Whither Higher Education?

By now, you have undoubtedly seen press coverage on “the crisis” in higher education, signified by disturbing trends in a number of performance indicators depicted below.

What adds urgency to the purported crisis (which in fact has been brewing for decades) is  a gnawing concern that the US is losing its historical higher education leadership — particularly in STEM disciplines — to China, India and other emerging powers.

On a brighter note, many observers point to the emergence of Massive Open Online Courses (MOOCs) as the savior that will disrupt and dramatically improve higher education. Some suggest MOOCs will supplant expensive, ineffective classroom education with a cornucopia of web-based offerings taught by the world’s best professors from the best schools on their best day — all for free!

Yet, while few would argue with the need for colleges and universities to bend their cost curve, improve accessibility and achieve better education outcomes, the notion that MOOCs will largely replace classroom education in meeting these objectives is naive folly.  There is a role for online and on-campus education, and the challenge and opportunity for higher education institutions is to find the optimal mix for their targeted student market.

So what can we expect to see in the higher education landscape over the coming decade?

For starters, let’s stipulate that the status quo in higher education is unsustainable.  No sector of the economy can continue to absorb an ever-higher proportion of household disposable income, particularly with mounting evidence that the quality of higher education outcomes is static at best, and by some measures, actually declining.

Defenders of the status quo may point to the fact that despite tuition inflation, a college education remains a good investment relative to non-college attendance.  But as Clay Shirky bitingly points out, this argument casts students as hostages in an extortion scheme: “pay us or you’ll be even worse off!”

The question of course shouldn’t be whether a college degree provides an adequate (albeit recently declining) return on tuition investment relative to an obviously inadequate alternative, but rather, how can we improve the ROI and accessibility of higher education?

There are already signs that market forces are correcting what has traditionally been a hidebound sector of the economy.

  • Many state governments have been cutting funding while mandating lower cost alternatives for course offerings
  • A growing array of lower cost, more flexible higher ed solutions are emerging, from publicly funded schools (e.g. Western Governors University), private institutions (e.g. Georgia Tech’s recently announced $6,600 online MS in computer science), and VC-backed startups (e.g. Coursera)

And in fact, recent data suggests that despite continued escalation of published tuition rates, net tuition revenue (i.e. net of financial aid) and enrollments have actually begun falling in many second-tier colleges and universities and in graduate degree programs in law and business.

But before accepting the dogma that these are early signs of a disruptive tsunami crashing on the shores of college campuses, it is wise to take some cautionary note of impediments to the speed and breadth of disruptive change in higher ed:

  • Cynics are right to point out that “we’ve been to this dance before.”  For example, after inventing motion picture technology, Thomas Edison boldly asserted in 1913  that “Books will soon be obsolete in schools …. Our school system will be completely changed in the next ten years.”
  • Similar pronouncements of a revolution in higher ed were made with the advent of radio, television and the internet.  For example, Columbia University, where I teach, was a pioneer in online education, investing $25 million to launch Fathom in 2000 during the height of the internet bubble.  This venture was disbanded in 2003 after failing to achieve ambitious enrollment and profitability targets.
  • There is a large and fiercely resilient constituency committed to supporting the status quo that will strenuously resist calls for reconceptualizing higher education.  It is easy to imagine that many senior faculty and administrators fall into this camp.  But this group, whose entire careers have been guided by the current rules of the game, also have powerful allies amongst current students and alumni, who fear that the value of their impending or past degree may be diminished by disruptive changes.  For example, when University of Arizona’s Thunderbird School of Management recently announced a partnership with for-profit education company Laureate to create online offerings and new global campuses, nearly 2,000 alumni signed a petition to block the proposed union.  As one alumnus noted, “when I tell people I got my M.B.A. from Thunderbird, I would like that to have meaning and not drawing comparisons to University of Phoenix.”

To appreciate the depth of incumbent stakeholder commitment to the status quo, consider the following dialog from one of my recent MBA courses at Columbia Business School, which focuses on disruptive change across a number of industries.  During one class, the topic turned to whether and how MBA education might be disrupted by new technologies and business models.

To get the discussion rolling, I started by sharing some recent data from widely watched MBA school rankings (Business Week and The Economist) indicating declining student satisfaction with the quality of the MBA education at Columbia and other schools.  The intent was to serve as a backdrop to soliciting student suggestions for improvement in business school education.  One of the students seemed visibly uncomfortable with where this discussion seemed to be going, and shared a point of view that the CBS community has an obligation to support the school and protect its reputation.

In fact, some students amplified this sentiment by noting that any student who gave less than top ratings on published surveys of student satisfaction were hurting themselves and classmates.

Recognizing the sensitivity of this topic to those still in the anxious hunt for a post-MBA job, I suggested that for the remainder of the class discussion, students should imagine that a decade has passed, everyone has a great job and we are now merely reflecting back on what might improve MBA education for the next generation of aspiring business leaders, including the possibility of disruptive new formats.

To my surprise, one of the students opined that he would still be reluctant to publicly acknowledge concerns with his alma mater for fear that it might weaken his executive stature.  In his words, “as long as I have Columbia Business School on my resumé, I’d like it be considered a top-notch B-School.  And I hope to play a valued role in recruiting the next generation MBAs from Columbia.”

To take this discussion thread one final step, I asked the class at what point their allegiance might shift from supporting their alma mater to supporting the best business interests of their employer, if in fact, a potential conflict emerged.

“Suppose,” I hypothesized, “an HR director came to you in your capacity of business unit general manager to report that your company was experiencing excellent results by hiring applicants who had supplemented their undergraduate degree with directly relevant skills via targeted MOOC courses.  Starting salaries for this new breed of employee was roughly half the rate of a freshly minted MBA.  As a result, she suggested that your company should reduce its historical emphasis on MBA hiring.  Would you be receptive to such a suggestion?”

One student continued to express discomfort with such a suggestion, thereby providing an unexpected teachable moment regarding just how resistant current stakeholders can be to disruptive threats to the status quo — in educational institutions or corporate entities.

With that caution in mind, what changes in higher education can we expect to see in the years ahead?

First of all, let’s return to what I stipulated earlier: despite earlier flame-outs, this time is different and higher education will be disrupted as new technologies enable viable alternatives to the unsustainably high costs and declining value of traditional higher education formats.

In the long term, resistance from incumbent stakeholders will eventually be overcome by two large and powerful constituencies poorly served by today’s status quo: the 70% of US adults who do not have a college degree and the large number of employers challenged by a skills gap in the recruiting marketplace.  The economic potential that can be unlocked by better serving these large constituencies will continue to attract investment in alternative education delivery models from both the private and public sector.

And make no mistake about it: if employers begin to experience positive results in hiring employees who have acquired superior job skills at lower cost than by attending conventional colleges (and therefore may accept lower initial compensation), interest in conventional forms of higher education will decline from both students and employers alike.

But these are still early days in the disruption of an extremely large and complex segment of the economy and anyone who tells you they know how it will all sort out — or even worse, cling to simplistic notions such as “MOOCs will largely replace college classrooms” — is either misinformed or naive.  There are appropriate roles for both online and on-campus education delivery models, and the challenge is ultimately to find the right balance to improve effectiveness at lower cost.

Institutions like Columbia University, who currently has the dubious distinction of charging the highest gross college tuition in the US can in fact continue to provide a superior higher education experience (and justify its inherently higher costs), but only by addressing two questions I believe every university president should currently be asking themselves:

  1. How can our institution demonstrably improve the quality and cost-effectiveness of our university education in ways that are uniquely well suited to students who choose an on-campus experience?
  2. How can and should we participate in emerging opportunities to deliver learning in an online environment – to enhance our in-class learning, to extend our global reach or both?

The answer to the first question lies in exploiting inherent advantages of on-campus education that demonstrably deliver superior value.  The starting point — and often the most under-exploited key differentiator — is more personalized interaction and feedback between students and leading academics and teaching practitioners.

Obviously a high level of personalization is not possible in MOOCs with tens of thousands of students.  So if universities want to remain leaders in delivering the best quality higher education, they have to ensure they provide more student access to the best teachers backed by research and relevant experience, who are incentivized and motivated to spend time interacting meaningfully and individually with their students.    Unfortunately, this key differentiator for on-campus education is often not a faculty priority, given the incentives typically in place at research-centric higher ed institutions.

In fact, at universities like Columbia or my alma mater MIT, the incentives in place for tenure track faculty are skewed so that the marginal utility of spending an extra hour on research greatly exceeds the marginal utility of an incremental hour devoted to curriculum enhancements, teaching and student interaction. Relatedly, it is already far too common for student TA’s to grade their peers’ homework assignments because professors are unwilling to put in the effort required to provide personalized feedback, or classes have become too large to make such personalization feasible, or both.

On the other hand, professors who volunteer to create MOOC courses are likely to be predominantly  motivated by teaching excellence and extending their intellectual reach.  The best online teachers will attract the most enrollments and the highest student satisfaction ratings.

Over time, I fully expect that MOOC platforms will evolve towards revenue-generating business models, precipitating a shift in the balance of power from universities to individual academics and practitioners who develop a global reputation for teaching excellence.  If the best teaching professionals increasingly find their best opportunities for global impact and remuneration lie outside traditional higher ed institutions, it may further hollow out the educational excellence of Tier 1 universities.

The point here is it that every academic leader should reexamine what it will take to sustain leadership in delivering the highest quality on-campus higher education in the future — not just with respect to traditional delivery models and current protocols, but also against evolving highly disruptive new technologies.  The context and priorities will vary from one institution to another.  For example, community colleges may choose to focus on online enhancements to classroom education aimed at lowering cost, expanding student coaching (to combat high dropout rates) and enhance flexibility.  On the other hand, Tier 1 universities may push the envelope on hybrid teaching models which free up faculty time for more intensive and personalized student interaction.

In any event, the question isn’t whether but how higher education institutions catch the wave of disruptive change.

With respect to the second key question facing university presidents – whether and how to participate in emerging online learning opportunities – no one can claim to know the precise pace and form that disruptive learning technologies will take over the next decade.  But I would argue that it is precisely because of this inherent uncertainty that the appropriate response to early stage disruptive threats (and opportunities) should be extensive low-cost iterative experimentation.

Universities need to discover for themselves how to best incorporate new technologies into their on-campus and extended learning environments.  I would like to see more higher education institutions aggressively undertaking and sharing experiences from multiple digital learning experiments, including video lectures to “flip”  classrooms, MOOC courses to extend  learning reach and to gain familiarity with online pedagogical techniques, greater use of video technologies to beam global thought leaders into our classrooms, and experiments with different forms of automated grading for larger online and classroom audiences.

What’s holding universities back?  The obvious culprits are common to corporate environments as well: budget constraints, misaligned incentives and the ever present FUD.  But another barrier is the significant faculty skills gap that constrains many colleges and universities from gaining widespread buy-in to exploit emerging technologies.

As a case in point, consider how leading graduate schools have adapted their curricula to train aspiring journalists.  Ten years ago, J-School curricula focused predominantly on the tools and techniques for becoming an effective print media reporter.  Today, J-School courses emphasize multi-media technologies, social networking and digital photography/editing skills which reflect the radical shifts in reporter roles and news delivery formats.

In contrast, graduate students pursuing a career in academia typically get limited formal guidance on general  teaching skills, let alone tutorials on emerging technologies to digitally enhance their classrooms.  On most campuses, there is simply too little opportunity and incentive for junior or senior faculty to lead the charge on pedagogical experimentation.

So for now at least, as is often the case in the corporate sector — Kodak and Blockbuster are exemplars that come to mind — the leading edge of disruptive change is primarily being driven by newcomers rather than incumbent leaders.

While it is difficult to predict exactly how new technologies, pedagogies and business models will play out over the coming decade, it is a safe bet that those institutions who stubbornly cling to the status quo are likely to find (painfully) that this time it is real: higher education is in the midst of disruptive, transformative change.