Why the College Monopoly is Crumbling
How can there be a college monopoly in a country of over 4,000 higher education institutions? In order to see the college monopoly, one has to define the market for higher education in the same way that an antitrust lawyer would. The starting point is the understanding that the vast majority of Americans go to college locally — most as a matter of necessity. Thus, the market is local, not national; and the choices are few, not 4,000.
Any metropolitan region could crunch the numbers if they doubted the existence of a monopoly. Start with the local high school graduating classes across the region, not just a single high school. How many students are applying to competitive admission institutions (50% or lower admission rate) and are willing to travel hundreds of miles from home to go to college? In most regions, that will probably be under 20%, if not under 10%. The vast majority of recent high school graduates are going to colleges in their backyard. And returning adults return to local colleges in even greater numbers.
Now take a closer look at that 80–90% of your graduating high school classes that stay nearby for college. Use the measures of your choice (GPA, SAT/ACT, etc.) to identify types of students by academic performance and where they go to college. I’m confident you will see some fairly clear sub-groups emerge clustered around three types of institutions: community colleges, regional public universities and regional private colleges.
These student sub-groups don’t really choose across these three types of institutions. They overwhelmingly go to the institutions that match their academic performance type. In most regions around the country, there might one, two or three community colleges at the most that a student could reasonably choose from. There will probably be just one regional public university and maybe 2 or 3 private institutions that largely serve students from within their region.
This is the reality of the college monopoly. The market theory purists would say that this is actually an oligopoly, but the end results are the same. Most high school seniors aren’t choosing from a wide range of colleges. And just as important, metro regions don’t have a wide range of choices when it comes to meeting education and training demands to remain competitive in the global economy.
The last ten years of online education and MOOC’s has not weakened the monopoly. Going back to those student types, it’s pretty clear that these internet driven models were not enrolling those student populations. The for-profit distance learning firms were getting returning adults but the overwhelming majority of high school graduates were going to traditional colleges and my hunch is that was true for a significant majority of returning adults.
There are signs that the monopoly may be about to crumble — at least around the edges. We can now see distance learning models emerge that specifically target the 80–90% of high school graduates and returning adults. The best example is Southern New Hampshire University’s College for America (CfA). CfA may be focused on returning adults, but its competency-based curriculum could work with a broader range of students. Some places around the country are experimenting with accelerated models that simultaneously award a high school diploma and an associate’s degree. Create some Title IV flexibility and high schools might find they can form partnerships with far flung institutions to meet the early stage post-secondary needs of their students better than any local institution.
Competency-based education delivered digitally but coupled with face-to-face supports will force the first crack in the monopoly. Complex skills education, delivered as a separate program or as a module within a broader competency-based curriculum, could storm through that opening and quickly accelerate the crumbling of the monopoly. Players in the now crowded coding market, such as General Assembly and Galvanize, aren’t just day dreaming about these opportunities.
It is not just new technology or learning models that will drive this change. Those models create the opportunity for something different to emerge in local higher education markets. It is the change in labor market demand that will ultimately crack the monopoly for very pragmatic reasons.
As labor market demand grows even more complex, it will become increasingly clear that no single institution or small number of local colleges and universities can meet it. This is true now, but the pain point is only going to get worse. As it does, students, employers and community leaders will turn anywhere they can to find solutions. Local colleges, especially given the traditional approach of building every new program from scratch, will not be able to keep up.
Ultimately local demand will blow up the monopoly. This does not have to be a bad outcome for local colleges. These changes will create opportunities that a nimble college with a deep understanding of both local students and employers can seize. But they can’t expect to succeed if they use traditional methods and go it alone.
Local higher education markets could enter a period of great volatility. In fact, the pace of change locally may outstrip innovation in the elite world of research universities and exclusive liberal arts colleges. These changes pose both opportunities and risks for students, communities and the local colleges that serve them now. Smart community leaders will push for whatever is needed to achieve their economic and educational goals. Smart colleges will do whatever they can to avoid being left out of the equation.
