The coronavirus pandemic has led to a substantial decline in the demand for traditional four-year degrees, leading to a 16 percent and 43 percent decline in fall enrollment for freshman and international students, respectively. In fact, a recent survey found that over a third of prospective college students are reconsidering higher education with 40 percent of them citing finances as the primary factor.
This has led to growing concerns among university administrators about the financial health of their institutions. While some have responded by temporarily lowering their tuition rates in the absence of in-person classes, many have not, leading to dissatisfaction among students and parents alike.
The value proposition for a traditional college degree has been shifting for a while. In fact, the added wage benefit that an individual with a bachelor’s degree earns, relative to not having a bachelor’s, has flattened in recent years, reversing a trend that had held for decades. Coupled with the move away from traditional in-person learning, at least temporarily, the pandemic has further undercut the returns to a college degree by removing the socialization that typically happens in-person.
The fact that higher education is suffering from the pandemic is not surprising—every sector has been affected one way or another. But higher education was especially ill-suited for the pandemic because of chronic underinvestment in innovative and digital infrastructure. It should not take a pandemic to force universities, which should be the most innovative institutions on the planet, to realize that they can use technology to scale and improve the quality of their services.
Nearly all the revenue increases in higher education over the past few decades have been driven by growth in tuition, according to Fitch Ratings. And yet, the value of a bachelor’s degree has declined over these same years, manifested in the flattening of the college wage premium and rise in grade inflation.
While one scenario is for higher education to emerge out of the pandemic with the same underlying strategy, but with some new bells and whistles, we should hope for more. Higher education should be an arena that inspires and creates. And yet, it often becomes a play pen, resource drain, and source of propaganda. Reforming higher education will require a fundamental change in incentives.
First, faculty compensation needs to be linked with actual performance—a combination of student and research impact. While lip service is paid to these, it’s well-known that teaching quality is not valued and research is viewed through an incredibly narrow lens. Fortunately, there are many good ideas about how to measure teaching outcomes, including experimental evidence at Northwestern. Moreover, with improvements in measurement and partnerships between colleges and LinkedIn, it wouldn’t be hard to quantify student outcomes in the labor market tied to specific teachers.
Second, faculty should be allowed to self-select across a spectrum of teaching and research tracts. While some would counter by saying that’s already possible, the reality is that there’s a strong stigma against teaching faculty. They’re not only paid substantially less than their tenure-track counterparts, but also marginalized—often not even having office space in the department. If higher education was an actual market, that could be an optimal response, but it’s not. If prospective faculty were able to choose across a spectrum of teaching and research, rather than the binary option of being “teaching” or “tenure-track,” that would lead to improvements in student outcomes since the faculty who don’t like teaching would self-select into pure research roles.
Third, college administrators should encourage faculty to become entrepreneurs and empower them with technology to teach, research, and ultimately solve problems more effectively. Right now, deans and chairs of departments take a hands-off approach, allowing a high degree of autonomy among faculty to do what they want. While autonomy can fuel creativity, the lack of structure can also backfire and lead to departmental confusion and low engagement with students and the local community.
What if faculty were encouraged to work with local companies and were rewarded based on their ability to solve actual problems? For all the talk about racial equity in colleges, you would think that faculty would be working with local small business owners, especially minorities, to mentor and equip them to drive greater profitability and impact. Unfortunately, that rarely happens. Department chairs and deans can play an important role in empowering faculty and augmenting them with new technological capabilities, which is something that Arizona State University is already doing.
Moreover, EdTech companies are uniquely positioned as strategic partners with universities. While some faculty are already working with them, uploading courses and making them freely available, this only scratches the surface. What if we could develop a trusted learner network with a well-defined skill taxonomy that allows learners to credibly signal competency regardless of where they completed their course credit?
Suppose, for instance, a student takes an accelerated three-week class on Python through Datacamp and wants to use the accumulated knowledge to jump into a capstone class in the computer science department at Arizona State University. If a trusted learner network existed between the two entities, then competency could be interoperable, allowing learners to move seamlessly across learning platforms. In fact, that’s exactly what Arizona State University is doing through its new University Design Institute. According to ASU President Michael Crow, “The principle of individual empowerment and a student-centric approach to learning and to education is a shared commitment, one where we are called to take action and broaden the network of stakeholders engaged in bringing about a change of culture.” The beauty here is that it’s not a winner-take-all system: A trusted learner network would invite many organizations to the table, allowing learners the utmost optionality to decide what works best for them.
These ideas are reflected in the Trump administration’s approach to promoting human capital. For example, the National Council for the American Worker focused on modernizing the federal government’s approach to workforce development, in part by drawing attention to apprenticeships and other non-traditional educational investments. This approach is much more focused on the acquisition of skills, rather than degrees, which contrasts with Joe Biden’s proposal for free college where the federal government would cover 75 percent of the cost and states would contribute the rest. At best, that strategy would only replicate the structural problems that are inherent in higher education.
The current system of higher education leaves much to be desired. We can do better. Strengthening incentives for faculty, allowing faculty to self-select within a wider spectrum of teaching versus research, and leveraging technology to augment faculty efforts would deliver better outcomes for students and drive innovation. A trusted learner network that promotes interoperability across educational investments is the best way to inject greater competition into higher education.
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