What a Disrupted College System Means for Business
The forces of the internet and digital age are at it again. They are sharpening their knives and preparing to take on a new “fat cow” industry. Like the music, travel and journalism industries before, today’s internet entrepreneurs are eyeing the world of education as the next business that’s ready for the picking. Or is it plucking?
Long held as a bastion of tradition, high standards and irreproachable value, the industry of education is starting to feel the first tremors of what could be the most profound series of changes in the past few decades, if not centuries. You see, post-secondary university education, especially in the US, has long been held as one of the best financial investments a person could make. The US college and post-graduate system is widely recognized as the finest in the world. Each year, thousands of students from around the world come to the US to pursue an education that they cannot find in their home country and which they believe will help set them up for success in their chosen field. Meanwhile, millions of American students also turn to one of the largest and most well-respected education systems to get a leg up in their careers and their earning potential.
Since at least WWII, a university education has been synonymous with the creation of untold wealth and has helped develop generations of leaders, executives and entrepreneurs. Three tectonic shifts, however, have recently combined to create the perfect storm and are threatening to upend what has been considered one of the safest and most hallowed industries in the world.
Rising Tuition – The past few decades have seen university tuition costs consistently rise well above inflation rates. With annual price increases between 5% and 8%, post-secondary education costs have soared unchecked. It is not unusual to hear of annual fees at private institutions of $40K or even $50K in some cases. Note: these are just the school fees and do not include food and lodging. This has given rise to unprecedented student debt levels, as much as $100K for students completing a 4 year degree. Imagine you are 22 years old and that upon graduation, you already have a debt obligation equivalent to that of a house mortgage.
Economic Recessions – The 2001 and 2008 economic recessions have dealt violent blows to the job and economic prospects of young graduates. The landscape has changed significantly both in terms of earnings potential and job opportunities. The two recessions -especially the latest one – have disproportionately affected the middle class. Even college graduates – long held to be immune from recessions and long-term unemployment – have been impacted. Their prospects are the weakest in generations and their earning power has also been considerably eroded. See the chart below for a contrast in tuition costs vs. earnings.
The Digital Revolution – The third ingredient to this perfect storm is the rise of the internet. A string of new educational start-ups supported by new technology and visionary entrepreneurs are setting themselves up to challenge the education world-order (e.g. Coursera, Udacity, etc…). The advent of MOOC (Massively Open Online Courses) promises to revolutionize education by offering educational programs/content for a fraction of the traditional price. By making knowledge and course content available on-line for free or almost free, these businesses stand ready to challenge the hegemony of the campus-based public education. Students from around the world are now able to access high-quality content on-line, on their own terms, according to their schedule and within their own means. (I’ll save the discussion of whether the quality of an on-line degree can match that of a bricks-and mortar university for another article).
Together, these three massive trends/forces are set to profoundly alter (note that I did not say replace) the post-secondary education system in the US and elsewhere.
Ten Implications for Businesses
- The talent pool is likely to get bigger, more international and more diverse. College students from around the world will begin to access on-line learning in unprecedented numbers.
- Job candidates will have less conventional educational backgrounds from traditional public higher education institutions. Get ready to see CVs with unconventional Education sections!
- Education and skill development will likely become more of a lifelong journey rather than one which is concentrated in early life.
- Younger, newer employees will be highly adept at continued education through digital/virtual/remote formats.
- Although digital social skills will continue to expand, physical social skills may suffer as the opportunities for face-to-face interactions diminish.
- Public and Private Universities will struggle to adapt and will need to reinvent themselves. Many will likely offer either 100% on-line and/or hybrid degrees that try to marry the best of the on-line and in-person models.
- With so much educational content being made available, the focus will likely turn towards testing, standards and accreditation. With budding students able to pick their content & lectures from almost anywhere in the world, the challenge will be to certify the student’s knowledge/competencies gained from multiple sources.
- There will continue to be campus-based programs but there will be fewer of them, they will have to become more cost-effective and/or they will be limnited to elite institutions. Top brand name public and private institutions will likely continue to attract thousands of students willing to spend >$200K for 4 years of education. It’s the remaining 90% of universities which will struggle the most to adapt.
- Get ready for the prize-fight between on-line and off-line university degrees: Which one is better? Are they both equal in the eyes of students, employers and governments?
- The concept of “value in education” will increasingly become a hot topic. Choices will inevitably focus on value-for-money as higher education is no longer the safe financial investment it used to be.
How do you see post-secondary education changing in the next 5-10 years? How do you see these changes affecting the quantity and quality of talent for hire in the coming years? How will businesses react? Leave a comment and let’s discuss.
photo credit: J.Salmoral via photopin cc
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