information is already rich. The “massively open online course” is just a new delivery system for a current good — and one that most Americans aren’t buying anyway. The real shift is occurring as fewer and fewer employers look to the degree as the dominant signal, and as more and more young people build their own.

When the dust settles, we’ll see great teachers and researchers doing their thing with eager audiences of students who are actually there to purchase that unique product, not just suffering through it on their way to getting something else they really want. The host of mediocre faculty will lose, but the good ones will win big, both in economic opportunity and in quality of the craft. So will the young customers who wish to learn from them.