Playing a pivotal role in the development of the modern society, higher education industry
has reached its capacity at least a decade ago and since then has lost its former characteristics of a
public good. Funding challenges and non-consistency in quality of output dominate the modern
discussion on tertiary education policies in search for the optimal way of reforming the sector. None
of the policies so far had a close look at the operational structure of colleges and universities from
the economic perspective, which by the author’s opinion is the reason behind the lack of progress
in reforming the sector. This study presents a discussion on economic structure of different functions
within the higher education process and suggests the levels of competition and regulation most
appropriate for each of these functions. The proposed option for the higher education reform allows
greatly reducing the costs of obtaining a post-secondary qualification, while simultaneously
addressing the quality issues