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By Justin Chapman

California Governor Gavin Newsom recently called the college textbook industry a “racket” as the cost of textbooks has become a barrier to success and completion of degrees for California’s 2.1 million community college students. For 10 years, Michelson 20 Million Minds Foundation has been highlighting the need to make textbooks more affordable for college students. In August, Newsom signed a budget allocating $115 million to the Zero-Textbook-Cost (ZTC) Degree Program.

Jerry Sullivan, former LA Business Journal editor who now runs his own media outlet called SullivanSays SoCal, interviewed Michelson 20MM CEO Phillip Kim for an episode of the “Making an Impact with Michelson Philanthropies” podcast series about the textbook affordability issue. Listen to the full conversation here, and read a full transcript of the conversation here.

Michelson Philanthropies is an organizational umbrella overseeing various initiatives and programs intended to “make life a little less unfair.” The multi-faceted organization was founded by Dr. Gary Michelson, a surgeon-turned-medical device inventor, and his wife, Alya Michelson, a journalist by training.

Sullivan asked Kim why students need protection from the publishing industry.

“We should always remember these are publicly traded companies that must answer to boards and investors and chase profitability, and we certainly can’t fault them for that, but we would be well served to remember that they exist that way and that we should protect our most vulnerable students accordingly,” Kim said. “Right now, college system leaders are inking contracts with these large publishers that will obligate our students to pay hundreds of millions of dollars in the coming years.”

He added that many of those contracts automatically enroll every single student in the class to pay these subscription fees, do not cap fee increases, and do not allow students to find affordable alternatives.

“Over the last 30 years, textbook prices have outpaced inflation by three times,” Kim said. “For much of that time, students have been paying over $1,000 a year on textbooks. During that time, the publishing industry consisted of five big players that controlled 80 percent of the market. There’s been some consolidation and now we’re actually down to only three big firms that control 80 percent of the market. Rarely do you see more consolidation like that and a higher concentration of power leading to reduced prices. We’re expecting it to go the other way.”

Given that the transition to digital textbooks would conceivably reduce the cost of them, Sullivan asked whether prices are remaining at “racket” levels despite the digital transformation.

“People have to appreciate what a seismic shift we’re actually in [with regards to the textbook industry]. We shouldn’t underestimate the destabilization that’s going to happen here.”

—Phillip Kim, CEO, Michelson 20MM Foundation

“The bigger concern is what happens now over this next decade,” Kim said. “People have to appreciate what a seismic shift we’re actually in. The last time there was such a fundamental change in medium was back when the printing press came into play. We shouldn’t underestimate the destabilization that’s going to happen here. What we are seeing now is that yes, prices are dropping as publishers engage in a subscription model. It could be $14.99 for access to their whole catalogue, but for a student, particularly one that might be lower-income, a grant recipient, or a first-generation student, someone that’s working and on financial aid and thinking about every dollar mattering to the total cost of their education, they may have to access three different publisher platforms in a given semester.”

Sullivan asked Kim to provide an overview of California’s community college system and why that has been the focus of affordability efforts.

“If you look at the system as a whole, it’s 116 colleges, over 2 million students, and 60,000 faculty,” Kim said. “It is the largest single system of higher ed in the entire country. Within that community, seven out of 10 students have reported experiencing food or housing insecurity in recent years. What we’re talking about is one of the state’s if not the nation’s most critical vehicles for upward mobility and economic prosperity, this one system.”

Research studies have shown that the cost of educational materials are major factors in community college students’ decisions to withdraw from school—which prompted 20MM to get into this space, Kim added.

“Dr. Michelson heard about a group of students at Santa Ana College who were all qualified but were not able to return explicitly because of the cost of textbooks,” he said. “There were faculty members there that were reaching into their own pockets to support those students.” Dr. Michelson made a small grant to the college initially, “but we immediately started to think about how we could deal with this problem.”

Listen to the full podcast here. To learn more, visit 20mm.org and ztc4ca.com.

Michelson 20MM is a private, nonprofit foundation seeking to accelerate progress towards a more just world through grantmaking, operating programs, and impact investing. Co-chaired and funded by Alya and Gary Michelson, Michelson 20MM is part of the Michelson Philanthropies network of foundations.