Transforming America’s workforce requires innovative approaches to higher education financing that reflect the needs of today’s students and our economy.People who worked their way through college twenty years ago often believe that students now can do the same, but tuition and other costs have risen much more than wages and financial aid, which makes the economics of college much more difficult for families and students today.Rather than continuing to expand federal subsidies for college students and student loan borrowers, policymakers and the private sector should focus on strategies to lower college costs to make it more affordable. A promising strategy is to strengthen competition between higher education providers by harnessing the power of technology and online learning.For example, this is already happening in K–12 education. Increasingly, states and school districts are using technology or online learning to improve the delivery and efficiency of elementary and secondary education. Today, as many as 1 million children around the nation are participating in some form of online learning. Nearly thirty states offer statewide virtual schools that allow students to take classes online, and over twenty states and the District of Columbia allow students to attend a virtual school full time.Of course, for years, many higher education institutions have offered instruction online. But these universities for the most part compete with traditional higher education institutions. However, two trends have the potential to change that.First, an increasing number of higher education institutions are placing course content—including lectures and instructional materials—online for free. For example, the Massachusetts Institute of Technology is now putting virtually all course content online for free through its OpenCourseWare initiative. The Web site has reportedly received 90 million visits from virtually every country.Many other universities are also placing instructional content online. The Apple iTunes program, for instance, offers a “university” section that offers free downloads of lectures from many universities, including Yale, Stanford, UC Berkley, Oxford, and Cambridge.Second, credit-by-examination programs are becoming more popular. These programs, similar to Advanced Placement and the College-Level Examination Program in high school, allow students to earn college credits by studying and completing an exam remotely. Through these types of programs, a student can earn college credit through self-study at their pace and at a fraction of the cost of a traditional college course.These two trends could dramatically lower tuition costs and other student expenses. Moreover, if more students pursue these opportunities, other important aspects of college instruction could be replicated in an online setting.Decades of increasing government subsidies for student aid have failed to solve the problem of college affordability. Instead of continuing to increase government spending and subsidies, policymakers should focus on strategies that lower college costs.