Why the University System, as We Know It, Won’t Last …. and What’s Coming Next

It’s easy to sell books and other commodities on the web. It’s not easy to deliver a quality education. But two converging trends point toward a future when we will see the traditional university give way to an online alternative — something I wasn’t willing to bank on two years ago. First, Silicon Valley is finally focusing on e-learning. Udacity, Coursera, Kahn Academy, EdX — they’re all looking to lift e-learning out of a long period of stagnation. And, second, times are tough, and the traditional university system doesn’t care enough about managing costs, while wrongly assuming that it has a captive audience.

This weekend, The New York Times took a good look at the financing of a college education and highlighted a few staggering data points.

  • The U.S. has racked up more than $1 trillion in student loans.
  • Today 94 percent of students earning a bachelor’s degree take out loans — up from 45 percent in 1993.
  • It’s estimated that the “average debt [per student] in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000.”
  • “Payments are being made on just 38 percent of the balance of federal student loans, down from 46 percent five years ago.”
  • Finally, state funding of education is going down, and tuition is going up, which means that the figures above will just get worse.

You don’t need me to spell things out. Paying for a college education is getting unsustainable, so much so that many expect a crisis in the college loan market in the coming years. And then you consider this. Many universities seem indifferent to the difficulties students face, if they’re not intentionally exacerbating the problem. At one point in the Times article, E. Gordon Gee, the president of Ohio State University, goes on record saying, “I readily admit it … I didn’t think a lot about costs. I do not think we have given significant thought to the impact of college costs on families.” Now listen to the latest episode of Planet MoneyThe Real Price of College (audio), which underscores a more galling fact — many colleges think that they gain a competitive advantage if they have a high sticker price. For many schools, lower tuition is a sign of weakness, not strength.

Universities can behave this way because they think they have a captive audience. Because college grads still earn considerably more than high school grads, colleges assume that students will keep enrolling. But what will happen when cash-strapped students are presented with a viable alternative? It may take 10 to 20 years, but I wouldn’t be surprised if a new breed of school emerges, schools that throw away the four year model (and the humanities too) and offer students a very targeted online education in “practical” fields — from accounting to coding to nursing to law and business — at a dramatically lower cost. Here, the education cycle gets shortened to perhaps two years, and then students get credentialed (maybe by a trusted third-party provider) and go to work, only to return later in their careers to take more courses in specialized areas. This model will require the right technology platform (something that will get worked out fairly soon) and a change in the expectations of employers and society more broadly (something that will take time to develop, but less time than complacent colleges think).

The new system won’t be better than the current one in many respects. It won’t offer a rounded education. The teaching will be less personal. Long-lasting social bonds won’t be made as easily. (You’ll need to pay the big bucks at a traditional school for that. No, they won’t all go away.) And the teaching jobs created by these universities won’t be terribly fulfilling or lucrative. But the new system will offer a more focused and affordable education to students on a mass scale. And when students graduate mostly debt free, they won’t complain. Nor will they be forced to forego college altogether, as some would now advocate. There’s perhaps something inevitable about this shift. But the insouciance of administrators and faculty inhabiting the current system won’t do anything to delay it. Stick around, and you’ll probably see that I’m right. And if you think my look into the crystal ball is wrong, let me know.

In the meantime, we give you another take on how to solve our world’s educational problems — Father Guido Sarducci’s Five Minute University:

For oodles of free courses, don’t forget to visit our collection of 450 Free Courses from Top Universities.


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Comments (20)
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  • I met a group of high school students in a Starbucks. We got to talking about higher education. The one student told me he was awarded a $15K academic merit scholarship from one of the local state universities, but he still had to borrow almost $20K to cover the tuition. He thought this was disgusting. That was the word he used: disgusting, and all of his classmates were nodding their heads in agreement. Change may be coming much sooner “than complacent colleges think.”

    Thank you for posting this.

  • Tasnuva says:

    Higher education has become asymmetrical in the amount of money it costs to attain a degree and the length of time it takes to find a job that pays well enough to pay off those loans. If students are to be the future consumers of the economy, it doesn’t make sense to place such a high financial burden upon them from the start. Your proposed model is interesting to say the least, and I reluctantly agree that this seems to be the trajectory, and it’s a shame because learning has become so commodified that if a field doesn’t seem to “pay off” it is cut, despite the valuable life lessons and general well-being certain subjects (especially within the humanities) can bring.
    I have definitely experienced the nonchalance regarding receiving help from higher institutions– as a student, I don’t feel like I’m valued unless I’m paying exuberant fees, but I put up with it because I truly love to learn. It’s a shame that learning has become a matter of access based on socioeconomic income rather than merit. Isn’t it better for the community and for the country if its members are well-educated and able to contribute not just economically, but in all other areas?
    Interesting post.

  • If past experience is worth anything, video based teaching will fail. It is too inefficient, too costly and reaches too small a fraction of the possible students.

    Look at the web site attached if you are interested in a model that can reach many more students, regardless of the speed of their connection or an disabilities they may have.

  • In response to Jerrold, I think a Social Media type platform will be the future of education, and video will be one of the many tools of this revised pedagogy.

  • In response to Charles – only if you choose not to serve the majority who access the material on a phone with a slow connection.

    Even if you are willing to exclude the disadvantaged, the text equivalent alone (required by law) for the videos pushes the price out of reach for many institutions.

  • Luke Mulks says:

    Excellent piece! I read this, and had to comment: “Paying for a college education is getting unsustainable”

    I agree with much of what the piece is saying, except that I feel it’s not ‘getting’ unsustainable, but rather it already is way past that point. The ripples haven’t rocked students as much as they soon will, but the pieces are already far in motion. The other interesting point to mention that unlike credit card and homeownership, student load debts stick on the record even with bankruptcy. Looks like shackles for banks.

    What’s promising is to see that people are banding together to further education through other means. http://www.njpoet.com and other sites out there across the country are working to help make that happen, and keep the dialogue open and ongoing for those who care to be educated. It’s one thing to post a lot, it’s another to do it well. We’ve all got skin in the game on this one.

  • What are the alternatives, Jerrold?

  • jonfernquest says:

    Very reasonable speculation about what is coming next.

    This raises the question of what is coming next in a world of reduced opportunities for university supported research that this scenario seems to portend.

    Perhaps, some space will open up for research by inspired amateurs and professionals outside the university who pursue research as an avocation or as an extension of their profession on the sideline of a more mainstream bread-winning career. This might arise as an outgrowth of greater engagement of universities with the public. (Funding of public interest journalism at UC Berkeley’s journalism school seemed like a step in this direction).

    Inspired amateurs seem to have played important roles in the past in many areas ranging from biology (naturalists) to lexicography (OED) to history (will have to make a list).

  • Check out Luke Mulks plugging my site. Thanks, Luke! =)

  • Jen Machajewski says:

    This quote: “… schools that throw away the four year model (and the humanities too) and offer students a very targeted online education in practical fields — from accounting to coding to nursing to law and business — …” makes me sad. Throw away the humanities? Only “practical” fields. Who gets to define practical?

    Think of the low quality of the average high school education; without the college exposure to humanities, philosophies, critical thinking, intense writing requirements – we will have more and more of the general populous less knowledgeable about anything outside of their little bubble of interest, nor the communication skills to share their knowledge with anyone outside their specialty. And aren’t we just now learning with the inter-connectedness of the world, the web, that the best ideas are when knowledge and curiosity and inspiration collide among a wide variety of disciplines. Isolation physically or in knowledge stagnates.

    It sounds like we’re pulling DOWN college to the high school version of VoTech. Sure, VoTech and certification programs and specialized schools have their place, but there’s something to be said for the exploration part of a four-year college experience. How many students start out as one major and discover in the journey their real passion. If you run straight toward a targeted online education, what happens when it’s not enough, when it’s not right (or when that targeted occupation is saturated)?

    Then again… Maybe the need for exploration will change into “gap-year” experiences like PeaceCorp or traveling abroad, internships, etc. Maybe, when someone outgrows their one occupation switching to a new one will be easier with a two-year online education rather than returning to a 4 year institution to re-start. Certainly we see that the idea of one career over a lifetime is antiquated and that “retirement” more often means a change in career not the end of the ability to work.

  • @jonfernquest “research by inspired amateurs and professionals outside the university who pursue research as an avocation or as an extension of their profession on the sideline of a more mainstream bread-winning career.” .. Nice. And I think that’s already happening, and the donation/subscription model allows some to turn this research into a bread-winning career. Although, most of these success stories are news commentary based, Richard D. Wolff, an economics professor, is also finding success with this model. Perhaps Professors will embrace the free agent nature of their positions within academia and go rogue–i.e. become student funded academics online. But what about accreditation?

  • Throw away the humanities? Only “practical” fields. Who gets to define practical? -Jen Machajewski

  • Claire Brantley says:

    Offering students “a very targeted … education in practical fields — from accounting to coding to nursing to law and business — at a dramatically lower cost” used to be called community college. The idea of putting it all online is all that’s new here.

  • I hear you, Dan. I taught college writing for five years and watched all of my students slowly become finance majors. And as someone who also studied the humanities on the graduate level, I have to say, in my humble opinion, we haven’t done a very good job defending ourselves against the claims of our irrelevancy.

  • I listened to a lot of talk radio on September 12, 2001. Really, that’s all there was. No one knew how to handle it, so they just had listeners calling in, sharing their stories, their thoughts and feelings. I was surprised how many people, ordinary working class people, asked if they could please read the poem they wrote about their experiences on 9/11. We need the humanities more than ever before.

  • Tyler says:

    I feel like this post drastically underestimates the social stigma that comes along with telling someone that you’re “taking classes online.” As much as we’d all like to talk about a radical change to the University model, kids today are told that they have to go to college, otherwise they will wind up flipping burgers at McDonald’s. I genuinely believe that if it weren’t for the stigma attached, technical schools and community colleges would be significantly more popular.

  • In response to Charles – here is a course of mine which works on all devices and over a slow connection.

    Again, the site that give directions about how to do it –

  • Ed Desautels says:

    Regarding the “practical fields” notion, this has also contributed to the demise of higher ed. Since WWII, corporate America has become increasingly effective at privatizing its gains and socializing its costs. One of these costs it the cost of training its employees. Time was, you went to university to learn how to _think_, not how to perfect amortization schedules and should-cost analysis models. Over the past several decades, I think universities had to spread too far and wide, cover to many areas of advanced “vo-tech,” to remain sustainable. They’re forced to keep up with whatever “practical fields” means in a given era.

  • Anon says:

    Today’s loan *amounts* are much greater than in the past, but otherwise how are today’s liberal arts majors really in worse shape? I graduated when the minimum wage ranged between $3-ish-to-$5-ish/hour with about $15,000 in debt. Relatively few graduates in the liberal arts go straight from the commencement ceremony to their dream, career-oriented job–and they never have. For many of us there are years of menial work/shared housing/loan payments along the way. If you don’t want to graduate in debt, work your way through school. You’re still doing McWork, but your degree will be pay-as-you-go, the debt load will be lighter, you have more chances to figure out what you really want to do with yourself, and there’s no hurry to enter the professional job market these days, anyway.

  • Matt says:

    That summary of the Planet Money episode wasn’t really fair. The much *bigger* takeaway of that episode was that the average amount people are *actually paying* for college has gone *down*. Yes the *sticker price* has skyrocketed and yes colleges think having a bigger sticker price lends prestige, but the increased sticker price has been met with enormous scholarships that offset that price for the vast majority of students.

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