Educational Entrapment

Post-secondary education is a business. The ramifications of this are ugly for students.

Chris Lee
Chris Lee
Aug 13, 2020 · 7 min read
Educational Institutions in the Wild

At an essential level, education is a structured process of learning. It’s concerned with the passing on of knowledge.

In our modern world, education, and particularly post-secondary education, is increasingly becoming synonymous with something else: money.

The promise of future money for the students, in the form of improved prospects and job opportunities. Immediate profit for the educational institutions in the form of, often very sizeable, upfront fees. For the students though, these fees translate to huge debts and financial commitments.

Here I’m specifically talking about universities and coding bootcamps. The bootcamps have investors to report to first and foremost, public relations battles to fight, prospect pipelines to fill. Universities have administrators galore, rankings to worry about and alumni to keep happy.

And both have to keep seats filled with students semester after semester, cohort after cohort. Unless you’re Harvard or MIT, filling these seats is your core battle.

For many educational institutions, simply filling these seats has become their core business model. It’s a simple model, and it’s worked well for many years. But there’s a tiny catch. This core business model is disastrous for students.

It looks something like this:

  1. Invest heavily in marketing the education you offer
  2. Entrap those students that the marketing brings in

This is a raw deal for students. So here I want to explore the unique attributes of the education sector that allows institutions to pull off this business model. Then I’ll examine what a more student-centric model can look like.

Business Metrics

To understand why so many educational institutions follow this model, we first need to talk about how education functions as a business. Here we find the same lingo you might hear in a corporate business development meeting: LTV and CAC.

LTV refers to the lifetime value of a customer. It’s a prediction of the net profit the business expects from a given customer over the lifetime of that customer’s account. Just replace business with educational institution and customer with student and run the numbers.

It turns out that the customer LTV can be enviably high in the education sector.

CAC refers to customer acquisition cost, which is exactly what it sounds like. Basically how much did the educational institution have to spend to get you to enroll?

LTV and CAC move in lockstep. The more profit you expect over the lifetime of a relationship with a customer, the more you can afford to market to a prospective student. This is a straightforward explanation for why so many educational institutions are marketing machines above all else: the high LTV of students justifies the high marketing budget. The relationship between these two metrics, combined with the up-front financial commitment which locks students in, encourages predatory behavior by institutions who follow this model. They’re incentivized to hype up the experience and oversell the benefit to students.

Education is a Business

So education is clearly a business, and most businesses aim to take advantage of the unique natural properties of their sector. If you’re a water delivery company, you usually get your water from mountain springs, so your core product is free. If you’re a casino, the entertainment you provide is addictive.

In the education business, the unique natural property that so many take advantage of is time-shifted value. It’s fundamental to post-secondary education, and it’s what enables these institutions to completely entrap their students.

Time-Shifted Value

Time-shifted value is a separation in time between when a service is rendered and when value is received. For example, if you go to get a haircut, the value is not time-shifted. You know immediately if you like the hairdresser’s work. You pay and leave the salon, taking the value you just bought with you.

Photo by Kevin Ku on Unsplash

Certain forms of education can be like this too. Say you take a short online course to learn a new graphics program. As soon as you finish the course and fire up the program, you’ll know whether you got the skills you need from the education you bought.

But post-secondary education is a very different game. Here there’s a significant separation between the time services are rendered and the time you as a student actually realize the value of your education.

As a student, you pour in huge amounts of time, money and effort up front. This makes sense given the carrot that’s dangled by the educational institution: fancy degrees, lucrative careers, maybe a move up the social ladder.

Basically the dream of a better life.

But as a student, it takes some time to discover if that’s what you actually got out of your education. You’ll probably need years to see the full impact of your education on your career trajectory and your life more generally.

There’s no avoiding this time-shifted value problem — it’s always been an inherent property of post-secondary education. What’s not set in stone, is how the educational institution views and responds to this problem.

The Conventional Path

Unfortunately, most educational institutions use time-shifted value to their advantage at the expense of their students.

In particular, we see intense marketing followed by student entrapment. The marketing material is largely puffed-up promises about the distant future that can’t possibly be fact-checked. And the goal of that marketing is to lure students in and “close the sale”. This means locking those students into major commitments, usually via legally-binding agreements and tuition paid up front.

For colleges and coding bootcamps, the temptation to use this path is particularly strong. Once the ink has dried and the deadline passed, they can book another sale. That seat has been filled for the next semester (whew…), so the educational institution can get back to luring in the next student.

For the student though, that’s not the end of the story. They may go on to have a positive experience, but those who don’t are trapped. If, a few weeks or months in, they realize that the institution isn’t right for them, it’s too late. They’ve already paid the fees or signed those binding agreements.

This sort of business model is incredibly one-sided, and one of its most serious consequences is that it completely ignores the issue of student-school fit.

Additionally, this approach has become so normalized within our education system as to become conventional. But there is another way.

The Student-Centric Path

Clearly no educational institution is right for every student. I know this firsthand. Here at Launch School, I get feedback that runs the gamut from “the best thing since sliced bread” to “what are you people doing? I just don’t get it — I’m out.”

And this is perfectly ok. We have strong opinions about what and how to teach. This pedagogy works really well for some students, but for others it doesn’t work at all. When I get negative feedback (often centered around our assessments), I look to see where we can make improvements. But I also stay realistic — the feedback can indicate a poor student-school fit.

Once the student realizes it’s not a good fit, they should have the option to admit as much and walk away relatively unscathed. A small amount of time, effort and money may be lost, but nothing that would have long-term consequences for the student.

The key here is to de-risk finding this student-school fit.

This lack of risk is standard in sectors other than education, for example the hospitality industry. If you go for a meal at a restaurant, you could have a great experience and keep visiting that restaurant again and again. Equally though, you could have a lousy time. The food might not be great, the service poor, the ambiance lacking. Or it might just be that there’s nothing inherently wrong with the restaurant, it just doesn’t suit your tastes.

Photo by Shirota Yuri on Unsplash

If you didn’t enjoy it, for whatever reason, the worst outcome is a wasted evening and the cost of one meal. There’s no obligation to keep visiting that restaurant. Within a short time frame, you can try many different restaurants and see which one best fits your taste. You choose only because you can leave.

If restaurants acted like bootcamps and universities, customers would have to prepay for a semester of dining and not be able to visit any other restaurants. Of course, this type of obligation is ridiculous.

So why is this kind of behavior deemed acceptable in the education sector?

At Launch School, we’ve worked hard to apply this thinking to what we offer. Our approach is the opposite of an entrapment-based model. The fee structure is a reasonable month-to-month subscription. We don’t even offer an annual subscription because I feel that leans too close to student entrapment — we just want people to go through Launch School one month at a time and leave any time they feel it’s no longer a good fit.

I see this “pay as you go and leave anytime” approach as a feature of our program. If you like what we have to offer, and want to stay and work your way through the entire curriculum, that’s great! If you decide we’re not a good fit for you, that’s fine too; with no long-term financial commitment, you can leave at any time. We view the ability to leave Launch School as a feature.

Being in the education business, Launch School is subject to the exact same time-shifted value that educational institutions are. But I see our program as “proof by existence” that time-shifted value doesn’t have to be abused. Instead of adopting a business model based on intense marketing and entrapment tactics, we’ve chosen a student-centric path, one that allows students to leave if there’s not a good fit.

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