University of the Future

The university has gotten a lot of bad press in recent years. Consider this video compilation where some of our society’s most successful people talk about higher education…

I’d strongly suggest you listen to the entire video, as there are some fantastic points here. At one time, universities were attended by a fraction of the population and trained people to think for modern times. It was affordable for anyone and then graduating was a qualification by itself, where you were assured of a nice career.

But times have changed. Consider all the weaknesses of the current system:

• It’s absurdly expensive. In the USA, home to many of the world’s most prestigious universities, you regularly see $20–50k annual tuition costs. Education simply shouldn’t cost that much, which gives you the feeling that tuition is subsidizing non-learning campus activity.
• Outcomes are not great anymore. In the USA, 50% of students are graduating into jobs that don’t require a college degree. So half of students are taking out life-changing debt levels for zero purpose.
• Universities aren’t able to keep pace with societal trends and technology. Most innovation is taking place off-campus and it takes a long time for the schools to realize these trends and incorporate it into the curriculum. That’s why there’s a huge skill gap, where employers say graduates aren’t job-ready.
• Degree programs are incredibly inefficient. Using hirable skills like programming or marketing as an example, where these skills can be learned in 3–6 months. It doesn’t take a four-year degree to learn them. And since trends in such subjects change so quickly, your learnings may be obsolete by the time you graduate.

Despite these trends, universities have refused to change. None of this is new. It’s been like this for decades. But it gets worse each year. And I have little confidence that they will change. Administrators are making bloated salaries. Professors make six-figure salaries, receive tenure, and generous pension benefits. Student loan companies are making billions on students. Too many people are benefiting from the current system and resist changes. It’s up to the student to demand them.

But they will demand it eventually. And Silicon Valley is taking note. They will offer something competitive to the university and force them to change. It’s already happening in the tech industries with online education, coding bootcamps, and other innovative collaboration programs.

Consider some other industries and examples of when content started really improving as a result of opening up competition:

• When Netflix/Amazon/HBO/Showtime figured out that they can have independent programs free from the grasps of the cable companies, the content suddenly improved.
• Ever search for books on Amazon lately? Free from the major publishing company constraints, there are endless choices from independent authors. Quality is assured because Amazon has such a strong rating/review section.
• The hospitality industry has been forced into top quality customer experience. Ever book a hotel on your travel site of choice? If a hotel gets poorly reviewed, it can have a massive impact on their business (Why book a hotel with an average 3.5/5 rating when you can see 20 other options with greater than 4.0?). Ditto for restaurants, bars, and anything else being reviewed
• Dislike the taxi monopoly filled with too many instances of poor hygiene drivers and vehicles, unsafe driving, and fare scams if you off if you’re not native to the city? Uber and competitors have fixed that.

We live in the information age where nobody can get away with providing a bad experience or a routinely poor business model, and higher education should be taking notice. Among the areas we already see or soon expect to follow a similar pattern:

1. Professors that teach poorly will be reviewed and nobody will ever sign up for their class again. Likewise, the best professors will get rave reviews and have near unlimited demand for their courses.
2. University statistics will be transparent for all to see. Didn’t graduate with a job in your major? That university will have some explaining to do. Those providing amazing content for low costs (think Netflix) will have unlimited demand for their services.
3. Cost will soon be a major factor in education decisions. Just like the Comcasts and Time Warners of the world better adapt to competitors offering a la carte programming and lower cost providers of quality content. The big universities will face pressure from low cost providers and those offering a model different than the “commit to our high cost four year program or else” requirement.

The University of the Future

Without further ado, let’s take a look at my future higher education vision…

1) The brand name university — Harvard, Stanford, Oxford and the other most prestigious universities have very little to worry about. They will be operating under a similar structure as today and cater towards those looking for the high service model (and willing to pay the costs associated with that service). Just as Harley-Davidson motorcycles, Prada shoes and Dom Perignon champagne do quite well as luxury brands, the luxury university brands will remain an appealing option to many. Will they offer high quality just as the other luxury brands do? Absolutely. Will that quality justify several price multiples higher? Perhaps to the wealthy, however, quality alternatives will exist to the middle class.

2) The experience university — Eventually a bright entrepreneur will realize there are alternative ways of educating people than the lecture/classroom model. Not everyone is a visual/audio learner and not everyone excels in the ‘study for a test’ environment. Some want to learn by doing or learn from experience. I have little doubt there will be specific higher education options for those seeking this experience. Perhaps it will be a four year option or maybe it will have a smaller timeframe than that. However, we will likely see learning organizations that nix the textbooks, tests, lectures and classrooms for something different. This might not work for math or accounting fields, but it would be very attractive for the sciences and liberal arts. I wouldn’t be surprised if this was offered by large corporations as an education training program to eventually work for them (it wouldn’t be a bad idea for them to make such an investment actually!).

3) The budget university — For those looking to get educated in the most efficient way possible, I believe a budget university will emerge. I expect tuition to resemble community college level pricing but for bachelor degrees to be offered. These budget universities will leverage online content for lectures and have a minimal local campus reach (perhaps rented space for discussions in certain classes). Professors will likely be employed at a temporary contract level and be sourced from industry rather than academia. All the “extras” like research facilities, athletics, university organizations, graduate school, and specialized classes/majors will not be part of these universities. They will offer you the most common majors and efficiently get you from admission to graduation. Quality will likely be questionable at many universities. However, I believe some will figure out the right way to assemble great content for a low price. Experience will be limited, however, as it should in a budget operating model.

4) Online Universities — I love companies like Coursera, EdX, and Udacity. These businesses offer learning paths that lead to real skills and real jobs if you leverage them correctly. A lot of people criticize online learning but these companies have only been around for a few years. They improve in quantity and quality every year.

As time goes on, more of these will pop up. Some might specialize in certain subjects and offer learning/training paths. And others like Udemy might provide general learning on any subject. The quality has provided a viable alternative to the learning portion of the university experience. Combine that with my company’s (Reverse Tide) career services and you can turn your learning/skills into a great career.

5) The Foreign university — Around the world, many universities are subsidized by their respective governments, and thus can offer education for free or at very low costs to their students. Not all are attempting to be profitable, as they’re quasi-government institutions. However, there are some fantastic opportunities to apply a price arbitrage overseas.

Take the Philippines as a great example. A smart businessperson could set up a university in the US, get the necessary accreditation and then set up a sister campus on the beaches of English speaking Cebu. They would have little trouble convincing students to move overseas for two years, offering a degree for less than $5k/year and effectively giving them a US degree with a ” Philippines study abroad” option for half its length. They could hire teachers from around the world that would, put much of their content online and then graduate their students in the US. They would leverage the same cost arbitrage done by businesses in every other industry, have an international education experience to sell and find the best content to be delivered virtually. Content creation, grading, customer service, technology, and all the other “high cost” things done on the American campuses would be done by well-educated Filipinos at a fraction of the labor cost.

The Philippines is just one example. This can be done across the world and with more than one satellite campus. We just need the right businessperson willing to deal with the education politics of each region and the logistics. It will happen eventually.

6) The Advanced vocational school — I think this is going to be a pretty big one and may offer partnerships with some of the other options on our list. Right now vocational schools are aimed at providing education toward specific industries or trades. The perception is that they might offer a good opportunity to get into a specific job. Overall, however, education quality is lower than the higher ranked bachelor degree institutions.

I believe some very prestigious and high ranked vocational schools will begin to emerge. Schools that have only a few majors and will focus on high growth, high income jobs primarily in engineering and technology. The format of such schools will almost be like a boot camp, where it is faster paced and efficient in skill development. While more diverse education might be provided, it will be significantly less emphasized than today’s education structure. I also expect such schools to be almost a feeder-like program where jobs are virtually guaranteed in highly technical corporations and government entities.

As mentioned, these are just predictions, but every day we see more and more reason for the industry to evolve in these ways. All in all, I believe it is a great thing for education. Democratizing the industry so there is more choice, more customization, and a marketplace of greater price and quality competitiveness is an amazing thing for the education consumer (the student).

When will this happen? I believe within the next 10 years, you’ll see these options really start booming and traditional universities shrinking from the superior competitors.

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