Why is California’s Free College Textbook Plan Still Delayed?

Open educational resources (OERs) are free online alternatives to commercial textbooks that turned into a hot political issue in California in 2021. During the press conference that unveiled his proposed budget that January, Governor Gavin Newsom said it was time to “deal with the racket…that is the textbook industry.”

The Governor then claimed he was “committed” to addressing the “usurious costs associated with textbooks…and so we’re going to do more this year…on open source textbooks,” he said. “We in California have an obligation to disrupt that entire system nationwide.”

Except for their publishers, nobody is happy about the high prices of the college textbooks sold by America’s $3.2 billion university textbook industry. These days, a traditional commercial hardback textbook in a large-enrollment introductory prerequisite course like Principles of Economics can typically cost students about $140. Many others cost several hundred dollars and range up to $400, with prices averaging from $80 to $150. In late 2022, the average college textbook costs $105, and a typical student must buy four or five of them every semester.

University textbooks are expensive to produce, and publishers have sold them at premium prices throughout the post-World War II era. But several reasons exist why college textbooks have recently become so outrageously expensive.

According to this 2018 study by strategy professor Dr. Matt Schmitt at the UCLA Anderson School of Management and economist Dr. Tongtong Shi with Compass Lexecon, a key reason is that the market for university textbooks is so unusual. College students have to purchase the precise book selected by their professor, and the publishers have developed strategies that exploit this captive market.

For example, publishers frequently revise college textbooks so that the new editions justify higher prices. Publishers usually want revisions for marketing and branding purposes even when the new edition contains no updated information. That’s because new editions accomplish two objectives: they drive up sales while simultaneously justifying higher prices—and both objectives can result in significantly increased revenue.

Offering a revision provides an accepted means of boosting sales. In fact, an average revision will boost sales by about 30 percent. As Dr. Schmitt and Dr. Shi point out, the reason is that it will render the previous edition’s used copies useless and kill off their secondary resale market. This is partially why all popular titles that are moneymakers for the publishers are typically revised every three years, and in many instances, even more frequently.

Interestingly enough, the revised edition’s sales typically increase even when the new edition is more expensive than the previous one. That’s almost always the case because textbook prices, on average, increase by 12 percent with each revision. Publishers raise prices even after redesigning the book’s layout without changing any of the language, and also raise prices irrespective of what the inflation rate might be at the time.

One might suppose that with the advent of digital versions, textbook costs would fall, since with these products no costs for paper, printing, or shipping exist. But with ebooks, publishers typically require students to purchase premium-priced “access codes.” These codes provide the student with temporary access to a learning management system (LMS) server containing the latest text version. The LMS might also contain supplementary materials and critical resources required for students to complete their assignments and study for examinations.

But because these access codes expire at the end of the term, students cannot sell or share used ebooks after they’re done with them, and they have no access to those ebooks after the course ends. In other words, under these arrangements, students no longer buy textbooks that they own in perpetuity. Instead, they buy temporary subscriptions that provide access to digital content, including the latest textbook and other materials required to pass the course. However, such subscriptions only provide access until an expiration date at the end of the term.

Some colleges even mandate ironically labeled “inclusive access” arrangements that bundle the fees for these access codes into tuition. These schools make buying the latest textbook version compulsory if students want to graduate. Students can’t opt out if they don’t want to buy the new version and can’t buy used versions at lower costs, as students could with printed books.

These “access codes” are nothing new. As early as 2013, one survey of college students by the Student Public Interest Research Groups revealed that 80 percent had to purchase such an access code to complete at least one of their classes.

Consequently, by any measure, textbook prices have soared since the 1960s at rates far exceeding rates of inflation. The Education Data Initiative reports that from 1977 to 2015, the cost of textbooks shot up 1,041 percent, outpacing the inflation rate during that period by 238 percent and equivalent to about triple America’s inflation rate.

Believe it or not, by 2019, textbooks had become so expensive that the chief executive officer of the publisher Cengage Group—the 14th largest book publisher in America, which along with McGraw Hill and Pearson, controls 80 percent of the college textbook market—actually characterized their prices as “unconscionable.” Cengage’s CEO Michael Hansen told Inside Higher Ed in May of that year that “the price increases on the sticker prices of textbooks were unconscionable.”

Voting at record rates, the college student voting bloc that appears to have finally made decades of astronomical textbook prices into a political issue during the pandemic’s economic upheaval is California’s two million community college students. As we pointed out in our recent OnlineEducation report entitled “Overwhelming Online Course Demand Reshapes Community Colleges in California,” this group typically comes from low-income backgrounds; almost 50 percent of those students receive tuition fee waivers from the community colleges they attend because of their low-income status.

However, the pandemic has been financially devastating for this group. By November 2020, 20 percent of the state’s community college students were homeless. Yet the average full-time California college student spends $800 annually on textbooks. This means that many of the one million non-waiver students who pay the community college system’s $46-per-unit tuition fee are only spending about $150 less on their textbooks than on the cost of tuition each semester.

“We can’t control the cost of housing, we can’t control the cost of food, we can’t control the cost of healthcare. But the system and the players within the system can at least control the cost of instructional materials,” said Geoffrey Baum, executive director of the Michelson 20MM Foundation and a leading advocate in favor of replacing textbooks with open educational resources.

Open educational resources (OERs) are free commercial textbook alternatives available to anyone online.

For example, on Rice University’s OER download site OpenStax which saved students $1.78 billion over the past decade, the ebooks available as free downloads contain peer-reviewed content by expert authors that’s similar to that found within standard textbooks. Moreover, expert authors and editors organized the OER ebooks such that their sections follow the sequences of topics within the best-selling textbooks in each subject area. That makes these free textbooks easy for professors to substitute in place of the leading commercial texts currently in use at most colleges and universities.

Since 2013, a movement advocating using OERs has slowly but steadily gained momentum among higher education faculty and administrators. In 2018, this trend was bolstered by a large-scale study of 22,000 undergraduates across America by the Association of American Colleges and Universities. Led by the AACU’s Dr. C. Edward Watson and Dr. Nicholas Colvard of the University of Georgia, the study demonstrated a variety of superior outcomes for students who used OERs instead of commercial textbooks.

In their paper entitled “The Impact of Open Educational Resources on Various Student Success Metrics,” the research team reported that adopting open educational resources did much more than merely save money for students or prevent them from taking out more student loans. In courses that used OERs, students earned significantly better final course grades and fewer “DFWs” (letter grades of D, F, or Withdrawal).

The study also drew scrutiny to the equity benefits of OERs because Pell Grant recipients, part-time students, and members of populations historically underserved by higher education significantly boosted their final grades and reduced their DFW rates in these courses.

As they discuss in this video of their presentation at the 2022 Open Education Conference, Dr. Julia Seaman and Dr. Jeff Seaman of Bay View Analytics reported that in 2019, the proportion of American college faculty who were aware of open educational resources shot up by 19 percent over 2018, to 44 percent. As of December 2022, that awareness rating now stands at 57 percent, a 30 percent increase over 2019 and the first time that over half of all faculty possess some awareness of OERs.

Since 2014, that awareness has more than doubled. And today, 20 percent of faculty require OER materials in their largest enrollment course—a 300 percent increase over the mere 5 percent of instructors in 2015.

Everybody hates expensive textbooks, and so does California’s legislature. Governor Newsom originally requested $15 million for a Zero Textbook Cost (ZTC) program for community college students, but the Assembly approved a whopping $115 million for it—666 percent more than what he proposed—in the budget effective on July 1, 2021.

So where’s the controversy? What’s controversial is that this $115 million has languished untouched for 16 months, and it’s unclear why. In July 2022, the ZTC project was already six months behind the Newsom Administration’s schedule, and at the time of this writing in December 2022, the as-yet unlaunched program is now a year behind schedule.

Here’s what EdSource reported on July 18 about this curious delay:

For months, the money has been with the statewide chancellor’s office that oversees the colleges.

Officials said they can’t distribute funds until they finish developing an application for the colleges to fill out. That application is expected to be available to the colleges within the next month.

They also needed time to build a portal that will allow the college system to track whether the free textbook programs are contributing to student success.

That peculiar report left observers wondering why it might take a state agency 16 months to develop an application form linked to a tracking database—the kind of online software platform routinely built all the time by Silicon Valley startups.

A few days later, the Michelson 20MM Foundation leaked a potentially more credible and certainly more disconcerting report. The foundation published an excerpt from Baum’s frank testimony at a July 2022 hearing before the CCC Board of Governors that assigned responsibility for the delay directly to resistance from the chancellor’s office:

[The ZTC] effort is being stalled while students are being eaten alive by soaring inflation and painful increases in gas prices. What more do you need?

We have the lessons learned from the pilot program. Both our foundation and the Academic Senate have offered implementation strategies. We worked with other funders to provide the resources to underwrite a full-time position to help with implementation.

The system office says there needs to be more study and a task force or even a reconsideration of how these funds are to be directed. That’s unacceptable while students are suffering.

As we go to press in December 2022, it is still not apparent what steps, if any, the Board of Governors has taken or may take in response to Baum’s testimony. Should the CCC system office actually insist on additional steps such as those Baum specified, those moves could invite legal challenges by consumer and student groups who seek to compel implementation without further delays. That’s because it is not evident how the ZTC legislation’s language approved by the Assembly specifically gives the chancellor’s office the authority to require additional time-consuming steps like more study, a task force, or a funding reconsideration.