Would You Enroll In A “Traditional” University If It Came With A Money-Back Guarantee?
A recent article in Money made the bold claim that college should come with a money-back guarantee. The statistics they cite for WHY it should do so were sobering — as but one example, less than 20% of of full-time students at public, four-year universities are actually graduating in four years.
The arguments and analogies the article provides to support its reasoning are both straightforward and compelling:
We often see guarantees for consumer goods and services when they are both expensive and complicated. And there’s a good reason for that. These purchases are risky. If an expensive purchase fails to meet a buyer’s expectations, it can have a big financial impact. A product or service that is complicated also poses a risk because it’s not easy for the buyer to tell whether it will turn out to be a “lemon.”
Guarantees give buyers the certainty that their purchase will deliver what they’ve been promised — making it a less risky endeavor — and they also push sellers to focus on quality and satisfaction. Higher education is a classic example of the expensive, complicated product for which guarantees would work well.
Udacity earns a mention in the article for our jobs-guarantee program, Nanodegree Plus. The authors, Beth Akers and Stuart Butler, highlight how this kind of guarantee addresses “the risk of unemployment (or underemployment) following graduation.”
The authors also highlight programs that financially incentivize on-time completions, such as a program at SUNY Buffalo called “Finish in 4.” These programs are not dissimilar to Udacity’s ongoing “Half-Back” program, in which students who complete their Nanodegree programs within 12 months receive 50% tuition refunds.
At the heart of everything to do with this topic is a core question: Is a college education worth it?
As simple as that question may seem, answering it is difficult. To do so, you have to first understand and make clear your objectives. For example, to borrow the “lemon” analogy from Money, if you buy a car, you have certain objectives for it, which are dictated by factors such as the amount you spend, the make and year of the car, and more. Your expectations for a brand-new Fiat 500e purchased directly from a dealer for 30K+ (assuming you can even afford to buy it!) are going to be very different than, say, for a 2003 Mazda Tribute purchased from a second-owner for 5k.
In the end, to determine whether you got your money’s worth — or got stuck with a lemon — you have to assess investment and outcome, and compare clearly defined and realistic objectives with actual results. If your Fiat falls to pieces in a year? Lemon. If your Tribute gives you another decade of solid service? You got your money’s worth.
To migrate this analogy to education, what are your objectives if you enroll in a community college vs. if you apply to Stanford? What are the costs? What are the risks? Is it even worth doing the former? Is it even possible to do the latter? Only if you work your way through these issues can you ultimately answer the question of whether a college education is “worth it.”
Which leads us to the question posed in this post’s headline. If you’re holding off on higher education today, would you pursue it tomorrow if it came with a money-back guarantee? Consider the conclusion the Money article comes to:
Thanks to recent innovations in data availability, students are more empowered than ever before when it comes to being able to shop for college based on quality and value. Guarantees offer one more tool that can help students and families use higher education as an effective means for improving their financial future.
If your educational objectives have anything to do with “improving your financial future,” then you may want to start looking at those programs that DO come with a guarantee. If you’re not already enrolled in one, that is!
This post was written by Christopher Watkins, Senior Writer, Udacity