Higher-ed’s Unbundling Opportunity
It’s 2020 and it appears America is finally forcing higher-ed to have its come-to-Jesus moment over exorbitant tuition costs.
Even pre-pandemic, the percentage of Americans who viewed getting a college education as “very important” had reached an all-time low of 51%, down from 70% just seven years ago(!), and a ton of ink has already been spilled on how Covid-19 will likely act as an accelerant to that trend.
But it’s worth examining more closely what exactly families (and students themselves, in many cases) have been buying when they pay for higher-education. Much of the talk from politicians and public intellectuals about higher-ed being too expensive seems to suggest the only or even primary product universities are selling is education, but is that actually the case?
Let’s have a look.
The Traditional University Bundle
While universities market themselves as institutions of higher education, what they’re selling, and what families are buying, is actually a bundle of distinct offerings of which education is just one component.
When we discuss this internally at Campuswire, we refer to this bundle as “the Four Es”:
- Environment (curated physical and social experiences)
- Education (access to subject-matter experts)
- Employment (improved access to good jobs)
- Eminence (credential bestowing prestige, improving social standing)
Most schools know this. It’s why they spend tens of millions on campus buildings (physical experience). It’s why college football coaches are the highest paid state employees in 32 states (social experiences, eminence).
It’s also the unspoken answer to the most important rhetorical question Marc Andreessen posed in his latest essay It’s Time to Build. “Why can’t 100,000 or 1 million students a year attend Harvard?” he asked. The answer’s actually pretty simple: though it’s now possible, using the best available tech, for Harvard to educate 100K or even 1M students a year, doing so would affect its environment and employment offerings, and diminish the value of its eminence offering.
Educating millions simply doesn’t fit within their current business model.
Selling a bundle is expensive
While the current system works well for many students and, in the best of cases, remains the gold standard for higher education, it suffers from inherent limitations of the traditional university model that necessitate exorbitant tuition costs, and serves poorly the millions of students only interested in accessing the education component of the traditional university bundle.
Maintaining a vibrant campus environment, a respected brand and a pipeline to top employers is critical to the traditional university model and requires a robust and expensive administrative staff base. For every three faculty members American universities employ, they employ four administrators, which contributes to ever-rising tuition costs.
Without pivoting to an online-only approach, universities are still on the hook for all of their campus-related expenses, which is partly why tuition for the online programs they do offer is usually just as expensive as for their on-campus classes.
So, what’s an alternative approach that might actually work?
Isolating Education For The Win
For our higher education system to actually serve its necessary societal role of educating all willing adults, it has to adapt to the needs of 2020 learners.
Yes, the bright-eyed bushy-tailed 18–22 year-olds and yuppie grad students, but also the “new” majority of non-traditional learners, most of whom are focused on accessing just the education and employment components universities offer.
We already know how to do part of this. 40% of American college graduates, from Steve Jobs (who didn’t actually graduate) to Morgan Freeman, attend community colleges for part of their undergraduate education to save big on tuition costs.
No sports teams or frat parties, no fancy buildings or prestigious credentials. Come in, knock out your gen-ed classes and then transfer into your dream four-year university.
The problem is that community colleges aren’t incentivized to offer drastically cheaper online education. Doing so would cannibalize their on-campus program enrollment, eating into tuition revenues and sending them into a budgetary death spiral.
Four-year colleges could provide part of the solution. It should be theoretically possible for them to compete directly with community colleges, offering some sort of “online-only freshman and Sophomore year” program.
ASU attempted to achieve this with their Global Freshman Academy initiative which initially generated tremendous interest, enrolling nearly 400,000 students, but ultimately suffered from the same low-completion rate problem facing all MOOCs.
What is needed is a high-quality online alternative to traditional community college — a platform for intimate online college courses, from fantastic professors and with as much professor-to-student interaction as in-person courses, from which students can inexpensively complete their gen-ed courses before transferring into a four-year university.
Making these courses synchronous and keeping class sizes relatively small could mitigate the low-completion rate problem of MOOCs, by enabling them to include as much social interaction as on-campus courses, and offering the courses exclusively online would allow for a massive reduction in the cost of delivering such courses.
Such a platform would likely need to be the collaborative effort of a modern tech company, with expertise in building high-quality, pedagogically informed teaching and learning software, and an established, reputable college or university with global ambitions.
If there’s a silver-lining to be had from this global pandemic, it might just be that Covid-19, in forcing us all to reevaluate the fundamental structure and mechanics of higher-ed, creates a window of opportunity for such a partnership to exist.
It’s also worth mentioning that the late, great Clayton Christensen predicted a lot of what we’re experiencing right now. The Traditional University Bundle is essentially Christensen’s “Harvard Model” which he, in The Innovative University, argued most universities should stop attempting to emulate. And there’s still time for his outlandish college bankruptcy predictions to come true too.
The good news in all this is that ed-tech is having a renaissance moment. Founders are focusing on building tools for high-quality online learning and investors are lining up to fund them. Time will tell but it certainly feels like higher-ed is finally about to experience a massive internet-induced sea-change and every ed-tech founder I know is fired up.
Stay tuned.
